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Preventing Fraud and Mismanagement in Government

Book Description

Dig to the root of public fraud with deep exploration of theory, standards, and norms

Preventing Fraud and Mismanagement in Government identifies common themes in public fraud and corruption, describes the forces that drive them, and provides an objective standard of good practices with no political bent. From Bridgegate to Iran-Contra, this book walks through the massive scandals that resulted from public mismanagement and fraud to illustrate how deeply-entrenched, entity-specific norms can differ from actual best practices. The discussion includes the theoretical underpinnings of public fraud, and how intense corporate culture and limited exposure to outside practice standards can lead to routine deviation from normal behavior and moral standards. You'll find a compendium of practices that illustrate actual norms, allowing you to compare your own agency's culture and operations to standard practice, and contrast the motivations for fraud in the public and private sectors.

Public agencies and governmental entities are generally driven by a pubic benefit or goal, but are widely varied in the ability and desire to deliver value while retaining best practices. This book explicitly explores the common patterns of agency practices and cultural norms, and describes how they can easily cross over into illegal acts.

  • Understand why fraud exists in the public sector
  • Discover how your agency's mindset diverges from the norm
  • Review cases where agency practices diverged from best financial practices
  • Learn good practices in an objective, nonpolitical context

The government/public sector provides some of the most basic services that are critical to a functioning society. Lacking a profit motive, these agencies nonetheless show a pattern of fraud and borderline behavior that could be mitigated with the adoption of standards and best practices. Preventing Fraud and Mismanagement in Government shares a canon of knowledge related to public operations and fraud, providing deep insight into the causes, solutions, and prevention.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Foreword
  5. Acknowledgments
  6. About the Authors
  7. Preface
  8. Introduction
    1. People are Your Greatest Risk and Your Greatest Asset
    2. Focus of the Book
    3. Rules: Do They Stop Fraud and Mismanagement?
    4. MIRD: The Four Criteria to Prove Fraud
    5. Judgment
    6. Structures and Systems
    7. Developing Systems in Structure by Asking the Right Questions
    8. AGFOT (Assisted Gorilla Fraud Observation Techniques)
    9. Notes
  9. Chapter 1: Government and How It Works
    1. Types and Forms of Local Government: An Example from New Jersey
    2. Politics, Public Operations, and Loss
    3. Global Forms of Government
    4. Revenue Functions within Governmental and Public Entities
    5. The Federal Government
    6. State Governments
    7. Local Governments
    8. Public Agencies
    9. Public Authorities
    10. Government via Concessions, Franchises, and Contract Work
    11. Public-Private Partnerships
    12. Conclusion
    13. Notes
  10. Chapter 2: Public Finance and How Government Creates Cash Flow
    1. Government Finance 101
    2. Case Study: Transportation Finance
    3. The Basic Rules of Forensic Accounting
    4. Fiscal Federalism
    5. Government Revenue Sources
    6. Bond Structure
    7. Core Issue: Government Spending
    8. Conclusion
    9. Notes
  11. Chapter 3: Accounting for Government
    1. Service Efforts and Accomplishments (SEA) Reporting
    2. Asset and Liability Recognition in Government
    3. Statement of Net Position
    4. Gordon Gecko Accounting
    5. Budgeting and One-Shot Accounting in Government
    6. Budget Manipulations
    7. Monopolistic Control
    8. AVERT Tool
    9. Governmental Funds
    10. Fixed Assets and Long-Term Debts: Self-Balancing Accounts
    11. Assumption Based
    12. Principle Based
    13. Judgment Based
    14. President Obama's 2015 Proposed Spending
    15. Ratio and Tables from a Government Perspective
    16. Government-wide Financial Statements Summary
    17. Know Management
    18. Conclusion
    19. Notes
  12. Chapter 4: Who Works in Government and What Is Their Motivation?
    1. Understanding People
    2. A Case Study in Too Much Carrot Eating
    3. Human Resources: The First Line of Defense
    4. Typical Types of Frauds
    5. Conclusion
    6. Notes
  13. Chapter 5: Fraud in Public Agencies: Horse Trading or Stealing?
    1. Understanding Government Fraud and Mismanagement
    2. Just How Pervasive Are Fraud and Corruption?
    3. Why Do Agencies Do What They Do?
    4. Who Motivates Policy?
    5. Government and Public Agency Frauds and Mismanagement-Why?
    6. Types of Government and Public Agency Fraud
    7. Criminality and Intent versus Ineptitude
    8. Auditor versus Accountant Understanding
    9. Categories of Waste
    10. Centralization
    11. Centralization vs Decentralization of Government/Public Agency Internal Accounting Control
    12. Money and Power
    13. Health Care Diversion
    14. Improper Payments
    15. Meals and Entertainment: Directly Connected to a Public Entity's Operations
    16. Churches and Political Campaign Activity
    17. Common Travel and Expense Reimbursement Fraud Schemes
    18. Systems and Structures That Can Potentially Prevent Expense Reimbursement Schemes and Abuse
    19. Common Schemes
    20. Conclusion
    21. Notes
  14. Chapter 6: Corrupt Policies and Actions
    1. Corruption: Agency Thinking and Inbreeding
    2. Systematic Risk
    3. Why Does Wrongdoing Continue to Happen?
    4. Types of Corruption Found in Government
    5. Examining Demographic Factors for Corruption Potential
    6. Corrupt Acts
    7. Social Security
    8. How the U.S. Government Spends
    9. How People Spend
    10. Political Risks
    11. Public Corruption
    12. Deregulation
    13. Conclusion
    14. Notes
  15. Chapter 7: Policing of Public Corruption and Fraud
    1. Background on Internal Control
    2. Distinguishing among Deterrence, Prevention, and Detection
    3. Back to Analyzing the Risk Beyond Numbers
    4. Worms
    5. Policing and Understanding the Enforcement Gaps
    6. How to Preserve the Evidence of Fraud and Corruption in the Public Entities
    7. How to Present the Evidence in a Public Entity Fraud or Corruption Case
    8. Conclusion
    9. Notes
  16. Chapter 8: Final Thoughts
    1. Six Symbolic Shapes of Government: Organizational Symphony
    2. Fraud Can Happen at Any Time or Place
    3. Five Categories of Fraud
    4. Why Public Entities' Auditors/Accountants Fail to Detect Fraud
    5. A Simple Fraud Risk Plan for the Public Entity
    6. Fraud and Mismanagement Types, Signs, and Suggested Actions
    7. Risk Overview and Plan
    8. Conclusion
    9. Final Word
    10. Notes
  17. Appendix: Tables
  18. Index
  19. End User License Agreement