ANATOMY OF A CHILDCARE FRAUD

Until this month, my only successful prosecution of a childcare provider for fraud in Pinellas County (with the assistance of the Florida Department of Law Enforcement) was back in 2004 in the amount of $6,777.71. Since then, fraud hasn’t been on the top of the priority list when it came to reimbursing childcare providers for services they provided to the children in our surrounding counties. I just recently have been summoned by our local coalition to utilize my strengths and attributes as a CFE in fighting fraud within the doors of my agency. Hallelujah - what a relief! Finally, just as all things must eventually change so must the supposition that everyone in Pinellas County was honest.

In my most recent conquest (I like that word) I hope to recover $5,319.92. It may not seem like a large amount of recovery, but in a small childcare business it does affect the small business owner heavily. Since this case is still working through the FDLE, the details will have to be masked for security reasons but you can still get an idea of what goes on in cases such as these.

Basically most childcare sites operate similarly and serve children using the same approved financial documentation and forms. Each provider must submit these forms to my agency monthly. Once submitted, they are reviewed for accuracy and compared with information that is contained in a state database. Attendance forms must contain specific information and comply with guidelines in order to be approved for payment. These forms are:

Step 1 – Parent/Provider

Let’s say for instance that your child attends a site and you drop him off at 7:00 am. The site has you sign your child in each day (Parent daily sign-in/out form) by writing the time you drop off your child and writing your name or initials on the form. When you pick up your child at the end of the day, i.e., 5:00 pm, you repeat this process only using the evening time. This works great as long as you do your part.

Step 2 – Provider

The provider must now enter the attendance of each child on the State approved attendance form that has been mailed to them by my organization in advance. It is recommended that the provider do this by comparing the Parent daily sign-in/out form. This process is completed each month.

Step 3 – Provider

Next the provider repeats this process for all children in care, completes any excessive absence forms (these are necessary for those children who have exceeded the normal absent policy guidelines and are requesting additional payment for excessive absences) and parent or other absent notes to accompany the other attendance forms. All these forms must be sent in to my office by a specific date in order to be processed for payment.

Step 4 – Organization

Once my team has completed all reviews, the documents can be completed for payment. Simple and sweet.

Step 5 – Audit Team

Here is where your audit team is most valuable and the consequences of trivializing that value will be detrimental to the organizational structure in the long run if ignored. Here’s what usually happens. You may have a very small audit team, say for instance one or two people – that’s what we had here. They may audit a small sampling with minimal findings. This leads to assumptions that there might be very little fraud occurrence due to the fact that the random sampling indicated a small overall percentage in our area of fraud cases. When in fact this might not be the case at all!

The audit team may audit a few providers but doesn’t audit all providers every month. Let’s say the above provider is one of those providers that do not get audited for at least six months and see how this affects their payments.

Let me outline what happens in the above case. This is a typical situational case. You are the parent and you no longer attend this provider’s site. You left two months ago and told the provider you were leaving but didn’t tell anyone at my organization. Now, the provider does not report this either to my organization and keeps writing your child on their attendance sheet for payment. They submit the attendance each month for the next six months requesting payment for your child. One day my auditor physically goes out to the provider’s site and reviews the sign-in/out sheet that you the parent were supposed to be writing the time of day that your child came to care each day. If you weren’t there then there shouldn’t be a time of day or a signature next to the date. Well, two things could happen.

1: there could be a time in/out with a signature or,
2: there could be nothing on the line – no time in or out and not signature

If there is a time in/out with the signature we would not question that the signature is that of the parent since we have no way of knowing at this time that the parent is no longer in care. If there is no signature and we question them on this fact, then sometimes the provider will tell us that the child has not been in their care. If they do this we can then recuperate any disallowed funds for which they were paid. This is not always the case and sometime we can only recoup funds for the immediate month.

We are often notified after the fact by the parent that they are no longer in the care of a provider and that they have been gone for a specific amount of time. Often parents will call when they need childcare services again and need assistance. At this time, we can then obtain additional information from the parents supporting their statements of non-attendance. This would be extremely helpful in the case mentioned above if this parent came to us and mentioned that she left six months earlier. We can request employment records, school attendance records, and other supporting documents that would help prove that the child could not have been in the child care site during the dates that the provider had claimed attendance. In certain cases, we gather notarized statements from parents, physicians, other childcare providers, etc. who can attest to the attendance of a specific child. This is helpful when we are trying to provide proof that a child was not in the care of someone else.

Step 6 – Reporting the Findings

The final reporting is still a work in progress. As with change, it isn’t always easy and people don’t always change easily even though they might want the changes that they suggest. So, if this sounds confusing, it is! I started out writing a formal Examination Report with background information, evidence, summaries, findings, recommendations, etc, etc. I was AWESOME! Well, so I thought. Needless to say, the final product ended up in an email - a few paragraphs written so as not to offend or bring too much attention to finding problems.

Regardless of the outcomes of the findings, the fact is that the fraud is still there. You can try to hide it, you can paint it over with pretty colors, but the beast is beneath it all no matter how you try to disguise the lie. Fraud cannot hide and as long as we never give up the battle and we continue to persevere through it all, we will continue to grow. I know that I won’t give up, no matter how many “emails” I have to write. If that is how I have to be successful in accomplishing my goal of fighting fraud, then emailing away I go….

ACFE
The Denial of Fraud and the Consequences and Cost of Ignoring it's Existence

Author

Judith A. Botham, MBA, CFE
2010-2011, Director Tampa Bay Chapter ACFE
Coordinated Childcare of Pinellas, Inc.

Drs. Lynn Clements and Gary Cook named as Winners of the 2009 Writing Excellence Award

The FICPA Editorial Committee named Drs. Clements and Cook the honor for their Web Digest article "A CPA's Investigation of Fraud", which was published in the July/August 2009 Florida CPA today. 

Laura Krueger Brock named as Finalist in the 2010 Women of Distinction Awards

Laura Krueger Brock of Kirkland, Russ, Murphy & Tapp, PA in St. Petersburg was named a finalist in the Business Women of the Year category in the 2010 Women of Distinction Awards.  The St. Petersburg Area Chamber of Commerce Women's Council presents the awards, honoring outstanding women in business and volunteerism in Pinellas County. 

New Chapter Website

The new Chapter website is currently under construction and will be launched soon.  The new site will have room for your articles and presentations, a members section and convenient submission buttons for your community events and achievements.  Click here for a sneak peak.

Next Dinner Meeting will be in September, 2010

Dates still have to be finalized but our next dinner meeting will be in September.  Meeting dates will be posted on the website and emailed to members as soon as they have been confirmed.  Membership renewal notices were mailed out during July and the updated membership form is available on the website here.  Please encourage your colleagues to become involved with our Chapter together we are stronger in the fight against Fraud.

Call for Speakers 2010 - 2011

We are always on the lookout for new and informative sources of information for our members so please help us bring you the topics you want to hear about.  If you or someone you know would like to present at one of our dinner meetings or our annual seminar please email Christine Dever at cdcfe1@verizon.net with details of the presentation.

CFE Exam Prep Study Group

Our CFE Exam Prep Study Group is going strong with participants attending the weekly three-hour session. The Group meets every Tuesday (except on dinner meeting nights) at 6pm at the Fifth Third Bank on Kennedy Blvd, which is close to the Westshore Blvd intersection. The Group is facilitated by two distinguished CFE members, Pamela Rainey and Consuelo Herrera who volunteer their time each week. If you are interested in joining us, contact Consuelo Herrera at Consuelo.Herrera@contactft.com or at the chapter email address tampacfe@tampabaycfe.org.

The sessions are open to anyone, member or not, who is interested in pursuing the CFE designation. We systematically cover all four-parts of the exam, through presentations, discussion, and reviews of exam questions and answers.  

NEWS FROM ACFE INTERNATIONAL

Ft. Lauderdale, FL - Healthcare Fraud - 09/10

This two-day, instructor-led course is designed for anti-fraud and audit professionals who work in the payer, provider, vendor and employer benefit areas or advise clients who operate within the healthcare continuum. Get the targeted training you need to keep up with the latest fraud schemes and related laws affecting this highly complex profession.

Fraud Magazine Site

Fraud-Magazine.com, a site dedicated to the ACFE's flagship publication highlights stories appearing in the magazine but also includes features such as exclusive, web-only content, videos, archives and more. It is packed with all the insight and cutting-edge information you've come to expect from the print edition.

Click here to visit the site

ACFE Job Board

Visit the ACFE Job Board regularly for up to date postings.  There are multiple listing from all around the globe.  Click here to log in and view the current postings.

Free Archived Webinars For Members

• The Plague of Spreadsheet Fraud and How to Address It New!

• The Top Ten Business Drivers in Financial Crimes Management

• Utilizing Analytics for Enterprise Case Management

• Leveraging the Power of Your Data to Uncover Fraud

FRAUD NEWS AND TRAINING

FBI: Tampa has highest concentration of mortgage fraud nationally

Tampa leads the nation in pending investigations for mortgage fraud, according to a new report released by the FBI.

The study showed that Tampa had 190 pending FBI cases in fiscal 2009, ahead of Los Angeles (176), New York (163) and Detroit (134). That marked a 363 percent increase in mortgage fraud investigations, behind only Portland, Ore., which had a 465 percent jump.

ISACA Training Week

AssetRecoveryWatch.com

HTCIA International Training Conference & Expo September 20-22, 2010

DFI News Summer Free Webinar Series
 

PRESIDENT'S MESSAGE

Good day everyone!

I hope that you all are enjoying your summer with your family and friends, but finding a way to keep cool!

I went to the ACFE Conference in Washington DC last week. I represented the chapter as a Foundation Board member and in the Chapter Leader meeting as well. The conference provided many opportunities to show what an amazing chapter we have and share ideas with other chapters from around the world. Each year the Chapter Leaders meet for 3 hours to discuss the challenges the world is facing with fraud and how the Chapters can assist in the fight against fraud. Our Chapter donated two seats at our two day seminar for the silent auction for the Ritchie-Jennings Memorial Scholarship Foundation.  Click here to learn more.

The Board met in mid July to discuss the upcoming year. As part of increasing our leadership organization we have created a chapter manual for the board as well as manuals for our committees. The committees each have a mission, duties, and goals for the current year. We will be posting the committee information on the updated website for you to view and volunteer. We hope that by seeing more detailed information it will entice you to volunteer for an area that sparks your interest. The more that you get involved the stronger we are!

We are in the process of finalizing the location for the dinner meetings and the seminar. The goal is to have them all at the same location. Our dinner meetings are beginning to fill up with speakers; however, we always have room for more. The seminar is almost completely booked. Dinner meeting location and speaker information will be posted soon on the website with the seminar to follow shortly thereafter. We will continue to subsidize the meetings, but ask that you please make sure to follow the reservation guidelines as we must guarantee the reservations. Our goal is to provide you the best CPE, with quality speakers, in the most cost effective manner as possible.

We look forward to seeing you at the next dinner meeting in September to start our new season. Please stay tuned to our webpage as many changes are coming soon!

Wishing you all the best!
 

Christine Dever, CPA/CFF, CFE
                                                                                  President, Tampa Bay Chapter - ACFE

2010-2011 TAMPA BAY ACFE CHAPTER BOARD

PRESIDENT

VICE PRESIDENT

SECRETARY

TREASURER

Christine Dever, CPA/CFF, CFE
City of Tampa
(813) 274-7166

Sharon M. Shaw, CFE
OAG Statewide Prosecution
Tel: (813) 287-7960

Ellen Wilcox, CFE
Florida Department of Law Enforcement
(813) 878-7893

Laura Krueger Brock, CPA/CFF, CFE, CVA
Kirkland, Russ, Murphy & Tapp, P.A.
(727) 572-1400

TRAINING DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR