Governments are taking unprecedented steps to provide much-needed assistance to individuals and businesses in response to the distress caused by COVID-19. For example:
Conducting an assessment and, where necessary, enhancing the controls an organization has in place to manage relief funds is an important first step to effective relief funds management.
It is essential that all relevant personnel (including vendors, suppliers, contractors, and employees, as applicable) receive role-specific training about conduct and expectations relating to relief funds. Open and transparent communication with staff, customers, and regulatory bodies will support a credible compliance culture.
A well-designed and effectively operating control environment relating to procurement of goods and services is critical in the prevention of fraud, waste, and abuse. Effective procurement controls should include a due diligence process for suppliers, vendors, and contractors; and processes to protect the integrity of the supply chain from bribery, corruption, conflicts of interest, and the theft of supplies and resources.
Well-designed and executed financial controls protect the integrity of the accounting and reporting of relief funds and promote management accountability of how the funds are spent.
An effective financial controls environment should include appropriate segregation of duties between procurement, payment processing, record-keeping, and reporting. Inventory, costs, and pricing controls should also be in place to protect against price gouging.
A robust internal audit process, supported by proactive monitoring, data analytics, and automated controls will help identify and remediate any potential anomalies or control weaknesses.
A robust investigations process can help organizations effectively address indicators or allegations of illegal or unethical conduct. Companies should incorporate regular testing, comprehensive reviews, and risk-based analytics to identify, detect, and protect against the mismanagement of relief funds and intentional efforts to circumvent established controls, which can lead to improper and fraudulent payments. These reviews should focus on vendors, suppliers and contractors, beneficiaries of funds, and employees, as applicable.
The public has an expectation to remain informed and that organizations that receive funds will operate with transparency in how they use and manage the funds. Governments are likely to articulate their expectations for detailed reporting on how funds are used.
Additional contributor: David Sabatelle.
Partner, Financial Services
Risk, Regulatory, and Compliance
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