What do fraud, Millennials and data analytics have in common?

Published | Monday, September 12th, 2016

If you are thinking that Millennials commit more fraud, I’m willing to bet you are a Baby Boomer or a Generation Xer—tsk, tsk! In fact, from what I’ve seen and read, Millennials are no more guilty than any other generation. The shared connection here is that all three were hot topics at the 2016 NASACT Conference.

NASACT, the National Association of State Auditors, Comptrollers and Treasurers, held their 2016 Annual Conference in the beautiful city of Indianapolis. Every year, the NASACT conference brings together local and state government professionals from across the country. The cross-pollination of ideas, stories and methodologies is where the conference hits its sweet spot. This year, NASACT members were inspired by a host of topics, including uncovering fraud in government entitlement programs, optimizing audit programs and business performance, fraud prevention, GASB updates, cybersecurity, and even recruiting and retention techniques for new employees. There was no shortage of excellent case studies and applicable topics.

 Here are my top 4 highlights:


 1. Combating government entitlement program fraud with data analytics

  • From Oregon’s Audit Division, Jamie Ralls, principal auditor, and Ian Green, state senior auditor, presented their innovative use of data analytics to identify potential fraud, waste and abuse within the Supplemental Nutrition Assistance Program (SNAP). Highlights and tips include:
  • To combat fraud in their SNAP program, Oregon tested 100% of their SNAP transaction data.
  • The audit team’s work has led to reducing merchant fraud in their state. To date, authorities have arrested at least three merchants and prosecuted over 100 individuals.
  • Data only provides part of the picture, and false positives do occur. A holistic approach is required to combat fraud waste and abuse—that includes fieldwork and other investigations to complete your case.
  • Don’t become overwhelmed when you discover more exceptions in your data than you think is manageable. Prioritize and start with your highest risk cases.

2. Spending transparency is better than ever in Ohio

Interested in how much a state patroller’s vehicle in Ohio costs? There’s an app for that! Seth Metcalf, deputy treasurer from Ohio State Treasurer’s Office, walked NASACT members through the Ohio Check Book website. This powerful website is a step towards greater spending transparency across their state—and even better, it’s modern and very easy to use. Lessons learned:

  • Data standardization is critical to establishing spending transparency across the state. Ohio started at the state level, and the local governments are now beginning to standardize and contribute their data.
  • The website demonstrates the potential for broader initiatives, such as the federal DATA Act, for providing full transparency of spending, with standardized reporting. As the state is able to easily get insight into all spending, longer-term benefits include automated compliance and increased transparency of life-cycle spending to improve predictability.
  • Data transparency for spending does not need to be complex or hard to access. Using modern UI design principals, Ohio has created a simple and useful tool for their citizens.
  • Everyone benefits! Citizens get visibility into where money is being spent with a click of a button; governments build trust.

 3. Millennials Matter!

Millennials now surpass Baby Boomers as the largest generation. This generational shift is exerting forces on the public sector workforce, the tools being used, and how services being delivered to citizens. Common themes include:

  • Hiring and retaining Millennials is top priority. When it comes to recruitment, the governments are fighting challenging reputations—from hostile workplaces, to being technology laggards. It can be hard to compete against the private sector, but it’s possible. The public service can be appealing as it’s strongly aligned with Millennials’ civic-minded traits.
  • The message from multiple speakers at NASACT was clear: keep your Millennial employees engaged. For example, if you have people on your team who are passionate about big data and analytics, then this is a great opportunity not only for your employees, but also to help build new strengths within your team while transforming your processes with newer technologies.
  • Millennials are demanding new technologies and tools to optimize audits. They are not content to work with antiquated systems or to follow paper-based projects. From electronic work papers and cloud-based full GRC platforms to data analytics and data mining tools, these new tools not only help to keep Millennials passionate, but also help teams be more efficient and successful in environments where they are expected to do more with less.
  • There is a wide technology gap between governments and their citizens, particularly Millennials. Millennials have zero tolerance for standing in line for three hours at a government office. They are demanding online services from their government, which we are beginning to see more developed. Audit teams should be aware of the resulting increased electronic data available, opportunities to establish continuous monitoring, as well as an increasing need for cyber security policies and compliance.

 4. Are you making the most of data analytics?

Let’s be honest, big data and analytics have been a hot topic for a number of years now, and increasingly we are seeing it move from buzz word to reality. The key question is: how do you make analytics valuable to your organization? Here’s what others are doing:

  • Key trends in government for analytics tool usage include: correlating related datasets for fraud detection; identifying behavioural patterns for compliance improvements; and forecasting for process optimization. Oregon Secretary of State Audits division has done great work optimizing their Temporary Assistance for Needy Families (TANF) program with their award-winning audit using data analytics.
  • Don’t think your state is way behind because you don’t have the latest and greatest technology and are still using paper for your audits. OK, maybe paper-based audits are a little behind the times, but in a very unscientific poll of attendees in a session, the majority  of people in the room identified with the early stages of analytics of adoption. Usage tends to focus on ad-hoc analysis. The private sector tends to be ahead and can provide inspirations and ideas.
  • Skills sets are siloed, and if you have a data scientist they may not be an expert in the processes behind the data. For the best results from your data scientists, pair them with your field experts to tackle problems together. Context is key!
  • Consider your analytics strategy.
  • When considering analytic tools, don’t try to compete by creating your own technology tools. Your IT resources are limited, and it no longer makes sense when software is available as a service. ‘Rent’ the technologies you use to ensure your organization can keep on top of the best technologies—but don’t forget to engage your IT team early.

Thank you to NASACT and Indiana State Examiner’s office for hosting a fantastic 2016 conference. The sessions were educational and inspiring, and the events were fun. We look forward to seeing everyone at next year’s conference in Tennessee.


Published with permission from ACL Services Ltd

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