Monday, December 5, 2016

Falsified Timecard Leads to False Claim Against Contractor Employee

We've discussed the importance of maintaining an adequate timekeeping system many times on this blog. Whether using a manual (paper or Excel) or an automated timekeeping system (tons of them out there at nominal cost), the basic requirements are the same; employees record their time at least daily, supervisors, or someone that has first hand knowledge of the employees' activities reviews and signs (manually or electronically) certifying that the hours are accurate, and any changes to original entries are documented. Beyond that, contractors must implement some kind of monitoring process to ensure that employees are adhering to established timekeeping policies and the results of those monitoring activities must be sent to management for corrective action, if any.

Those fundamental requirements seem fairly straight-forward and simple to understand and implement, yet throughout Government contracting, there is a very high rate of noncompliance. Where internal controls are weak, where the contractors' monitoring process is absent or ineffectual, or where there are no consequences for failing to comply with timekeeping policies and procedures, the rate of noncompliance is even higher.

With this in mind, consider the Department of Justice (DoJ) press release from late last week. A federal grand jury charged a contractor employee for falsely representing to her employer that she was working as a security guard at a government facility, when she was actually elsewhere. The indictment alleges that for nearly a year, from September 2015 to August 2016, the employee regularly abandoned her work station and falsely represented to her employer that she had been working as a security guard when she was actually elsewhere. This cost the Government about $40 thousand for work that was not performed.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some late criminal proceeding.

The press release was bereft of details concerning the manner in which the fraud was uncovered and reported. It could have been a result of a whistleblower or perhaps a voluntary disclosure by her employer. It is possible that someone began to notice that the security guard was regularly no where to be found.

The fact that the fraud continued for a full year suggests to us that the employer, the Government contract, had weak internal controls over its timekeeping practices. Someone had to be reviewing and certifying the employee's timecard - certifying that the work had been performed. Also, the company should have been performing its own internal audits of timekeeping practices to ensure compliance. Obviously, its oversight was not as robust as it should have been.

You can read the full DoJ press release here.

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