We know that waste, fraud and abuse cost the Federal government billions of dollars each year.
But do you know the signs?
Here are seven warning signals to help you spot potential risks to your Federal grant.
7 Warning Signs of Waste, Fraud and Abuse
#1 Unethical Relationship
Example: The bidder is inappropriately close to a procurement officer, program official or directly participated in writing the specifications
Potential risks: Uncompetitive Practices, Conflict of Interest Violations
#2 Undue Personal Gains
Example: Staff member accepts gifts-especially high-value ones from vendors, contractors and subgrantees
Potential risks: Bribery, Kickbacks, Ethics Violations
#3 Improper Time-charging Processes
Example: Timecards are completed by managers or administrative staff instead of the individual employees
Potential risks: Mischarging of Costs, False Statements and Claims,
#4 Ignoring Award Terms and Conditions
Example: Vendor provides foreign-made goods where domestic production is required
Potential risks: Product Substitution, Defective Pricing
#5 Insufficient Monitoring
Example: Labor and time charging is inconsistent with project progress
Potential risks: Mischarging of Costs. False Statements and Claims
#6 Inappropriate Transfers between Budget Categories
Example: Grantee or contractor fail to disclose changes that significantly reduce the projects costs
Potential risks: Defective Pricing, Cost Mischarging
#7 Disclosure of Confidential Information
Example: Proprietary information is provided to one or just a few contractors
Potential risks: Conflict of Interest Violations, Uncompetitive Practices
Two Main Categories of Risk for Grantees
As you can see the possibility of misuse of federal funds focuses on two main areas:
• Time and labor charging
• Procurement of Goods and Services
This is because the vast majority of federal funds spent on an award fall under these two categories.
If you make sure you have strong internal controls and adequate compliance with policies and procedures around these two areas and you can reduce much of the risk to your federal grant.
Want to learn the basics of grant management? Sign up for our free 5-part series “Grant Management Basics” today.
Lucy Morgan CPA, MBA
CEO, Compliance Warrior