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Taking care of business

Does Your Agency Have An Issue With Employee Fraud?

Feb 05 2016

Brian Scott Orr is a name that government agency officials should know — that is, if they want to prevent employee fraud.

Orr was a former employee at the United States Air Force Research Laboratory in Rome, N.Y., from 2009 to 2011. In late 2014, he was handed a three-year prison sentence for providing sensitive information about a government-owned satellite network to an agent working for the People’s Republic of China.

Even though he had a top-secret security clearance and was heavily involved with ultra-sensitive data linked to a vital Air Force network that managed military satellites, he sold classified government information to a foreign agent.

Orr is a clear outlier. Most government agencies are comprised of hard-working, ethically minded individuals who chose a life of public service for a reason — they want to help people and make a living doing so.

But no agency is immune from the growing threat of fraud and theft, and even if your office seems to be above board (and probably is) and actively working on fraud prevention, it’s good policy to recognize the warning signs linked to employee fraud.

Fraud and theft in the workplace is a legitimate problem. Experts estimate that employee fraud can happen in any company or public agency and can take 3-5% out of bottom-line budgets.

Employee fraud examples include fraudulent financial reporting, fictitious or ghost vendors and employees, bribes, kickbacks, credit card and check fraud, and also theft, as in the case of Orr. It usually occurs over a long period of time and is exposed accidentally or by a whistleblower. The more access to information and assets, it seems, the more expensive the internal fraud, and the more for government managers to worry about fraud prevention.

The key for government managers is to handle the issue by involving everyone in the agency from the top down to create a positive culture of high ethics and integrity, along with an anti-fraud program. Consider implementing some or all of the following fraud prevention suggestions: 

1. Get ahead of the problem early on

No fraud prevention plan is foolproof, as the Air Force found out with Orr. But you can work towards nipping fraud and theft in the bud by hiring the right government employee. Conduct a vigilant background check and check all of a potential hire’s personal records, and vet the applicant with as many previous employers as possible. In addition, check law enforcement records. This is especially crucial if the employee has access to cash, currencies, credit cards or classified data.

2. Be vocal about policy and procedures

Your agency may already have good fraud-prevention policies in place, and that’s a great start. But data shows that employees who are knowledgeable of current anti-fraud and theft programs are less likely to try and skirt around those policies.

3. Keep things positive

Education and training initiatives geared to make staffers aware of fraud should be team-based and non-accusatory. Help everyone understand that the problem of employee fraud is an issue that impacts the entire agency. This can help you build a more positive anti-fraud theme that improves morale, increases teamwork, and boosts productivity — and gives you vigilant staffers, as well.

4. Some other fraud prevention tips

Observe and track any marked discrepancies when employees are away on vacation or out on personal or sick leave — that’s often when the people filling in for the absentee uncover many fraud cases. Also be aware of any employees experiencing substance abuse, which can lead to uncertain behavior. 

In the spirit of positive accountability, make sure all agency high-end officials are held to the same policies as staff members. That feeds into a culture of partnerships, where the entire agency is in it together.

Hopefully you’ll go your entire career without having to experience financial or data fraud on your watch. But be vigilant anyway — it’s your best bet to protect taxpayer assets on a long-term basis.


Brian O’Connell is a writer with 15 years' experience covering the intersection of government, business and technology. A former Wall Street bond trader, he has written for dozens of top-tier national publications, including TIME, MSN Money, Forbes, The Wall Street Journal, CNBC, The and CBS Marketwatch.

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