Wednesday, August 9, 2017

Contractor Employee Pleads Guilty to Timecard Fraud

Last December, we reported on a Justice Department announcement that it had indicted a Government contract employee for falsifying her timecard (see Falsified Timecard Leads to False Claim  Against Contractor Employee). Yesterday the Justice Department that the Government contract employee has pled guilty to the charges (see Government Contractor Pleads Guilty To Making False Claims and False Statements).

Our previous post details the crime so we will not repeat the details here. Essentially, the person was a full-time Government employee and also moonlighted as a security guard for a Government contractor at a SCIF (sensitive compartmentalized information facility). While supposedly on duty, she left the premises. The fraud went on for about a year from what the investigators were able to piece together.

The reason we bring this up again is to illustrate the importance of internal controls. Presumably this Government contractor had an adequate accounting system that had been approved by an ACO (administrative contracting officer). Inherent in an adequate accounting system is a timekeeping system that internal controls of its own. So a supervisor had to have been signing off on the employees timecard certifying that the employee had been at work and had charged to the appropriate final cost objective.

So what happened? Where were the internal controls that should have detected and/or prevented this from occurring? Was there a massive failure in the contractor's internal controls over timekeeping? Was there collusion?

Which brings up the question for Government contractors reading this blog. Could this have happened at your facility? How certain are you that your "trusted" employees are at work and/or charging to the proper contract? And we're not referring to the games that contractors play when auditors show up at their facility to perform floorchecks. We're talking about the day-to-day operations when no one is really looking.

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