Managing Fraud and Other Risks in Federal Programs. Uniform Guidance Performance. Performance Metrics Audits

Transcription

1 Managing Fraud and Other Risks in Federal Programs Phil Maestri U.S. Department of Education 1 Uniform Guidance Performance On September 30, 2014, OMB published Memorandum M Metrics for Uniform Guidance to measure the impact of the Uniform Guidance and to evaluate the extent to which it achieves the COFAR s goal of reducing administrative burden and risk of waste, fraud and abuse. 2 Performance Metrics Audits Report annually: Number of Modified Opinions for Higher Risk Major Programs Number of Audit Findings of Material Weaknesses in Internal Controls for Higher Risk Major Programs Number of Repeat Findings for Higher Risk Major Programs (Starting FY 2015) Number of Major Programs selected for audit Number of Audit Objectives in the Compliance Supplement 3 1

2 Performance Metrics Policy Report annually: Policy changes that most: reduced administrative burden increased administrative burden reduced risk of waste, fraud, and abuse increased risk of waste, fraud, and abuse dollar value of impact of policy changes Stakeholder satisfaction with the opportunity to engage with the COFAR or Federal agencies during policy development Stakeholder perception of whether the policy outcome appears responsive to and aligned with their input Opportunities for greater stakeholder engagement 4 5 Suburban father, son charged with education fraud A father and son who run education companies defrauded more than $33 million in federal grants from school districts across the country by misrepresenting the tutoring services they purportedly provided to lowincome students. April 28, 2014 By Jason Meisner Tribune reporter 6 2

3 7 8 Puerto Rico tutoring agency charged in nearly $1M federal fraud case By DANICA COTO Associated Press September 10, :10pm Authorities said the fraud occurred in part because officials bypassed a faulty biometric system and teachers would tell students to provide fake names. 9 3

4 Even if the deterrence factor doesn t prevent fraud, catching it can be its own form of deterrence for future employees. 10 Fraud Risks missing the signs 11 Chicago Public Schools Response Independent consulting firm third party review of the District s sole source contracting process Policy that distinguishes between sole and single source procurements Publish sole source and single source contracts online Require single or sole source requestors to disclose any past or present business or personal relationships with the vendor City Inspector General Commissioner of the Department of Procurement studying reforms that can be adopted by the School District A complete audit of operations, including the organization, contracts, employee travel, capital projects, facilities, enrollment, and individual school operations 12 4

5 Single most powerful tool to fight fraud MISUSED 14 The revised Standards for Internal Control in the Federal Government requires managers to assess fraud risks as part of their internal control activities Based on leading practices of Federal agencies, Offices of Inspector General, The World Bank, The Organisation for Economic Development & antifraud experts from all sectors 15 5

6 GAO Framework 16 GAO Framework Assessment Identify fraud risks affecting the program (Contracting/ Sole Source contracts) Assess the likelihood and potential impact Determine risk tolerance Examine existing controls relevance and costeffectiveness Document the fraud risk profile 17 GAO Framework Strategy Determine risk response and strategy Design and implement control activities Plan how program will respond to fraud Establish relationships with stakeholders 18 6

7 Challenge COFAR Strong Program Oversight: Audit Resolution Over 4,000 audited programs failed to receive clean opinions in 2011 Inconsistent implementation of Uniform Guidance Audit requirements Lack of tools to analyze audit data Quality of audits Accomplishments December 2014: Enhanced reporting abilities available from the Federal Audit Clearinghouse February 2015: Tested MAX CUBE analytic capabilities May 2015: Identified Single Audit Senior Accountable Officials and Key Management Liaisons July 2015: Published 2015 Compliance Supplement 19 CAROI is Dead? 20 Not a Chance 21 7

8 Not just at ED any more Cooperative audit resolution. Cooperative audit resolution means the use of audit follow up techniques which promote prompt corrective action by improving communication, fostering collaboration, promoting trust, and developing an understanding between the Federal agency and the non Federal entity. 22 Not just a nice to do (c) Federal awarding agency responsibilities. The Federal awarding agency must perform the following for the Federal awards it makes: (3) As part of audit follow up, the Federal awarding agency must: (iii) Use cooperative audit resolution mechanisms to improve Federal program outcomes (6) [name] a key management single audit liaison who must: (iv) Promote the Federal awarding agency s use of cooperative audit resolution mechanisms. 23 New name: OMB Circular A 123 OMB Circular A 123, Management s Responsibility for Enterprise Risk Management and Internal Control (as of 11/10/2015 draft) 24 8

9 Working together with trust, communication and creativity Better compliance supplements, and other guidance Many disputes resolved together Emphasis on joint decisions that resolve underlying problems Sometimes money has to be repaid Better programs for students 25 CAROI Principles Communication Understanding Trust Sharing Collaboration Resolution/performance 26 CAROI Proverb one does not need a sledgehammer to remove a fly from another s forehead Ancient Proverb 27 9

10 Five Part Formula for Success +Right Players +Open Dialogue +Shared Purpose/Objectives +Sense of Urgency +Seeing Things Differently =Successful resolution 28 Why does it work? Audits become a useful management tool Burden of resolving audits and correcting problems is reduced Communication and understanding increases 29 Advantages of CAROI Broad Applicability Cost Savings Flexibility Impartiality Efficiency Accountability 30 10

11 Every CAROI project should end with Performance goal/objective Solution to root causes systemic change Project plan to achieve goals Identifies Stakeholders Accountabilities and responsibilities Resources An agreement signed by all parties 31 Relevance of CAROI Today New OMB omni circular ( (3)(iii) and Cooperative Audit Resolution); Broad Applicability; Provides a framework for problem solving; Can be applied in local multi agency issues; Addresses root causes of problems. 32 CAROI Guides dex.html /documents/caroi.pdf 33 11

12 CAROI Projects vs Recurring Findings 34 On the Horizon Performance measurement Data analytics Data driven decision making Consolidation Confusion and Delay

13 Thank You 37 13