Wednesday, August 21, 2013

Tips Outweigh All Others In Fraud Detection

by Gary Snyder

According to the Association of Certified Fraud Examiners, employee tips are the most common method of fraud detection since 2002. According to the ACFE's 2012 Report to the Nations on Occupational Fraud and Abuse, tips led to the initial detection of fraud in 43 percent of the 1,388 cases of worldwide occupational fraud reviewed in the study. Management review and internal audit ranked as a distant second and third, noted the report.

Whistleblowers are becoming an increasingly powerful weapon against healthcare fraud, and as predicted back in January, the industry saw more whistleblower lawsuits this year, especially as states looked to qui tam settlements to pad their tight budgets, The Wall Street Journal reported.

Nonetheless, nearly half of the victim organizations studied for the report did not have fraud hotlines in place at the time of the crime, and fewer than 10 percent offered rewards to whistleblowers. "These low rates indicate that many organizations might not yet realize the importance of proactive efforts to support and encourage tips in order to effectively detect fraud," noted the report.

In addition to facilitating employee tips, the ACFE said that organizations should provide fraud-awareness training for employees and managers, the Society for Human Resource Management reported. At a minimum, these programs should include education of what actions constitute fraud, how fraud harms everyone in the organization and how to report suspicious activity. Management should not only encourage reporting but also adhere to a strong anti-retaliation policy.

Last year, the DOJ recouped nearly $3 billion in healthcare fraud recoveries under the False Claims Act for the first time in a single year, shattering previous records by more than $1.7 billion. (source)

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News,, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter,, CORP! Magazine, Crain’s Michigan Nonprofit,, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner,, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today,, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization),, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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