I presented recently at the County Auditors Association of California annual conference. It was a packed house in Death Valley, CA, and after weathering a major sandstorm, the attendees seemed anxious to learn of the latest fraud trends in local government. Based on the questions and sidebar discussions throughout the day, it was clear that fraud is a top-of-mind issue at the local level, just as it is at the state and federal.
Auditors have a unique and varied role in combating fraud. Some see their role as limited to ensuring that county programs have adequate program integrity and controls (more of an internal audit function); whereas, others see themselves playing a more active, almost inspector general-type role. It will be interesting to observe how this plays out over the coming months, and which model proves to be most viable and effective at combating fraud in local governments.
The most successful anti-fraud programs will be the ones that view evidence of suspected fraudsters across the entire spectrum of government programs and services. For example, a mother who applies for food stamps might claim that she is not employed, but on a separate application for child care services might claim that she is working. These types of discrepancies often go undetected since each benefit program has its own eligibility and benefits tracking system. It’s not until we get a longitudinal view of the recipient across all programs and government touch points that we can see these discrepancies as potential indicators of fraud.
To do that well, the group responsible for the anti-fraud program must have the appropriate oversight authority. Auditors typically have this broad oversight authority, but currently lack the skilled investigative resources that typically live within fraud fighting programs, and of course lack criminal investigation and prosecution abilities.
While more common in anti-terrorism efforts, perhaps the fusion center concept, where resources and information from different units are brought together for a common purpose , will prove to be the option of choice. But one thing is for certain - regardless of how it is internally organized, the anti-fraud program needs to have the latest tools and technology to integrate and cleanse disparate data, detect known and unknown fraud schemes, and provide investigators with the ability to assess and act upon suspicious activity in real-time. With all that, they can prevent fraud from happening in the first place. But not sandstorms. Anybody got a Shop-Vac?