A nationally prominent forensic accounting firm is sounding the alarm about the potential for hundreds of millions of dollars in fraud, waste and abuse from the nearly $150 billion in federal funds slated for public schools. These funds, part of the estimated $900 billion economic stimulus package, would be distributed through the Department of Education directly to state and then local school districts. The Association of Certified Fraud Examiners' 2008 Annual Report to the Nation which estimated that U.S. organizations lose 7% of their annual revenues to fraud. Applying that percentage to the total stimulus package indicates the potential loss to fraud waste and abuse could be as high as $63 billion dollars.
Birmingham, AL (PRWEB) February 6, 2009 -- A nationally prominent forensic accounting firm is sounding the alarm about the potential for hundreds of millions of dollars in fraud, waste and abuse from the nearly $150 billion in federal funds slated for public schools. These funds, part of the estimated $900 billion economic stimulus package, would be distributed through the Department of Education directly to state and then local school districts.
"When you think about all this money coming down to these local school districts, it scared the heck out of everybody. It's like an ATM for thieves," stated Ralph Summerford, president of Forensic/Strategic Solutions. "We know that most of these school districts do not have the controls and safeguards in place to truly prevent fraud and waste from happening."
Summerford cited The Association of Certified Fraud Examiners' 2008 Annual Report to the Nation which estimated that U.S. organizations lose 7% of their annual revenues to fraud. Applying that percentage to the total stimulus package indicates the potential loss to fraud waste and abuse could be as high as $63 billion dollars.
Summerford's firm has recently hired Don Mullinax, a 29-year veteran of conducting complex forensic investigations and former Inspector General of the Los Angeles Unified School District (LAUSD) where he uncovered significant shortcomings in the oversight areas of the district's accounting procedures and business operations.
According to Mullinax, "This huge volume of cash flowing into thousands of ill-prepared and under-staffed school districts will create an unprecedented potential for fraud and waste on a massive scale." While serving with LAUSD, Mullinax released a report that chronicled a series of poor decisions made by the district in construction of one of the nation's pubic schools which ended up costing more than $300 million.
"Without the proper controls and oversight structure in place, this money and the potential for its misuse could be a significant issue for a lot of school districts," Mullinax added.
According to Summerford, Forensic/Strategic Solutions is calling for all school districts to review their accounting polices, procedures, and systems with the following suggestions in mind:
1. Make sure there is a sufficient structure in place to identify, track, and control the huge inflow of cash - many school systems have cut back in accounting and oversight areas due to recent budget cuts which only magnifies the need for more help in this vulnerable area.
2. Start now creating a strategically-focused priority list for how they will spend the money when it arrives - not a "wish list". In some cases there may be a time limit set for action on certain funds and that can prompt hasty and unsound decisions. Get the debate on what your district or system needs over with now before the funds even arrive.
3. Develop reliable mechanisms that provide accountability, transparency, and measure performance in order to understand and follow the money. When this data is analyzed systematically the chances of catching fraud and abuse in its very early stages is much greater.
"Obviously," Summerford stated, "our primary concern is to make sure that these funds which were allocated specifically to help our children, our schools and our communities reach their intended destination. It would be a national tragedy to see billions of dollars in much needed funds fall prey to fraud, waste and abuse."
About Forensic/Strategic Solutions, PC
Forensic/Strategic Solutions, PC, with offices in Los Angeles, CA, Birmingham, AL and Dallas, TX employs financial forensic experts who are trained to look beyond the numbers, calling on many years of experience in investigations, accounting and auditing to see the realities of a company's financial situation. They provide an accounting analysis that becomes the basis for discussion, debate and ultimately dispute resolution, whether in a court of law or other forum.
The experts at Forensic/Strategic Solutions are trained to analyze, interpret, summarize and present complex financial and business related issues in a manner that is both understandable and properly supported. The firm's team is familiar with legal concepts and procedures and understands the implications of multiple issues, including that of substance over form. The experts at Forensic/Strategic Solutions are equipped with the latest in computer equipment, data mining software and forensic computer analysis tools. Additionally, they are qualified to undertake complex assignments, serving as expert witnesses and investigative accountants in areas including fraud, economic damages, financial reporting, business valuation, and financial distress.
For more information on Forensic/Strategic Solutions, PC, visit www.forensicstrategic.com. To speak with any of these financial forensic experts, please contact Ruwena Healy at 205.655.0783.
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[Via Legal / Law]
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