Detection and Prevention of Fraud and Abuse in Human Services Programs Contracted for by Government Agencies

While there were some differences among program types, a number of commonalities were observed. Check fraud was the single most common means of malfeasance. Falsified fiscal documents (inflated staff and participant timesheets), vendor overbilling, and falsified client eligibility also were uncovered. A risk analysis established potential points of vulnerability to abuse in check processing procedures; staff termination and payment procedures; vendor solicitations, deliveries, invoicing, and billing and accounting; and participant eligibility determination, termination, and payment. On the basis of these findings, recommendations are made for internal controls to improve management and administration of the city's contract programs. In addition to covering identified vulnerabilites, recommendations discuss staff training, reporting, accounting, audit, and monitoring functions and propose development of a contract management system, an investigative agency to detect malfeasance in contract programs and funding agency management, and a unified contractor oversight system. Appendixes include a literature review, additional data on individual programs studied, and an assessment of the city's inspector general system. Tables and 16 footnotes. For executive summary, see NCJ 109112.