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The Fraud Audit: Responding to the Risk of Fraud in Core Business Systems by Leonard W. Vona

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Chapter 16

Program Management Fraud

When we speak of programs, we are not focused on core business systems per se; rather, we are referring to projects that are not funded through the sale of a product or service, but projects that obtain outside funding via the government, charitable grants, or donations to achieve a specific outcome. These outcomes can be any of a variety of things, from a scientific research study to find a cure for a catastrophic illness or federally legislated programs to provide health care to the indigent and elderly, as with the Medicaid and Medicare programs, respectively; or a not-for-profit charity that provides several programs, each funded from different sources, but all providing services to the elderly such as delivered meals, community center operations, adult daycare, and wellness programs. Typically, these outcomes are of a social benefit. Some of these programs are of a specific duration, while others are renewed on a periodic basis depending on continued funding and the successful management of the program to achieve the desired outcomes. So, you may ask, with such a variety of objectives, funding mechanisms, and organizational configurations, how can there be one-size-fits-all inherent fraud schemes to build our fraud risk structure?

The projects or programs themselves are not the object of our search for fraud; it's the management of the programs. Managers are engaged to operate such programs consistent with their scope and budget. The opportunity ...

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