2020 Thomson Reuters government fraud,
waste, and abuse report

Government employees: the first line of defense

At the state and local levels of government, fraud/waste prevention and detection is largely the responsibility of program administrators, clerks, assessors, auditors, and other department-level employees. Most of these public servants follow specific policies and procedures to minimize opportunities for malfeasance. In many cases, however, any number of factors—e.g., tight budgets, outdated IT systems, staff attrition, changing regulations, overwhelming workloads, inadequate training—can make it difficult for even the most dedicated civil servants to do their jobs to the best of their ability.

In the survey, 44% of respondents reported that they had “little or no confidence” in the tools and resources available to them to prevent fraudulent activity. 29% said they were “confident” that their tools and resources were sufficient, and 27% reported that they were “very confident” in their agency’s fraud-prevention capabilities.

Though a lack of confidence in agency effectiveness can arise from many sources, it is generally connected to how well people feel they can perform their job duties given the resources available to them. Interestingly, survey respondents had much higher confidence in their agency’s ability to investigate fraud, waste, and abuse than to prevent it in the first place.

Indeed, a higher percentage of respondents (65%) indicated they were “very confident” or “confident” that their department had the tools and resources necessary to conduct investigative activities. Investigative confidence was also higher at the county level, where 75% of respondents said their investigative resources were sufficient.

In search of better searches

In another part of the survey, however, we asked government workers to identify the specific “tools and resources” they relied upon most often for research and investigation. More than half of survey respondents (51%) indicated that the primary “tool” they and their departments use to screen vendors and vet potential contractors is a simple Google™ search. The highest percentage of those who rely on Google searches for this type of information gathering was at the county level, where 69% of respondents said they used Google for screening purposes, and 63% said they used it to search public records and conduct other investigative activities.

While it’s understandable that government employees would use Google or other popular search engines (e.g., Bing®, Yahoo!®) for routine due diligence (they are free, after all, and seem to yield the desired results), it’s worth noting that popular search-engine algorithms only scan a small percentage of the total information available on the internet, so the “results” of any given search can be misleading. If a government employee conducts a Google search to screen a potential vendor, for example, the search may miss financial, legal, and property records contained in databases the engine does not search. Consequently, a basic internet search can fool government officials into thinking they have done their due diligence when they really haven’t.

Additional free information sources survey respondents reported using were Department of Revenue tax records, company references, and Better Business Bureau® records. A small percentage of respondents also use such subscription services as Thomson Reuters CLEAR® investigative solution (20%), PACER (Public Access to Court Electronic Records) (13%), or LexisNexis® Accurint® (7%).

The advantage of a paid service or software product is that it can specifically target information related to fraud, money laundering, civil complaints, criminal judgments, financial malfeasance, or other criminal activity. And unlike Google, which prioritizes “popular” websites and presents its results in a list, such dedicated programs can prioritize financial and legal records, and in some cases can couple that information with proprietary data to which Google does not have access. If suspicious activity is flagged, the results can be presented in a way that allows the user to see the various threads and connections of criminal activity in the historical record.

Tight budgets, limited resources

Such programs cost money, however, and require a marginally higher level of training and technical expertise—two elements that survey respondents admit are in short supply. Indeed, 58% of survey respondents indicated that a lack of resources was one of the most pressing issues their departments faced last year, while half cited staff turnover and loss of institutional knowledge. At the state level, 54% of respondents indicated that adoption and implementation of technology was their next biggest challenge.

Given that technology updates and budget constraints are the top two challenges facing state and local governments, it is perhaps not surprising that roughly two-thirds (68%) of survey respondents reported that they do not use any sort of case-management or integrator solution to organize and manage their operations. In theory, funneling workflows through a case-management system would be more efficient, and free up time to pursue other matters. Many government offices are still upgrading their legacy IT systems, though, and the complexities of coordinating state, county, and city computer networks can be daunting, however desirable it may be in the long run.

Toward better prevention

Of course, the best way to combat fraud, waste, and abuse is to prevent it from happening in the first place. Currently, those we surveyed said they spend approximately one-quarter (24%) of their time on prevention efforts, but would like to spend up to 30% of their time on prevention. Such a shift might seem like a small matter, but prevention is much more cost-effective than investigation, because investigations are typically initiated after the activity in question has already happened. In the case of fraud, that means the suspicious activity, whatever it is—money laundering, embezzlement, billing irregularities, kickbacks, etc.—could have been going on for years. The losses incurred are not necessarily recoverable, either, even if the fraudulent activity is exposed.

Conclusion

The Thomson Reuters Government Fraud, Waste, and Abuse Study surveyed 84 government professionals from states and counties across the country whose job involves prevention, detection, and investigative work.

In general, the study highlighted the trade-offs many state and local government agencies make between the resources available to them to prevent and investigate fraud, waste, and abuse, and the results they must accept given the practical limitations of their department.

Keeping current with technology and managing tight budgets were cited as the top two challenges facing state and county government agencies, followed by the loss of institutional knowledge as older workers retire, and the difficulty of recruiting and training new hires. These and other factors led 44% of survey respondents to reveal that, in their opinion, they did not have the resources they needed for effective fraud prevention.

Budget concerns could also explain why a majority of respondents reported using popular search engines such as Google or Bing as their primary research and investigative tool. While some agencies do rely on free search tools, using them exclusively for such purposes can also mislead investigators into believing they have searched all available records, when they really haven’t. And since fewer than one-third of survey respondents use any sort of specialized software or research platform to screen vendors and contractors, that risk remains higher than it might otherwise be if investigators had a more robust toolkit at their disposal.