Typology ofFraud and ErrorControl Programs |
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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 |
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Client | Client Fraud | Client Error |
Vendor | Vendor Fraud | Administrative Error |
Staff | Staff Fraud |
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
as follows:
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.
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CLIENT FRAUD |
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" Public program
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Enhanced verification of
need requirements
Photo ID Digitized/ scanned
Income Assistance ID Point-of-sale
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 |
Fraud "Profiling"
Random Eligibility
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 |
Case Closure
Reduction of benefit levels Criminal prosecution Civil recovery procedures Reimbursement of funds. Administrative
Tax-intercept
Interprovincial/
Lien on real
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VENDOR FRAUD |
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 Monitoring by
Develop close relationship and "presence" with inner city landlords |
Duplicate address checks to identify "mail-drops" and kickbacks to landlords Undercover "sting" operations Random client
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Public identification of reporting mechanisms Follow-up on all reports of suspected vendor abuse Development of close links with commercial crime police
units/better
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Recovery of
Vendor "blacklist" Loss of license or professional affiliation |
STAFF FRAUD |
DETERRENCE
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 |
Separation of
Criminal record checks on staff Risk assessment of procedures Careful control of cheque/ voucher forms Staff rotation
Staff code of
Adequate
Computer security |
Fraud "Profiling" 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 Criminal prosecution Restitution |
ADMINISTRATIVE
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DETERRENCE
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 Program simplification Appropriate
standards |
"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 Internal or
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CLIENT ERROR |
DETERRENCE
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 |
Annual reports |
Client repayment of error No repayment - correction of error only for on-going payments |