Finding Text
Allegations of Fraud
See Schedule of Findings and Questioned Costs for chart/table.
Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor.
Condition: During 2023, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI.
• In the Republic of Tanzania, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 72062122CA00008 was $1,834.
• In the Republic of Kenya, allegations of potential misuse of program vehicles by a subrecipient were investigated to validate that the allegations of vehicle abuse and false travel expenses were made for award 7200AA18C00014. This investigation resulted in the disallowance of $2,371.
• In the Republic of Burundi, it was determined that there was falsification of procurement records including: manipulating the process of selection of vendors, selection of a hotel with less capacity than what was needed, and fictitious payments made. The costs incurred related to the falsified procurement activities totaled $82,052 for award 72069519CA00001.
• In the Republic of South Africa, programmatic records of client visits could not be sufficiently substantiated for 1,576 clients. The estimated financial loss to award NU2GGH002138 was $12,400.
• In the Republic of Zimbabwe, field services coordinators had signed off on intake forms on behalf of clients without conducting the first-level client verification activities. The attributable financial loss to award 72061318CA00009 is $3,524.
• In the Republic of Angola, an employee falsified expense records for advances provided resulting in a loss to award AID-OAA-1-15-00004 of $4,476.
PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency.
Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency.
Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2023.
Cause: Individuals intentionally circumvented PSI’s established internal controls.
Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions.
Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2022-005 in the December 31, 2022 schedule of findings and questioned costs.
Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk.
Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.