Top 3 Telltale Signs You Need a Government Fraud Investigation

By scoutadmin - March 23, 2017

Fraud can occur  any organization. One of the primary reasons for fraud, according to an Oversight Systems study, 81% say are the pressures associated with meeting goals; 72% say it’s to seek personal gain.

Fraud can occur in any organization. Two of the primary reasons for fraud occurrences, according to an Oversight Systems Study, are the pressures associated with meeting goals (81%) and seeking personal gain (71%).Regardless of the reason, conducting any kind of internal government  fraud investigation can be difficult – from an accountant standpoint  or otherwise. There will always be people who seek to benefit from the resources of another company or government organization, and everyone has a different method of conducting fraud.

The best defense when predicating fraud is ironclad documentation, and knowing as many facts as possible before taking action. You may have suspicions, but unless there’s proof, you won’t have a solid foundation for further government investigation.

Let’s go over a few red flags, or telltale signs, and how you can snuff them out:

#1: Suspicious Fund Transfers/Activity

Government is tightly bound to its main branches; the same can be said about its funds, too. Look for “off-book” or “on-book” schemes where someone in accounting may be diverting funds to appear like they’re going into the organization, when they’re really not.

Everyone who is considered under investigation must be monitored in a variety of ways:

  • Understand how actual operations are supposed to function, so you can  identify if a specific activity was acted on inappropriately
  • Paper recordation of activities to compare to electronic files
  • Any personnel files on someone’s employee history to see if they’ve had any issues in the past
  • Public record of any financial distress or personal issues, as it could be pertinent to an investigation
  • Gain any and all financial statements and banking records from involved parties – and confirm their credibility before taking them at face value
  • Analyze where funds were previously deposited, including any that were canceled

#2: Untimely Financial Documents

Are you not getting the proper financial documentation at the end of every month? This can be a big red flag because things in the past may be harder to spot in the minutiae. It also leaves room for rewrites or addendums onto something that’s already happened.

#3: Inconsistent Data or Complaints

If you’re having a difficult time tracking your data, or there are always errors where the numbers aren’t lining up, chances are, something’s not right. Fraudsters will use any kind of data archiving or errors as a scapegoat for why the numbers might not be lining up.

It’s an unfortunate truth, but you can’t just use the basis that you “trust someone” as a means to track financials. So if you’re getting lots of complaints that documents are going missing, or if things “just aren’t lining up,” make sure you’re arranging routine audits by an outside party so there’s no one with a “dog in the fight” so to speak.

Studies have shown that organizations could be losing as much as 7% of their annual turnover due to fraud. Senior management and executives are not immune to fraud and this is especially important to consider in government.

To learn more about tracking down the bad guys for whistleblower or other government fraud investigation cases, feel free to schedule a demo with us and learn how our software can help.

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