PALM BEACH COUNTY AGA Podcast Data Analytics ENHANCING PUBLIC TRUST IN GOVERNMENT Megan Gaillard DIRECTOR OF AUDIT Internal Audit vs Inspector General Internal Audit Inspector General ID: 727228
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OFFICE OF INSPECTOR GENERALPALM BEACH COUNTY
AGA Podcast – Data Analytics
“ENHANCING PUBLIC TRUST IN GOVERNMENT”
Megan Gaillard
DIRECTOR OF AUDITSlide2
Internal Audit vs. Inspector General
Internal Audit
Inspector General
Typically created by the Board or Management
Typically creation
is influenced by External Pressure
Independent, but under Management control to various degrees
Typically more independent with legal/regulatory
authorities/protection
Audit
centric
Audits, investigations, inspections, and more
Standards: “Red Book” and/or
“Yellow Book”
Standards: “Red Book,” “Yellow Book,” “Green Book,” and more
Typically, reports are internal and not publicized
Typically, reports are publicized and available
Results: Mainly performance based and improving
internal controls
Results: Performance based, internal controls, monetary, discipline, arrestsSlide3
Auditing versus InvestigationsAudits
InvestigationsConducted for stakeholdersMay be compulsory or required
Typically red or yellow book standardsEfficiency and EffectivenessControlsAudit Report
Conducted as a request or from “tip”Not compulsoryGreenbook standardsSpecial inquiry or reviewAllegationsInvestigation ReportSlide4
The Palm Beach County
Office of Inspector GeneralSlide5
Palm Beach County
Ethics Movement
2003 –
2010: Arrests/Prosecutions of high level County and City officials.
2009: State Attorney convenes a Grand Jury.
December
2009: County Code of Ethics, Commission on Ethics, and the Office of Inspector General created.Slide6
The Creation of thePalm Beach County OIG
November 2010, by over a
72% majority
, the people of Palm Beach County voted to expand the IG’s jurisdiction over all 38 municipalities (now 39).
The Palm Beach County IG is unique in that the IG
reports to its citizens
.Slide7
PBC OIG’sMission
Our mission is to provide
independent and objective insight, oversight, and foresight in promoting integrity, efficiency, and effectiveness in government
.
Ultimately,
enhancing public trust in government
.Slide8
Jurisdiction/Oversight Responsibilities
Palm Beach County Government, 39 Separate Municipalities, and 2 Special Districts
Civil Service Employees: 14,500 (+)
Combined Budgets: $8 Billion
Contract Value Monitored:
$ BillionsSlide9
Investigate, audit, and review.
Receive full and unrestricted access to records.
Receive Whistleblower complaints.
Obtain sworn statements.
Issue subpoenas.
Make criminal referrals to Law Enforcement Agencies.
Inspector General AuthoritiesSlide10
How Auditors and Investigators Work Together in the
Office of Inspector General
Example #1Slide11
Purchasing Audit – Investigation - Prosecution
1. Planned Audit of City - Purchasing
2. Office of Inspector
General Audit Staff
3. Office of Inspector
General Investigations
Justice is Served
Three Arrested for Organized Scheme to Defraud & Grand Theft
Benefit to Citizens/Government
$158,139 in questionable transactions
$120,630 in other Questioned Costs
4. State Attorney Office
Public Corruption Unit (PCU)
5. Office of Inspector General
Audit Report
Identified
an additional
$48,007
Identified
an additional $28,654
Total of $158,139 in questionable transactions
Identified $81,478
in questionable
transactions
Audit, Investigations, Prosecutor Working TogetherSlide12
Audit, Investigations, Prosecutor Working Together
A
Plant Operator and a Supervisor were identified as owners of a registered City vendor, who caused the City to pay for purchases totaling over
$150,000 for products the City
never
received
.
Three former City employees were arrested
on felony and charged with Organized Scheme to Defraud and Grand Theft.Slide13
The Palm Beach County
Office of Inspector General
Data AnalyticsSlide14
Data analysis is a process of inspecting, cleansing, transforming, and modeling data with the goal of discovering useful information, suggesting conclusions, and supporting decision-making.
Data analysis can be used for many purposes, including fraud detection.
What is Data Analysis?Slide15
Describe the dataCompare groups and test hypotheses. Is the violation rate in group A different from group B (Statistical hypothesis testing)
Identify causal relationships, estimate their strength, and predict outcomes (Multivariate modelling with appropriate identification)Make the best possible predictions given the available data without attempting to understand causation (Machine learning)
Identify the optimal use of resourcesSimulate, predict, and identify uncertainties
Help describe textual information
Analytics can:Slide16
Access data from many sources100% transaction coverageFast to complete for large volumesLimited resourcesHigher rates of detection and preventionActs as a deterrentCan be automated for continuous monitoringQuantifies the impact of fraudPrompt notification of control breakdowns
Benefits of Data AnalyticsSlide17
Prevent FraudDetect FraudProactive Tools = Save MoneyLess Resources
Data Analytics for FraudSlide18
Data AnalyticsSlide19
Risk AssessmentPlanningFieldwork
ReportingOther
Data Analytics - Audit ProcessSlide20
Data Analytics ToolsSlide21
Data Analytics TechniquesBenford’s Law
Round NumbersDuplicatesCost CodesComparison
Gap AnalysisFrequencyAnomalies
Vendor SpendTrendsDescriptive statistics (including outliers)
Models and probability distributions
Network/link analysis
Text analyticsSlide22
Descriptive StatisticsSlide23
Apply filters and sort dataCheck for information gapsLook for duplicate entries
Join and match dataRound-dollar payments
Identify amounts under thresholds (structuring) / split purchasesIdentify unusual dates and times
Data Analytics – Low Lying AreasSlide24
Purchasing CardsEven number expendituresMerchant Codes
Highest spending by userExpenses by vendor
Key word searches (gifts, personal, other)
Data Analytics - ExampleSlide25
Detection through Analytics
Office of Inspector General
Example #2Slide26
Credit Card Audit
Planned Audit of Town – Credit Cards
Data Analytics for Selection
High Risk Transactions
-Key Words
-Separated Employees
Findings
$4,100 gift cards
$1,683 food purchases
$13,601 entertainment tickets
Miami Dolphins tickets
Marlins tickets
Sunday brunch on cruise
$17,903 – 33 tablet devices
Lack of documentation and/or approval
Office of Inspector General
Audit Report
Total of $83,741
in questionable transactions
Audits – Data AnalyticsSlide27
NOT JU5T NUM8ER5Key word searches (gifts, personal, other)Conflict of Interest searches
Addresses, Names, Locations
Data Analytics - ExampleSlide28
PayrollTerminated ghost employeesUnauthorized payroll adjustments
Overtime fraud / false hours reportedExempt employees receiving overtime
Duplicate payroll checks
Data Analytics - ExampleSlide29
Red FlagsSlide30
Data Analytics – Why Not?Slide31
Data Analytics Specialist / PositionTraining and Cross-TrainingSet goals for all audits
Identify Objectives and Align AnalyticsEstablish practices and operations
Inventory Tools and TechniquesKnow Your Data
Quality Control / Quality Assurance
How to StartSlide32
Provide training and toolsIdentify quick winsGet buy in from the top
Develop clear goals Communicate the benefits
Determine what success should be – target goals / KPIsProvide incentives
Data Analytics – Success TipsSlide33
QUESTIONS?
Visit our website at: http://www.pbcgov.com/OIG
Email speaker at:Mgaillard@pbcgov.org