investigating allegations of noncompliance and/or misuse of funds in the cacfp & sfsp how the...

2012 CACFP National Professional Association Conference- Austin Texas

Investigating Allegations of Noncompliance and/or Misuse of

Funds in the CACFP & SFSP

How the Investigation Affects the Administrative Hearing

MH Miles Company, CPA PC

• Full service CPA firm

• Corporate Office in Decatur, GA

• Satellite office in Richmond, VA

• MHM Financial Services - Washington DC



Specialize in Compliance

FEDERAL• Nutrition • Transportation• Equal Opportunity/ Civil Rights

STATE Prekindergarten


Nutrition – CACFP & SFSP• State Agencies– Complaint Investigations– Fraud Investigations– Agreed-upon Procedure Reviews– Staff Augmentation – Policy & Procedure Development– Internal/External Audit Services– Budget Reviews– VCA Analysis


Nutrition – CACFP & SFSP

• Sponsors– OMB Circular A-133 audits– Management Studies– Programmatic Audits– Compliance Monitoring– Management Plan Evaluation– Policy & Procedure Development– Accounting System Set-up


Objectives

• Documenting the Complaint/Allegation• Assessing the allegation(s) • Planning the engagement• Fieldwork• Techniques for Investigating Common

Schemes• Reporting• Affects on the Administrative Hearing Process


Looking at the Big Picture

http://www.bing.com/images/search?q=beach+pictures&view=detail&id=63C7AC67BAA0F9663D3A2B926DBFB1D3B5727C46&first=0&FORM=IDFRIR


Who files Complaints?

Whistleblowers


WHISTLEBLOWERSProgram Beneficiaries

Parents/GuardiansCaregivers

EmployeesAgencySub-recipients

General PublicVendors



Documenting the Complaint/Allegation


Documentation ProcessCapture Pertinent Information

• Who received the complaint• Date Received• How the complaint was received– Written

• Email• Letter

– Recorded• Voicemail

– Live• Telephone call• Interview in person

• Does complainant want to remain anonymous?


Documentation ProcessDocumenting the actual complaint• Written or Recorded– Verbatim

• Live / complainant doesn’t want to be anonymous– Verbatim– Clarity


Helpful Words & Phrases

I understand………

What would happen when…?

THANK YOU

IF ANYTHING ELSE COMES TO MIND…

REALLY?


Organizing the Information

What is being communicated• What is actually being said?• Supporting documentation

available?• Keep the complainant on

track

Side bar thoughts• What they didn’t say…..• What other areas are

impacted?• Follow-up questions


Documentation Process

• Compiling the information–Assign a tracking number–Categorizing the Complaint


Documentation Process

C 2012-06178-01 - A

Complaint

Year

Identifying Number

Sequence in the year

Complaint Category


Assessing the Allegation(s)

• Group allegation(s) in bite size subcategories 1st on face value then by noncompliance

• Additional Observations

• Committee for feedback

• Next Steps


USDA OIG Complaint Hotline Categories

Participant FraudWaste Management

Employee MisconductBriberyReprisal

Health & SafetyOpinion & Information

National intake-point for reports from both employees and the general public of suspected incidents of fraud, waste,

mismanagement, and abuse in USDA programs and operations.


FY2010 – FY2011USDA-OIG Semiannual Report to Congress

FY2010 1st Half FY2010 2nd Half FY2011 1st Half FY2011 2nd Half

Participant Fraud 780 1,090 931 969

Waste Management 108 165 207 259

Employee Misconduct 183 204 177 172

Bribery 1 1 3 -

Reprisal 1 2 2 4

Health & Safety 25 51 41 31

Opinion & Information 127 198 131 116

Total Complaints 1,225 1,711 1,492 1,551


Participant Fraud

Waste Manage-ment

Employee Mis-conduct

Bribery Reprisal Health & Safety Opinion & In-formation

FY2010 1870 273 387 2 3 76 325

FY2011 1900 466 349 3 6 72 247

100

300

500

700

900

1,100

1,300

1,500

1,700

1,900

FY2010

FY2011

USDA-OIG FY'10 & FY'11

TOTA

L CO

MPL

AIN

TS


Planning the Engagement

Investigation Review Plan• Review Tools• Staffing Considerations• Scope– Determine Necessary Documents– Develop Interview List

• Fieldwork- Action Plan• Timeline


Review Tools

• Review Reports & Management Plan• Interviews• Observations• Program Documentation• Independent Research• Supplies


Staffing Considerations

• Specific Experience

• Independent

• Coverage & Resources


Scope & Timeline

• Clear & Concise• Regulatory Compliance• Subject to Change• Documentation for Review• Interview List• Develop an initial timeline


Action Plan

•Start Big

• Drill Down


Fieldwork

• Entrance Conference

• Document Request

• Tour


Interviews & Observations

Interview Methodology:• Telephone Interview– Quick– No Travel– Record• Ability to record (State)• Less intimidating

• In-person Interview– Observe reactions to questions

• Questionnaire


Interview Objectives

• Gather information related to the allegations

• Identify possible “leads” to support/refute allegations


Interview Techniques• Develop an Interview Plan• Start with easy questions– Build rapport– Relax

• Identify relationships• Be prepared• Private/Confidential• Choose your words wisely


Interview Techniques

• Observe body language• Pose open & close ended questions• LISTEN– What is said– What is not said

• Take Notes- not dictation• Show documentation where applicable


Red Flags

• Information changes

• No eye contact

• Long pauses


Document Analysis Techniques

• Horizontal & Vertical Analysis of Information• Signatures• Dates & Times• Transactions• Formatting• Verifying item codes


Techniques for Common Program Schemes

Inflated Meal Counts• Assess knowledge of sponsored facilities• Confirm affiliated/unaffiliated sites• Flux analysis of meals by type/site• Observe behavior



Inflated Meal Counts• Open Sites- #of meals delivered = # of meals

served 100%• Simultaneous Reviews (open site & central

kitchen)• Arrive early & engage participants• Observe behavior• Test Leftover meal practice



Falsified labor documentation– Review standardized forms by individual– Record transaction number by vendor/date/total– Be familiar with other programs

Duplication of Costs– Record transaction number by vendor/date/total– Be familiar with other programs

Other Unallowable Costs– Cost of Ownership between organizations under

common control


Reporting

• Status Reports• Draft Report• Final Report– Findings of noncompliance– Recommendations for oversight


Administrative Hearing

• Methodology and Results are relied upon to determine how to move forward

• Notes and emails related to investigation may be requested

• Weakest Evidence is anything than can be contradicted

• Anyone who has touched the investigation is a potential witness


Ideal Witness

• Education/Training/ Experience in the area• Knowledge of the investigation• Testified in other cases & courts have relied on

information presented• 13 Tips


Questions

Cherese Myree, CFEVice President, MH Miles Company, CPA PC

(404) [email protected]



Thank You!

investigating allegations of noncompliance and/or misuse of funds in the cacfp & sfsp how the...

Documents

documentation process

actual complaint

complaint date

administrative hearing

documentation available

pertinent information

anonymous verbatim clarity

cpa pc