With expectations high for federal oversight and enforcement in connection with the potential mismanagement of relief and stimulus funds, all recipients need to be conscious of the risks and what needs to be done to prevent or mitigate those risks. This will require the right governance frameworks, policies and procedures in place to ensure funds are used consistent with agreed upon terms. In addition, systems to detect, investigate and report allegations of fund misuse are critical to remaining free from regulatory scrutiny and potentially criminal culpability. Our professionals have extensive experience dealing with crises and supporting governments and businesses to manage the risks of government stimulus funding, including the American Reinvestment and Recovery Act, BP Gulf Oil spill, Hurricanes Rita and Katrina, Superstorm Sandy, and World Trade Center 9/11 Recovery. K2 Intelligence Financial Integrity Network (K2-FIN) has extensive experience supporting organizations with developing governance and oversight frameworks, detecting and investigating allegations of fraud, waste and abuse and establishing auditing and testing systems to support compliance with disbursement requirements.
Stimulus and Relief Funding
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) became law on March 27, 2020, marking the third phase of government aid to combat the COVID-19 pandemic.
This $2 trillion stimulus package, the third of what will likely be several such funding packages, will be distributed through a variety of state and local mechanisms where capabilities for oversight and fraud detection and investigation are disparate.
At the federal level, the $500 billion allocated to corporate relief will be overseen by a triumvirate of oversight authorities based largely on the successful Troubled Asset Relief Program (TARP), which includes: including a Special Inspector General for Pandemic Recovery (SIGPR) with far-reaching authority to monitor the corporate relief fund. The additional oversight entities include the Pandemic Response Accountability Committee, which is comprised of Inspectors General from several government agencies including the U.S. Department of Justice and the Department of the Treasury and the Congressional Oversight Commission, a bipartisan committee will oversee the implementation of the CARES Act program and report to Congress every 30 days on progress and impact of all aspects of the relief fund. Financial Institutions, corporations, individuals, and state and local governments should expect intense oversight of all relief fund spending and accountability to the various relief programs for years to come.
Government investigations into the $430 billion TARP program resulted in 300 defendants being sentenced to prison and $11 billion returned to the federal government for fraud, money laundering, mortgage fraud, conspiracy and other illegal activity, and 24 enforcement actions against financial institutions and other corporates.
How We Assist
Compliance and Governance
K2-FIN works with clients to ensure they have the proper governance, controls and compliance framework in place to mitigate the risks of managing stimulus and relief proceeds. Our work includes developing all facets of a compliance framework, including the preparation of policies and procedures, establishing the appropriate governance structure, assessing resource requirements, assuring transparency and “tone at the top” approach.
K2-FIN also supports clients by designing and implementing effective anti-fraud programs and internal controls to support the detection of non-compliant activity. Our teams also have the ability to test and audit the efficacy of fraud prevention programs and compliance and governance frameworks, identifying weaknesses and making recommendations for improvement.
Third-Party Risk Management
K2-FIN services leading corporations, governments, financial institutions and investment funds with the management of risks related to third parties. From assisting with the design, improvement and evaluation of their third-party risk management frameworks; to conducting risk assessments across a wide range of third-party risk areas; to evaluating internal processes and controls for third party risk management; to providing due diligence and background checks solutions; to ongoing risk monitoring; to providing investigative services into allegations or suspicions of misconduct, K2-FIN is a one-stop resource for all third-party risk mitigation services. Our business intelligence capabilities are perfectly suited to vetting potential vendors and suppliers where the highest risks of fraud and abuse exists. K2-FIN handles a combined hundreds of thousands of screens and due diligence investigations per year, involving both companies and individuals as subjects in the United States and around the world. Utilizing a risk-based approach, we work with our clients to scope assignments and assist in identifying the appropriate depth of investigation taking into account their need, the report’s use and the risk presented by the subject or transaction.
Oversight and Independent Monitoring
Our experts have deep expertise helping states, local governments and private businesses by providing independent oversight in a variety of contexts, including the oversight, auditing and ongoing monitoring of the use of emergency relief and stimulus funds. Our work has occurred at both the program level—overseeing disbursements programs—as well as at the recipient-level, including oversight of agencies and business. K2-FIN’s multidisciplinary approach aligns our subject matter expertise with our seasoned monitoring professionals comprised of former federal prosecutors, computer forensics and technology experts, data analytics professionals and forensic accountants to provide a cohesive unit to oversee the activities of the host.
Assisting with Government Investigations and Enforcement
K2-FIN has developed a reputation for undertaking independent, credible and ethical investigations for corporations and their counsel. Our teams of professionals possess the hands-on experience, technical skills, and the situational awareness necessary to conduct efficient and effective investigations. Our capabilities include a range of proven investigative procedures, which include reviewing and analyzing business and accounting records, tracing questionable financial transactions, performing in-depth interviews of key personnel, conducting data analyses on volumes of disparate data to identify red flags and anomalies, collecting and analyzing electronic data and integrating it into a comprehensive review effort, and calculating the amount of damages or disgorgement. We are experts in uncovering key facts that help clients formulate the right strategy to address regulatory issues. In situations where we identify questionable activities, we work with counsel and company management to gain a complete understanding of the issues and recommend corrective actions to prevent future recurrences.