NCJ Number
81578
Date Published
1981
Length
21 pages
Annotation
The U.S. Assistant Comptroller General discusses the problem of fraud, abuse, and waste in Federal programs and the auditor's role in taking the preventive, investigative and corrective measures to combat this problem.
Abstract
He emphasizes that the auditor's role in reducing Government fraud and corruption can only be seen in tandem with that of the Federal program manager. If the Federal manager does not implement, monitor, and follow up on the system of internal controls, the auditor may still be able to find signs of fraud and recommend system changes, but the era of staggering misuse and abuse of taxpayers' money will not end. Agencies must address the problem of preventing fraud from occurring among people who work inside the computer room. However, Government has no monopoly on fraud, abuse, and mismanagement. Individuals have successfully defrauded the system over the years. In addition, General Accounting Office (GAO) studies have shown that bank failures are caused primarily by the policies used by bank managers. Examiners have criticized the banks' managers for following self-serving loan practices and for maintaining inadequate loan records. GAO's emphasis in dealing with fraud has been on prevention. GAO audits can be effective when allowed to concentrate their efforts on helping design and monitor systems of internal controls. Management must also be responsible for instituting policies and procedures that will prevent irregularities and improprieties and will reward managers for clean records. This policy of prevention has led to the establishment of Inspector General offices across 15 Federal departments and agencies and to the proposal of legislation requiring agencies to report yearly on their systems of internal controls. Other GAO-initiated fraud prevention efforts include a fraud task force and hotline. Case studies, including the Equity Funding scandal of 1973, are cited throughout. No references are included.