High-Profile Fraud Reinforces Need for Adequate Compliance Programs

This post was written by Gunjan Talati.

On April 1, 2013, the Federal Times covered the story of how an Army Corps of Engineers contracting officer committed fraud to the tune of $30 million. The fraud was simple: contractors submitted fake invoices and the Army Corps—through the contracting officer—paid those invoices. In turn, the contractors paid kickbacks to the contracting officer through various businesses. This story highlights the need for contractors to have controls in place to prevent employees from participating in such schemes, and detecting them when they occur.

Contractors can take a few basic steps to shore up their compliance programs. Contractors should foster a culture of ethics and compliance within their organization. This requires a top-down approach with a firm commitment by management. Building on this commitment should be a code of conduct tailored to the size and specifics of the contractor. Additionally, ethics and compliance training should be a regular staple of overall training programs. Further, employees should be aware of resources available to them if they encounter questionable situations.

While contractors should focus on preventing issues, they should also ensure that internal controls are in place to detect fraud. Internal controls should be company-specific to and focus on high-risk areas.

Taking these precautions can help prevent contractors from being news fodder.

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