Contract and procurement fraud
Labour costs can be inflated by various means, including
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- Common red flags of labour cost mischarging schemes include
| Labour costs can be inflated by various means, including:
Reporting inflated salaries and consulting fees Using outdated salary and fee schedules Charging lower rate personnel at higher rates Failing to account for learning-curve cost reductions Transferring labour costs from fixed-price contracts to cost-type contracts Falsifying the labour distribution Billing for the type of service performed rather than the actual employee hours spent performing the work Billing for employees’ expenses that were not incurred Fictitious time cards Altering time cards Common red flags of labour cost mischarging schemes include: Billings not in line with estimates Excessive or unusual labour charges Sudden, significant shifts in labour charge levels Labour charges inconsistent with contract progress Vague or minimal education, credential, and experience qualification requirements for labour hour contract positions Procuring entity personnel do not review or challenge qualifications of key contractor employees Contractor has high employee turnover rate among procurement personnel Contractor must hire large numbers of personnel quickly Contractor personnel rarely take vacation Significant increases in charges to overhead accounts (e.g., idle time, down time, and non-applied time) Contractor has a mix of cost-type and fixed-price contracts Increased labour hours with no corresponding increases in material used or units shipped Actual hours and dollars consistently at or near budgeted amounts Labour standards not updated after contractor improves its manufacturing technology Unavailable supporting documentation for proposed standards Lost personnel files No audit trail to verify propriety of labour charges Weak internal controls that provide numerous opportunities to adjust labour charges Download 0.62 Mb. Share with your friends:
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