DoD Fraud, Waste, and Abuse Policy Compliance Checklist: Controls, Training, and Reporting Tips

This DoD Fraud, Waste, and Abuse Policy Compliance Checklist gives you practical controls, training guidance, and reporting tips to prevent losses and protect mission readiness. It aligns day-to-day actions with a defensible Internal Controls Framework while promoting a speak-up culture and timely resolution of issues.

It highlights how the Department of Defense Inspector General, the Defense Finance and Accounting Service, and the Defense Contract Audit Agency intersect with your processes, so you can embed effective Fraud Reporting Mechanisms and improve Resource Mismanagement Detection across your component.

Defining Fraud Waste and Abuse

Working definitions

• Fraud: intentional deception for personal or organizational gain, including bribery, kickbacks, false claims, and mischarging costs to contracts or programs.
• Waste: careless, needless, or inefficient use of government resources, such as unnecessary purchases, idle assets, or duplicative services.
• Abuse: improper use of position or authority, government property, or systems contrary to policy or ethical standards, even when not illegal.

Common DoD scenarios

• Inflated labor hours, ghost employees, or timecard fraud; altered travel vouchers or per diem abuse.
• Purchase card split transactions to evade limits; unnecessary year‑end spending sprees.
• Improper billing of indirect costs; misallocation across contracts; unallowable charges.
• Personal use of vehicles, tools, or facilities; steering awards to favored vendors.

Red flags and Resource Mismanagement Detection

• Vendors with sequential invoices, round-dollar billing, or rapid award-to-invoice cycles.
• Unusual changes to vendor master data; frequent urgent purchases outside established vehicles.
• Excessive timecard overrides; supervisor approvals performed after-the-fact.
• High volume of exception write-offs or unmatched transactions in DFAS-reconciled accounts.

When in doubt, consult your ethics office and coordinate with the Department of Defense Inspector General for guidance on classification and next steps.

Implementing Internal Controls

Build an Internal Controls Framework

• Governance and tone: assign clear ownership for anti-fraud controls; brief leadership quarterly on risks, cases, and remediation.
• Risk assessment: map fraud schemes by process (procurement, payroll, travel, inventory, cost accounting) and rate likelihood/impact.
• Control design: adopt a COSO-style Internal Controls Framework; document objectives, risks, controls, and test plans per process.

Core control activities

• Segregation of duties in requisitioning, receiving, and payment; enforced system workflows.
• Three-way match (PO, receipt, invoice); price/quantity tolerances; automated duplicate-invoice detection.
• Vendor vetting and periodic revalidation; conflict-of-interest attestations for approvers and contracting staff.
• Government purchase and travel card rules: MCC blocking, transaction limits, independent audits, and merchant analytics.
• Timekeeping controls: biometric/unique credentials, supervisor review, surprise validations, and DFAS reconciliation.
• Asset management: lifecycle tracking, cycle counts, and disposal authorization with photographic evidence.
• Cost accounting: allowability checks, indirect-rate monitoring, and DCAA-informed cost surveillance.

Documentation and evidence

• Policies, desktop procedures, and control matrices tied to specific risks and owners.
• Testing evidence: samples, screenshots, system logs, reconciliations, and exception resolutions.
• Issue tracking with root cause, corrective actions, and closure verification by an independent reviewer.

Conducting Employee Training

Design Compliance Training Programs

• Role-based pathways: acquisition, finance, program management, cardholders, supervisors, and contractors.
• Scenario-based modules that mirror DoD processes and recent control failures.
• Microlearning refreshers and just-in-time tips embedded in workflow systems.
• Assessments with knowledge checks and practical exercises on reporting steps.

Cadence and delivery

• New-hire onboarding, periodic refreshers, and event-driven briefings after policy updates or incidents.
• Blended delivery: e-learning, leader-led workshops, job aids, and quick-reference checklists.
• Verified completion with system-of-record tracking and escalation for overdue training.

Measure effectiveness

• Training coverage by role, assessment scores, and reduction in repeated control exceptions.
• Volume and quality of tips submitted through Fraud Reporting Mechanisms after campaigns.
• Post-incident learning: update curricula with real case lessons and trend data.

Reporting Procedures for DoD Components

Standard intake and triage

• Multiple intake channels: supervisor chain, ethics/compliance office, security, and IG/command hotlines.
• Document each allegation with who, what, when, where, how, and evidence available.
• Initial risk screen for safety, funds at risk, data sensitivity, conflict of interest, and retaliation risk.

Escalation and coordination

• Escalate potential criminal or significant fraud to the Department of Defense Inspector General and appropriate investigative entities.
• Coordinate with legal counsel, HR, security, and when relevant the Defense Finance and Accounting Service and the Defense Contract Audit Agency.
• Use de-confliction to prevent parallel inquiries from compromising evidence or witness integrity.

Case management and closure

• Maintain a secure case file with access controls, evidence chain-of-custody, and status logs.
• Record findings, financial impact, corrective actions, recoveries, and disciplinary outcomes.
• Share sanitized lessons learned to strengthen controls and training.

Using Hotline and Confidential Channels

Available Fraud Reporting Mechanisms

• DoD IG Hotline and component-level hotlines for military, civilian, and contractor personnel.
• Anonymous and confidential options, with non-retaliation statements included in acknowledgments.
• Alternate avenues when chain-of-command involvement is impractical due to conflicts.

What to include in a report

• Specific facts: dates, locations, organizations, contract numbers, and names or roles.
• Documents, images, emails, screenshots, or transaction details supporting the allegation.
• Estimated funds at risk and whether the issue is ongoing.

Protecting reporters

• Limit need-to-know access, remove identifying metadata, and route communications through secure channels.
• Track and address any signs of reprisal promptly in coordination with IG and legal counsel.

Monitoring and Auditing Compliance

Continuous monitoring

• Automated analytics over DFAS transactions for duplicates, round-dollar spikes, and unusual vendor patterns.
• Key risk indicators: improper payment rate, purchase card exceptions, late approvals, and unmatched receipts.
• Control self-assessments with evidence uploads and follow-up on failed items.

Internal audit and DCAA/IG coordination

• Risk-based audit plan covering procurement, travel, payroll, inventory, and cost allowability.
• Leverage Defense Contract Audit Agency reports and recommendations to sharpen testing.
• Brief leadership on systemic issues, root causes, and remediation progress.

Remediation tracking

• Assign owners and due dates; verify fixes via re-testing and sustained-performance metrics.
• Escalate overdue high-risk actions to senior leadership with clear impact statements.

Responding to Allegations and Investigations

Immediate actions

• Preserve evidence: legal holds, system log retention, device and email preservation, and secured physical records.
• Stabilize risk: suspend implicated access, freeze suspect payments, and notify stakeholders on a need-to-know basis.
• Conflict checks: ensure investigators and reviewers are independent of the subject matter.

Investigation management

• Coordinate with the Department of Defense Inspector General and, as appropriate, security and law enforcement entities.
• Use a written plan: scope, sources of evidence, interview sequencing, and timeline.
• Maintain confidentiality, avoid witness coaching, and document all steps and rationales.

Corrective action and recovery

• Pursue restitution, contract remedies, suspension/debarment referrals, and disciplinary measures as warranted.
• Fix control gaps, update procedures, and refresh training content to prevent recurrence.
• Validate effectiveness with targeted testing and post-implementation reviews.

Key takeaways

• A robust Internal Controls Framework, reinforced by targeted Compliance Training Programs, prevents most issues before they start.
• Clear, accessible Fraud Reporting Mechanisms accelerate detection and protect reporters.
• Data-driven monitoring with DFAS feeds and DCAA insights strengthens oversight and recovery.
• Early coordination with the Department of Defense Inspector General preserves case integrity and outcomes.

FAQs.

What constitutes fraud waste and abuse in the DoD?

Fraud involves intentional deception for gain (e.g., kickbacks, false claims, mischarging). Waste is needless or inefficient spending (e.g., duplicative purchases, idle inventory). Abuse is misuse of authority or resources contrary to policy (e.g., personal use of vehicles, favoritism). All three undermine readiness and trust and must be prevented and reported.

How can DoD personnel report suspected fraud or abuse?

You can report through your chain of command, your ethics or compliance office, or directly via DoD IG and component hotlines. Provide concrete facts, documents, and the estimated funds at risk. If conflicts exist, choose confidential or anonymous channels. Non-retaliation policies protect good‑faith reporters.

What internal controls prevent waste in DoD programs?

High-impact controls include segregation of duties; three‑way match; vendor vetting; purchase and travel card limits; timekeeping validations; asset lifecycle tracking; and cost allowability checks. Embedding these in a documented Internal Controls Framework, regularly tested and monitored with DFAS and DCAA insights, reduces waste and strengthens oversight.

How does the DoD IG handle reported allegations?

The Department of Defense Inspector General assesses jurisdiction and credibility, coordinates with investigative entities, and may open or refer a case. They safeguard evidence, protect whistleblowers, and track outcomes, including recoveries and corrective actions. Components are expected to cooperate fully and implement required remediation.