Suggested solutions to Case 1
- Elements of the fraud triangle present include the following:
- There is pressure on location directors to maintain or increase program quality with decreasing funds
- Opportunity exists at the four offsite locations due to limited staff and oversight
- Location directors believe the VPO doesn’t understand the difficulties they face, which could lead to rationalization of fraudulent transactions
- Additional procedures that could have been in place to ensure compliance with program requirements, include the following:
- Review of application files by someone at the administrative office
- Confirmation of family income using external data bases
- Surprise visits by the VPO to observe activity during drop off and pick up hours
- Keep all family files at the administrative office, if in paper form, or limit access to electronic files
- Periodic review of the waiting list activity and dates of activity
- Missing or inadequate internal controls include the following:
- Lacking controls at locations
- Limited supervision of location directors who are in a position to perpetrate fraud due to limited or missing controls
- Over-reliance by administrative office leadership on location directors
- Lack of central oversight or control of program activities and transactions
- Preliminary audit procedures might include the following:
- Assessment of locations for potential material fraud
- Review of controls at all locations
- Inquiry of selected location personnel at ...
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