Deloitte released a report recently that warned contractors bidding on Recovery Act funds to be prepared for especially strong transparency and accountability requirements. And a meeting of government accountants this week will help the government enforce of those requirements.
The federal government is appropriating $200 million for inspectors general to provide oversight of stimulus spending. The Government Accounting Office (GAO) is hiring accountants, lawyers, economists and policy analysts to look for fraud and abuse. And the Recovery Act Accountability and Transparency (RAAT) Board is a new set of eyes charged with establishing and maintaining transparency of acquisition processes, fund recipients and fund uses. According to Deloitte, this translates into a web of potential trip wires and pitfalls for even the most experienced of government contractors.
The point of view document, authored by Deloitte Financial Advisory Services Partner Donna Epps, focuses on two federal statutes: the False Claims Act and U.S. Code Title 18, Section 1001, which criminalizes false statements. The False Claims Act (FCA), and recent additions to that family of legislation, is a volatile tool for the Department of Justice, the report shows.
“False claims fall into three categories,” the point of view document says, “those that are intentionally false, those made with deliberate indifference to the truth or falsity of the claim, and those made with reckless disregard for the truth.”
And the penalties of violating FCA are stiff:
The FCA mandates the awarding of treble damages and penalties of up to $11,000 per violation. These costs can add up quickly. A $100 overcharge spread over 1,000 invoices – 10 cents per invoice – could result in $300 in damages and $11 million in penalties. In addition, defendants can be required to pay plaintiff attorneys’ fees and face potential suspension and debarment from government contracting.
“Investing time, effort, and resources today to establish and improve risk management and compliance processes and controls can help companies mitigate potentially catastrophic problems later,” the document concludes.
Deloitte’s point of view document sits as a backdrop to the Association of Government Accountants’ (AGA’s) 4th Annual Internal Control and Fraud Conference, which Deloitte is a platinum sponsor.
According to the AGA, the conference features an impressive line-up of speakers that will share best practices, leadership secrets, and the knowledge governments need to become more effective. Speakers include RAAT Board chairman Earl Devaney, Troubled Asset Relief Program (TARP) Special Inspector General Neil Barofsky, and G. Edward DeSeve, Special Advisor to the U.S. Office of Management and Budget Director for Implementation of the Recovery Act.
The conference began Wednesday and concludes today in Washington, D.C.