Tailor-made software uncovers fraud

Looking for a faster way to ferret out fraud and abuse, the inspector general

at the Department of Housing and Urban Development has partnered with a

company to take software developed for commercial auditors and investigators

and tailor it for government use.

The software, developed by Paisley Consulting based on Lotus Development

Corp.'s Notes groupware technology, will help HUD's inspector general staff

work together by making it possible to share electronic documents and track

the workflow as files go through the extensive process associated with auditing

proj-ects and conducting investigations.

The paperless process should make it easier for the inspector general

staff to sort out the mountains of paperwork it processes every year, said

HUD Inspector General Susan Gaffney.

The investigative office handles 1,250 investigations a year — each

averaging 500 pages of related documents — and 160 audits a year, averaging

3,600 pages each. The pages include spreadsheets, interviews and other material

not easily digested by reading the reports.

HUD investigators are on the lookout for a range of abuses, including

double-billing by contractors, theft of project funds, unauthorized use

of money earmarked for specific projects, bribing local officials to approve

inspections and embezzling federal funds.

With a small staff, Gaffney found it took months to connect the dots

for every case. In searching for a solution, she didn't want to have a large

information technology staff on hand or a handful of "computer cowboys"

to do the job. "We do all kinds of analysis because there is a consistency

in the software, things that people cannot do on their own," Gaffney said.

Paisley, a small company founded in 1995 and located in Cokato, Minn.,

partnered with Arthur Andersen to develop the solution for the inspector

general using two existing packages: Auto-Audit and AutoInvestigation.

AutoAudit was a natural fit. This program automates the process of creating

and maintaining files to document auditors' fieldwork by generating audit

reports and tracking those reports through the review process.

AutoInvestigation serves a similar purpose for investigators, making

it easier to store files and spreadsheets in the format of an investigative

file, track complaints and even fill out suspect and witness profiles. Although

a number of vendors have automated the auditing process, few have tackled

investigations, Gaffney said.

Better yet, the two pieces work together, which will improve the teamwork

between HUD investigators, who are generally the first to look for irregularities,

and HUD auditors, who go in to crunch the numbers and prove the case.

HUD is paying for the software on a per-user basis, rather than buying

it outright. It costs $900 for each of the 600 seats and will be operating

in 65 HUD offices by February 2001.

"We really want a paperless office," Gaffney said. "We think we can

get there by next year."

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Data Mining

HUD is just the latest federal agency to use Paisley software to automate

auditing. Others include the Environmental Protection Agency, the Defense

Intelligence Agency and the National Reconnaissance Organization.

In the past, auditors pored over volumes of statistics by hand to analyze

them and find trends, said Tim Welu, vice president of marketing at Paisley.

Randomly selecting 1 percent of the data, auditors looked for a needle in

a haystack. But now, computer tools allow auditors and investigators to

look at the entire database at once to uncover a pattern of abuse.

The leader of the Institute of Internal Auditors, a professional organization

that represents more than 70,000 members, said technology is an important

component of the modern-day audit.

"Because it plays such an important role in today's organizations, internal

auditors are charged with knowing more about information technology than

ever before," said William Bishop III, president of the Altamonte Springs,

Fla., institute. "In fact, many people new to the profession are bringing

with them information-systems training and education."