Fraud and Error
Typology of Fraud and Error Programs
Appendix - Listing of Control Programs by Type
In the development of this typology, the two main variables selected
for categorizing overpayments are the person(s) responsible for the overpayment
and whether or not the person(s) intended to create an overpayment. The
person(s) who may be responsible for an overpayment are the client himself,
the staff member(s) responsible for the file, and external vendors of goods
and services who receive payment directly from the jurisdiction on behalf
of the client. The following schematic demonstrates the associated types
of fraud and error.
|Responsibility for Overpayment||Intentional Overpayment||
|Client||Client Fraud||Client Error|
|Vendor||Vendor Fraud||Administrative Error|
All of these categories of error and fraud overlap, and it is often
a matter of convenience or legal niceties which determine how a particular
case is labelled. Generally, the overall caseload profile shows a pattern
Programs which are designed to identify, reduce and control levels of
fraud and error, and the contingent overpayments and underpayments, fall
into five categories:
There are a surprisingly large number of jurisdictions who make no attempt to measure the degree of error or fraud that they have within their programs. In these cases, neither the program department itself, nor the related Auditor-General's department, have identified the issue of cost-control through reduction in fraud and error levels as a priority. These jurisdictions also invariably have few, if any, programs for controlling or reducing the level of fraud and error. It is highly unlikely that these jurisdictions are operating an error-free or fraud-free program. However, if fraud and error levels are not routinely measured and identified, there is no public or internal pressure to "solve the problem".
The public sensitivity towards levels of fraud and error in Income Security
programs, coupled with a tight fiscal environment, make it critical that
jurisdictions be able to demonstrate internally and publicly the integrity
of the social assistance programs. Therefore, C. A. MacDonald &
Associates has developed the following typology of fraud and error
control programs to assist jurisdictions which are attempting to improve
their levels of fraud and error in their income security programs.
On request, C. A. MacDonald & Associates will tailor a proposal, based on this typology and creating other tools, techniques and strategies as required, to meet the needs of a specific jurisdiction in addressing fraud and error.
|Publication of fraud convictions.
Clear statement of penalties to clients through pamphlets, posters, etc.
Strong legal wording in client declaration on application form
Public and client awareness of specialized fraud staff
Warning at intake about fraud and penalties
Public announcement of "welfare crackdown"
|Enhanced verification of
Income Assistance ID
Intake in client's home.
Investigation or verification prior to intake
Safe-proofing cheques against counterfeiting
Risk assessment of clients
Postal code checks
"Alerts" on system.
Strict controls on issuing of birth certificates
Intake worker training regarding identification of forged documents
Direct deposit of client payments
Data matches with other jurisdictions
Data matches with other programs
Non-deliverable cheques follow-up
Review of location of cheques cashed.
Review of late cheques cashed.
Periodic data match on outstanding arrest warrants/serving prisoners
Random address verification
Periodic client cheque pickup or delivery
Special constable status for investigators
|Hiring of internal
departmental investigative staff
Investigation of all external reports of program abuse
Advertizing of mechanisms for public reporting of suspected program abuse
Establishment of a Fraud "Hot Line".
Close Liaison with other enforcement systems, eg. police, immigration, etc.
Follow-up on suspicious cases turned up through eligibility reviews or udits
Amnesty period offered to clients who report program abuse
Reduction of benefit levels
Civil recovery procedures
Reimbursement of funds.
Lien on real
Publication of vendor fraud convictions
Clear statement of penalties on vendor payment instruments.
Client declaration or signature required to confirm receipt of goods and services.
Licensing of authorized vendors
Develop close relationship and "presence" with inner city landlords
Duplicate address checks to identify "mail-drops" and kickbacks to landlords
Undercover "sting" operations
Public identification of reporting mechanisms
Follow-up on all reports of suspected vendor abuse
Development of close links with commercial crime police
Loss of license or professional affiliation
Internal publication of identified cases
Clear description of penalties provided to staff
Quality training of staff
Media coverage where criminal prosecution is undertaken
Training of supervisors
Criminal record checks on staff
Risk assessment of procedures
Careful control of cheque/ voucher forms
Staff code of
Random verification of file closure date
Periodic random financial audits
Address check against staff list
Follow-up on all staff, client, and/or public reports of abuse
Termination of services
Expectations for error levels built into performance appraisal system
Staff commitment to quality service
Computer system with built-in edit checks and error
Effective staff training program
"Pre-audit" assessment of every client payment prior to issuance
Supervisor review of a sample of files
"Post-audit" file assessments and audits
Clear, rapid, feedback loop on errors and immediate correction
Client repayment of funds paid in error
No repayment - correction of error only for on-going payments
Client awareness of reporting requirements
Monthly client reporting system for change in circumstances
Sufficient time at intake for thorough explanation from worker
Easy client access to staff/prompt staff response to client inquiries
Client training on program "rules"
"Plain English" program brochures
Translation of program materials into key other languages
Client completed periodic file reviews
Random eligibility and benefit verification process
Data matches to identify unintentional non-reporting of income
Client repayment of error
No repayment - correction of error only for on-going payments