When it comes to reducing the risk of fraud and misuse of taxpayer funds, grant managers should watch out for the great “blame game” hoax that often accompanies the misappropriation of funds and concealing grant fraud.
Committing fraud is deliberate; efforts to conceal that fraud are just as deliberate.
The 3 Ingredients in the Grant Fraud Triangle
Concealing grant fraud starts with a “recipe” for committing the deception.
The recipe includes these three ingredients:
- Opportunity
- Motivation
- Rationalization
When these three ingredients are combined, it creates an environment where deliberate misuse of funds can happen.
To deter grant fraud, you want to start the process by focusing on systems that reduce the opportunity for fraud.
When you reduce the opportunity, you reduce the risk of grant fraud and mismanagement.
However, we also need to be on guard for warning signs of the other two elements of the fraud triangle:
- Rationalization
- Motivation
How the “Blame Game” is Used for Concealing Grant Fraud
The old adage says, “the best defense is a good offense.”
In other words, beware when an offensive attack is launched against you when you question circumstances that seem “fishy.”
Both motivation and rationalization are involved in triggering the “attack dog” response.
The goal for the fraudster is to get you to back down and quit poking around.
You can even be drawn into the “blame game” with accusations that you are not “trusting” or not being a “team player.”
It’s true!
It’s hard to challenge someone about how grant funds are being spent.
And the sad truth is that being a whistle-blower doesn’t always turn out great for the person blowing the whistle.
But if you are caught in the hurricane of the “blame game,” it may just mean you are on the right track.
Keep Your “Smoke” Detector Fired Up for Motivation and Rationalization
Where there’s smoke, there can be fire!
So, please keep your eyes open to situations where people may be motivated to take advantage of and rationalize their behavior.
Studies have shown that the most common motivations for grant fraud are:
#1 Employee dissatisfaction with job or life
#2 Employee financial stresses
When employees have the opportunity and the motivation to commit and conceal grant fraud, all that’s needed now if the rationalization to do the deed.
Rationalization = Making Excuses for Bad Behavior
Rationalization (also called making excuses) acts as a “cheerleader” for doing wrong things by encouraging unacceptable behavior.
Here are some examples of rationalization:
- “Nobody really cares if we take these supplies.”
- “Turning in this refund’s too big of a hassle .”
- “I’m just borrowing this equipment to fix my house and will return it before anyone needs it.”
- “I deserve a government “bailout” too!”
What Can Be Done?
Preventing and detecting grant fraud requires fighting the battle on many different fronts.
Here are a couple of key areas:
#1 Monitor to Reduce Opportunity
Having procedures and policies to deter direct and indirect fraud within an organization is similar to taking a safe driving course to lower car insurance premiums.
However, while there is undoubtedly truth in the adage, “An ounce of prevention is worth a pound of cure.”
For example, a safe driving course cannot guarantee accident-free driving, nor can anti-fraud procedures and policies guarantee fraud will never occur within an organization.
Careful monitoring of anti-fraud policies and programs is necessary to reduce the opportunity for misappropriation.
It is also essential to have a strong ethics policy and monitor behaviors that may indicate motivation and rationalization toward unethical behavior.
(Want to see some examples of concealment behaviors? Check out 9 Lies that Fraudsters Like to Tell)
#2 Knowledge is a Powerful Fraud Finder
Here are two couple other things that organizations can do to reduce the risk of grant fraud:
First, provide grant management training so employees understand what behavior violates the grant terms and conditions.
Additional training should include periodic employee training on the organization’s internal policies and procedures.
Next, it must be understood that individuals who commit fraud deliberately try to exploit the existing opportunity.
These fraudsters frequently use their positions and knowledge of the organization and authority in an organization to circumvent organizational anti-fraud efforts.
That’s why it’s crucial to establish and communicate a whistle-blower program so employees have a safe way to report their suspicions to the appropriate oversight group.
Grant management is not just about doing everything right.
It also includes monitoring to make sure things aren’t being done wrong.
