Findings & Fraud Awareness Corporation for Public Broadcasting - PowerPoint PPT Presentation

Findings & Fraud Awareness Corporation for Public Broadcasting Office of Inspector General 2017 The CPB/OIG was created by Congress in 1988 to promote the efficiency, effectiveness, and integrity of CPB by conducting audits, investigations, and other evaluations of CPB initiatives and operations. To report potential fraud, waste, or abuse in CPB initiatives and operations, please call 800-599-2170 or go to www.cpb.org/oig/contact.php

CPB/OIG Created by Congress in 1988 Reports to CPB Board and to Congress Oversight over CPB initiatives & operations CPB/OIG June 2017 2

Inspector General Act Promote economy, efficiency, effectiveness, and integrity. CPB/OIG June 2017 3

OIG website reports page CPB/OIG June 2017 4

OIG hotline CPB/OIG June 2017 5

Audit engagement letter • Scope of work • Information before entrance conference – chart of accounts – trial balances – cross walk from AFR to general ledger – transaction details for revenues & CPB grant expenditures – access to IPA work papers CPB/OIG June 2017 6

Field work – documentation, interviews, analysis – source docs for revenues, expenses, compliance – delegations of authority – risk assessments & IPA management letters – articles of incorporation & bylaws – accounting manual & org chart CPB/OIG June 2017 7

OIG written products • Preliminary observations – condition, criteria, cause, effect • Draft report – 30 days to respond – Response in final report • Final report – Issued to CPB, Board, Congress – Posted to website w/in 3 days CPB/OIG June 2017 8

Audit resolution • CPB management determination, 180 days • CPB may request additional info • Auditee may appeal decision, 30 days CPB/OIG June 2017 9

Communications Act Compliance 1) Open meetings 2) Open financial records 3) CAB 4) EEO reporting 5) Donor lists & political activities CPB/OIG June 2017 10

Compliance important to Congress Not included in original statute in 1967 Congress added in 1978 Open stations to public scrutiny Foster greater public participation Encourage more diverse staff CPB/OIG June 2017 11

No compliance, no CSG “Funds may not be distributed pursuant to this subsection . . . To the licensee or permittee of any public broadcast station . . .” that does not comply with each of these 5 requirements. CPB/OIG June 2017 12

Compliance important to CPB • Yearly certification by 2 different officials • Subject to False Claims Act • Non-compliance policy • Compliance alerts CPB/OIG June 2017 13

FY17 Radio CSG Certification of Eligibility CPB/OIG June 2017 14

Compliance important to OIG Examined in every station audit 10-year summary report (FY2005-15) 69 licensees 22% rate of noncompliance CPB/OIG June 2017 15

Non Federal Financial Support CPB Financial Reporting Guidelines – reporting NFFS on AFR or FSR – Contributions v. payments – NFFS criteria (recipient, form, source, purpose) – Federal funds – Policy restrictions re certain revenues – Underwriting/in-kind contributions – Indirect administrative support CPB/OIG June 2017 16

Most common NFFS audit findings • In-kind contributions • Exchange transactions • Federal or public broadcasting revenues • Auction/special fundraising costs • Uncollectible underwriting CPB/OIG June 2017 17

Other CPB grants CPB Terms & Conditions for TV, Radio, & Other Media Production Grants • changes to budget need CPB approval • maintain records to permit effective audit – verify all direct, overhead, administrative costs – trace CPB funds to general ledger – disclose total costs & funding & use of CPB funds – support labor costs w/contemporaneous docs. CPB/OIG June 2017 18

Most common other audit findings • Indirect costs not supported • Inaccurate financial reporting • Expenses exceed budgeted line items • Inaccurate reporting of ancillary revenues • No documentation to support labor charges CPB/OIG June 2017 19

CPB/OIG June 2017 20

Vulnerability of nonprofits • Oversight thinner, limited staff • Inadequate financial management resources • Control structures weaker • Supervisors more trusting/mission focused • Lack of board financial oversight expertise • Nonreciprocal transactions (donations) easier to steal CPB/OIG June 2017 21

Impact of fraud Destroys morale public trust public support CPB/OIG June 2017 22

Impact of fraud National Capital Area United Way Revenue $100 $90 $80 $70 $60 Millions $50 $40 $30 $20 $10 $0 2002 2003 CPB/OIG June 2017 23

Most frequent fraud scheme – asset misappropriation revenue & cash receipts/collections purchasing & cash disbursement payroll & employee expense reporting noncash asset misappropriation CPB/OIG June 2017 24

Fraud triangle Opportunity lax controls/oversight, “rubber stamp” approvals Rationalization undercompensated, not treated fairly Pressure personal issues, too much work CPB/OIG June 2017 25

Employee red flags Living beyond means Financial difficulties Too close with vendor Unwilling to share duties CPB/OIG June 2017 26

Organization red flags • Lax tone at the top • Lack of/overriding policies & procedures • Lack of/overriding internal controls • Lack of segregation of duties • No management reviews • No timely reconciliations CPB/OIG June 2017 27

Deterring fraud Threat of detection is one of the most powerful deterrents. CPB/OIG June 2017 28

Deterring fraud Exercise healthy skepticism Establish culture of honesty & integrity Ensure good communication CPB/OIG June 2017 29

Contacting OIG • http://www.cpb.org/oig/contact.php – online complaint form • 202-879-9728 or 800-599-2170 – telephone • 202-879-9699 – fax • oigemail@cpb.org – email • Corporation for Public Broadcasting Office of Inspector General 401 Ninth Street, NW Washington, DC 20004-2129 CPB/OIG June 2017 30