Grant Fraud is an issue that you, as a grant seeker, need to be aware of. Grant fraud happens when the money appropriated for a grant is misused due often to conflicts of interest, lying or failing to properly support the use of funds, and outright theft. This set of slides, prepared by the United States Department of Justice, outline how grant fraud can occur by outlining what constitutes a conflict of interest, “lying” and theft of funds appropriated for specific purposes. This is something to be particularly aware of if you are applying for federal grants, as it is taxpayer money that must be accounted for. There are people who investigate grant fraud and these cases are tried in federal courts with penalties, such as prison time or steep fines that may exceed the award of the grant that has been taken fraudulently.
If you are uncertain of whether or not you might be viable to commit grant fraud, your risk can be mitigated by following these steps:
- Examine your operations to determine your fraud vulnerabilities.
- Implement specific fraud prevention strategies including educating others about the risks–the more people are aware of the issues, the more they can help prevent problems or detect them as early as possible.
- Maintain a well designed and tested system of internal controls.
- Ensure all financial or other certifications and progress reports are adequately supported with appropriate documentation and evidence.
- Identify any potential conflicts of interest issues and disclose them to the granting agency for specific guidance and advice.
- Follow a fair and transparent procurement process especially when utilizing consultants.
- Ensure the rate of pay is reasonable and justifiable and that the work product is well-defined and documented