Page 71 - Financial Report 2020

PRIVACY AND CIVIL LIBERTIES OVERSIGHT BOARD

FY 2020 Fraud Reduction Act

The Fraud Reduction and Data Analytics Act of 2015 (Pub. L. 114-186, 31 U.S.C. 3321 note),
now incorporated into the PIIA, requires agencies to implement the GAO’s A Framework to
Managing Fraud Risks in Federal Programs. The GAO framework identifies four steps that
agencies should follow: 1) commit to creating an organization that is conductive to manage
fraud risk; 2) assess the fraud risks within the organization; 3) design and implement
controls that reduce risk of fraud; and 4) evaluate and adapt assessment outcomes.
PCLOB’s approach to managing fraud risk starts with a strong tone at the top. This includes
messaging from senior officials regarding the importance of a culture committed to a high
level of integrity and resources dedicated to ensuring that ethics training is provided
annually to all employees. PCLOB leverages its Senior Assessment Team, which consists of
senior executives from divisions/offices throughout PCLOB who oversee the Board’s efforts
to assess, address, and report on identified fraud risks.

PCLOB has established a system of internal controls to support effective and efficient
operations that also helps to mitigate the risk of fraud. Such controls, which overlay formal
policies and procedures, typically deal with factors such as approval and authorization
processes, access restrictions and transaction controls, account reconciliations, and
physical security. These procedures often include the division of responsibilities and
checks and balances to reduce risk. To the extent that these controls affect financial
reporting, they are reviewed and tested by management on an annual basis. While strong
internal controls help to mitigate the risk of fraud, employees are strongly encouraged to
contact the General Counsel or the GAO’s FraudNet hotline should they suspect instances of
fraud.

Analysis of results from testing performed and the overall business environment can lead
to additional training opportunities for which there is a heightened risk of fraud. For
example, PCLOB contracting officer representatives are required to take annual training
around the potential for fraud in the area of procurement.

Management recognizes that the assessment of fraud is an ongoing process and that
mitigation strategies need to change as business processes and the overall environment
evolve.

FY 2020 AGENCY FINANCIAL REPORT 62