The passage and implementation of the American Recovery and
Reinvestment Act of 2009 and distribution of more than $700 billion
in funds to federal, state, county, and city governments and
agencies by the Obama Administration has highlighted the role of
public administrators in preventing and detecting fraud, waste, and
abuse in government programs.
Now more than ever, public administrators are at the forefront of
ensuring that citizens are receiving the most bang for buck for
their tax money used by government entities. Public administrators
encounter significant challenges to safeguarding taxpayers money:
budget constraints, technology developments, and the fertile
imagination of those who seek to defraud the system.
Indeed, providing services to the public is challenging enough
without negative headlines in the local paper or the latest story
on the 6 oclock news trumpeting that someone has defrauded a
government agency while its leaders were asleep at the switch. What
can you do as a public administrator to prevent and detect fraud,
waste, and abuse in the programs you are charged with
Preventing and detecting fraud, waste, and abuse begins at home.
Public administrators must be keenly aware of how these issues are
addressed in their own agencies and must lead by example. Agency
leaders need to develop a written code of conduct that applies to
all employees and addresses ethics; confidentiality of information;
conflicts of interest; sexual harassment; and preventing and
detecting fraud, waste, and abuse.
In addition to the code of conduct, there must be a separate fraud
policy in place that addresses how employees should comply with all
laws and regulations, stresses the importance of maintaining
accurate books and records, and directs how payments are made to
contractors. In addition, the fraud policy should offer guidance on
government relationships with the public, including vendors.
Public administrators can also use internal tools, such as the
employee handbook and policy manual, to address the importance of
preventing and detecting fraud, waste, and abuse to the agency. The
employee handbook and policy manual should be part of an overall
internal communication plan that stresses the importance of
antifraud, waste, and abuse policies and procedures to all
Positive Workplace Environment
Public administrators must be aware that creating and maintaining a
positive workplace environment is critical. For example, there
needs to be a system in place that recognizes and rewards
employees, not only for what they do in preventing and detecting
fraud, waste, and abuse, but also in what they do for programs the
agency administers. Providing equal opportunities to employees also
helps foster a positive workplace environmentthe lack of which can
quickly derail many efforts.
Open lines of communication are also important in creating and
maintaining a positive workplace environment. They foster loyalty,
feelings of ownership, and encourage collaboration. Does your
organization allow input, both informal and formal, from employees?
Do leaders talk to staff or hide behind their desks and computers?
Additionally, there should be formal venues for employees to report
fraud, waste, and abuse. Examples include a whistleblower policy
and a system for employees to obtain advice internally before
making decisions that have significant legal or ethical
implications. There should be a process to encourage employees to
communicate or reporton a confidential or anonymous basis without
fear of retributionconcerns related to wrong-doings. These formal
lines of communication are key to creating the necessary positive
Public administrators should take advantage of the HR function in
the fight against fraud, waste, and abuse. The HR department can
conduct background investigations on job applicants to verify
education, personal references, and employment history. More
important, HR can instill values in regular employee performance
reviews by implementing an objective evaluation process.
The HR function may also assist by conducting training on these
issues. If your agency is lucky enough to have this staff resource
in-house, use it to help clarify employees responsibilities and
values. Organizations can also use training to examine the code of
conduct and fraud policy within the agency.
Agencies can also use HR to clarify employees own accountability
for preventing and detecting fraud, waste, and abuse. At a minimum,
employees should be asked to sign a conduct statement annually,
which acts as a reminder to employees of their roles in the
The role of HR in the disciplinary process is also important in
combating fraud, waste, and abuse. To create the positive workplace
environment and to address internal abuse, a public administrator
must take consistent and appropriate disciplinary action against
employees. Because it is vital that public administrators
investigate incidents thoroughly, HR should develop standard
procedures to deal with complaints, protect the rights of the
employees, conduct disciplinary interviews, and deliver
disciplinary actions. There should also be a policy in place
concerning criminal prosecution of employees who break the law,
which must be made clear to the employees and applied consistently.
Performing an agencywide fraud risk assessment is a critical
component. When public administrators add fraud, waste, and abuse
to the list of potential risks they face and assess that risk, they
will be more likely to identify potential incidents and be better
able to design effective internal controls to prevent and detect
them. The fraud risk assessment should be performed in two steps:
- Perform an agencywide environmental infrastructure assessment
- Perform a detailed assessment by division, process, or core
function, including finance and accounting; purchasing and
contracting; information technology; and human resources
Use of the fraud risk assessment enables public administrators to
assess the internal controls of the agency in preventing and
detecting fraud, waste, and abuse. Public administrators must
consider whether their internal controls are sufficient,
well-designed, and applied properly. In addition, the risk
assessment allows public administrators to determine if internal
control activities are not only well-documented, but working
Internal controls are extremely important when identifying
instances of technology-enabled fraud, such as unauthorized access
and physical intrusion or inappropriate modification to computer
programs. Indeed, controls must be in place to address the adequacy
of the fraud, waste, and abuse detection and monitoring tools and
system override of control features.
After completing the fraud, waste, and abuse risk assessment, it is
necessary that the public administrator have in place a sufficient
oversight process to ensure that the internal controls are working
properly. Clear oversight roles must be established, and the public
administrator must determine the management level at which the
risks are considered and the level of likelihood and significance
of fraud, waste, and abuse.
For internal controls to work, there has to be a commitment to
zero-tolerance. The public administrator must assess the strength
of the internal controls. There should be a mechanism for employees
to report their concerns, along with adequate documentation and
open lines of communication.
Role of Management
Public administrators have their own roles to play to prevent and
detect fraud, waste, and abuse. It is imperative to periodically
report on the internal control and oversight processes to the
board, commission, or executive director. Open lines of
communication go up as well as down.
The public administrator also must implement an ongoing process to
identify significant fraud, waste, and abuse risks. The fraud risk
assessment tool is not a one-time thing, but should occur on an
annual basis. In addition, to address the risks identified by an
assessment, the organization must be willing to promote a process
to reengineer the risks.
Role of Internal Auditors
If an agency has an internal auditor, public administrators have
another weapon in their arsenals to address fraud, waste, and
abuse. Internal auditors can identify indicators and determine
whether there is a proper environment at the agency to address
Internal auditors can ensure that there are written policies
regarding prohibited activities and follow-up actions to respond to
such activities. They can determine authorization policies, ensure
mechanisms to safeguard assets, conduct proactive auditing, employ
procedures to isolate anomalies, and assess the effectiveness of
hotline or whistleblower programs. More importantly, an internal
auditor can make certain that the public administrator is aware of
risks not being covered by the programs, policies, and procedures
of the agency.
In essence, the internal auditor is the eyes and ears of the
executive management team overseeing an agency. It is the role of
the internal auditor to report directly to the team. The internal
auditor should provide team members with an assessment of an
agencys process for identifying, assessing, and responding to risks
of fraud, waste, and abuse.
Putting in place these tools does not ensure that fraud, waste, and
abuse will not occur in your agency. Public administrators must
continue to use these tools as designed and reengineer programs,
processes, and procedures to constantly address potential instances
of fraud, waste, and abuse. Vigilance is key. Good luck!