Essential Insights on Combatting Fraud in Grant Management
By Iván González, CPA, CFE and Rebecca Silva, CGMS, Falcón Sánchez & Associates

In our May 2024 collaborative webinar with the National Grants Management Association (NGMA), we, experts from Falcón-Sánchez & Associates, along with Joseph González, Special Agent in Charge of the San Juan Field Office of the Federal Bureau of Investigation (FBI), shared critical insights into the complex world of fraud within government, organizational structures, and grant management. Below are the key takeaways from each category discussed during the session:
 
Understanding Government Fraud
Government fraud involves intentional acts designed to deprive the government of funds through deception or other unfair means. This type of fraud is not only harmful to government entities but also to taxpayers and beneficiaries of government programs. Key red flags include large, unexplained expenditures, sudden changes in vendor lists without clear justification, and discrepancies in financial statements compared to previous fiscal periods.
 
Organizational Fraud: Internal and External Dynamics
Organizational fraud, or occupational fraud, occurs when employees, managers, or executives deceive their organizations. This can manifest as embezzlement, theft of assets, or manipulation of data. External organizational fraud involves entities outside the organization, like vendors or contractors, manipulating processes to divert funds. Critical red flags to watch for include inconsistencies in inventory records, unusual financial transactions without adequate documentation, and conflicts of interest among staff or with external partners.
 
Grant Fraud: Misuse of Allocated Funds
Grant fraud is defined by the misuse of grant funds in ways not consistent with the grant's objectives. This often involves falsifying needs assessments, inflating costs, or misreporting the scope of funded projects. Important red flags include rapid depletion of grant funds, mismatch between reported activities and observed outcomes, and irregularities in grant reporting timelines and formats.
 
The Role of Certified Fraud Examiners (CFEs)
Certified Fraud Examiners (CFEs) play a pivotal role in enhancing an organization's anti-fraud efforts. With specialized knowledge and training, CFEs help organizations establish comprehensive anti-fraud programs, perform thorough risk assessments, and ensure strong internal controls are in place. Their expertise is crucial in not only detecting and preventing fraud but also in fostering a culture of transparency and accountability.
 
Understanding the types of fraud and recognizing the red flags are fundamental steps in safeguarding your organization against potential financial and reputational harm. The insights we provided are geared towards empowering professionals with the knowledge to identify and combat fraud effectively.
 
Remember, combating fraud is a continuous effort that requires vigilance, education, and the right expertise. Engaging experts and training your teams are essential steps in building a resilient anti-fraud strategy.

 
Iván González, CPA, CFE and Rebecca Silva, CGMS are senior managers at Falcón Sánchez & Associates, a CPA and consulting firm in Guaynabo, Puerto Rico.

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Did you miss this live webinar presentation? (Identifying Fraud and Key Red Flags in
Grant Awards and the Role of Certified Fraud Examiners in Your Anti-Fraud Program)
View the recording HERE. (Member login required)