How to Write Fraud, Waste, and Abuse Policies and Procedures Checklist

You can build a strong, audit‑ready framework with this fraud, waste, and abuse (FWA) policies and procedures checklist. It shows you how to define FWA, spot red flags, report concerns, investigate issues, and reinforce accountability with training, monitoring, and fair discipline.

Throughout, you will align responsibilities for the Compliance Officer, stand up an Anonymous Hotline, set clear Documentation Standards, and address legal concepts such as the False Claims Act and Kickbacks Prohibition. The result is a practical policy set you can implement and defend.

Define Fraud Waste and Abuse

Definitions

Fraud is an intentional deception for personal or organizational gain, such as falsifying records, submitting claims for services not rendered, or paying/receiving inducements in violation of Kickbacks Prohibition. Waste is the careless or inefficient use of resources—often the byproduct of Program Mismanagement or poor controls. Abuse includes practices that are inconsistent with sound business or professional standards and that lead to unnecessary cost or improper benefit.

Your policy should state that FWA can be committed by employees, leaders, contractors, vendors, and third parties. Spell out examples that are relevant to your operations (billing, procurement, grants, travel, assets, data access) so people can recognize issues quickly.

Scope and Ownership

Define who is covered, including employees, temporary workers, agents, and vendors. Assign policy ownership to the Compliance Officer, who maintains the policy, coordinates updates, and reports to leadership and the board or compliance committee. Note the review cadence (for example, annually) and how changes are communicated.

Core Principles

• Zero tolerance for retaliation against good‑faith reporters.
• Compliance with applicable requirements, including the False Claims Act and Kickbacks Prohibition where relevant.
• Strong Documentation Standards to evidence decisions, approvals, and transactions.
• Use of Background Checks for employees in sensitive roles and for high-risk vendors, consistent with law.

Identify Indicators of Fraud Waste and Abuse

Operational Red Flags

• Manual overrides of controls, missing or backdated approvals, or unusual “rush” purchases to bypass normal review.
• Vendors sharing addresses or bank accounts with employees, or repeated use of sole‑source justifications.
• Workarounds that ignore Documentation Standards, such as unsigned timesheets or missing receiving records.

Financial and Data Red Flags

• Duplicate invoices or claims, split purchases below approval thresholds, or abnormal credit/void patterns.
• Outlier billing, excessive adjustments, or mismatches between units ordered, received, and paid.
• Altered documents, inconsistent serial numbers, or unexplained write‑offs.

Behavioral and Cultural Red Flags

• Resistance to vacation or cross‑training, secrecy about processes, or unexplained lifestyle changes.
• Supervisors dismissing concerns or discouraging use of the Anonymous Hotline.
• Weak tone‑at‑the‑top or chronic Program Mismanagement that tolerates known control gaps.

Use data analytics, exception reports, and trend dashboards to surface anomalies early. Require managers to escalate suspected issues immediately to the Compliance Officer.

Establish Reporting Procedures

Reporting Channels

• Anonymous Hotline available 24/7, with multilingual options where appropriate.
• Dedicated email inbox and web portal monitored by the Compliance Officer or designee.
• Open‑door reporting to managers, HR, internal audit, or compliance; if a conflict exists, report directly to compliance or legal.

Intake, Triage, and Protection

• Capture who, what, when, where, how, and the estimated value or impact. Assign a unique case number.
• Triage for urgency and risk; preserve evidence immediately and issue a legal hold when needed.
• Guarantee confidentiality to the extent possible and prohibit retaliation against good‑faith reporters, including protections consistent with the False Claims Act.

Communication and Recordkeeping

• Acknowledge receipt promptly, outline next steps, and provide periodic status updates when appropriate.
• Store case files securely with access limited to need‑to‑know personnel and in line with Documentation Standards.
• Escalate significant matters to leadership or the board compliance committee per your escalation protocol.

Implement Corrective Actions

Investigation Framework

• Define roles for the Compliance Officer, investigators, internal audit, HR, and legal. Address conflicts of interest.
• Use a plan that covers scope, evidence collection, interviews, data tests, and timelines. Maintain chain‑of‑custody for key artifacts.
• Consider Background Checks or vendor due diligence refresh when third parties are implicated.

Root Cause and Remediation

• Apply structured analysis (for example, 5 Whys) to identify control, process, and cultural drivers.
• Remediate with policy changes, system or approval controls, retraining, and vendor or contract adjustments.
• When applicable, calculate overpayments, arrange repayments or recoveries, and address exposures tied to the False Claims Act or Kickbacks Prohibition.

Action Plan and Closure

• Assign owners, milestones, and due dates; rate residual risk and define success metrics.
• Document findings, actions taken, lessons learned, and monitoring steps; close the case formally after verification.
• Report themes and significant cases to leadership and the board or compliance committee.

Provide Training and Education

Curriculum and Audience

• Cover FWA definitions, real‑world scenarios, reporting options (including the Anonymous Hotline), non‑retaliation, and consequences.
• Include Documentation Standards, conflicts of interest, gifts and entertainment, and a plain‑language overview of the False Claims Act and Kickbacks Prohibition.
• Deliver role‑based modules for high‑risk functions such as billing, procurement, grants, and vendor management.

Cadence and Delivery

• Provide training at onboarding and at least annually; add timely refreshers after incidents or policy updates.
• Use blended formats—short e‑learning, live workshops, and microlearning nudges that reinforce key behaviors.
• Track completion, require attestations, and remediate non‑completion promptly.

Measurement and Reinforcement

• Use knowledge checks and scenario‑based assessments to confirm understanding.
• Provide manager toolkits, team huddles, and periodic reminders that promote a speak‑up culture.
• Publish anonymized case studies that show how issues were identified and resolved.

Conduct Monitoring and Auditing

Monitoring (First and Second Lines)

• Implement continuous exception monitoring for duplicate payments, outlier billing, and high‑risk vendors.
• Require managers to review key controls regularly and certify adherence to Documentation Standards.
• Track hotline metrics, training completion, and corrective action status in a compliance dashboard.

Auditing (Independent Assurance)

• Build a risk‑based audit plan that tests design and operating effectiveness of controls over FWA risks.
• Use data analytics for targeted sampling; perform walk‑throughs and surprise audits where appropriate.
• Document findings, agree on corrective actions, and validate remediation within defined timeframes.

Records and Retention

• Maintain secure repositories for reports, evidence, and workpapers with role‑based access.
• Align retention schedules with legal and regulatory requirements and your Documentation Standards.
• Periodically review metrics to identify systemic weaknesses or Program Mismanagement trends.

Enforce Disciplinary Actions

Fair and Consistent Enforcement

• Apply consequences based on intent, severity, impact, past history, and cooperation.
• Hold managers accountable for failing to report, for weak oversight, or for retaliation.
• Ensure decisions are documented, reviewable, and consistent across similar cases.

Range of Actions

• Coaching, written warnings, suspension, demotion, or termination; restitution and bonus clawbacks where permitted.
• Vendor remedies including contract termination, repayment, and disqualification from future work.
• Referral to regulators or law enforcement when warranted, including matters tied to the False Claims Act or Kickbacks Prohibition.

Decision Process and Documentation

• Coordinate among HR, legal, internal audit, and the Compliance Officer; resolve conflicts of interest.
• Issue a written decision letter that cites facts, policy violations, and required corrective actions.
• Feed lessons learned into training, monitoring, and control design to prevent recurrence.

Summary and Next Steps

By following this checklist, you have a complete fraud, waste, and abuse program: clear definitions, practical red flags, safe reporting, disciplined investigations, targeted remediation, capability‑building through training, continuous monitoring and auditing, and consistent enforcement. Finalize your documents, communicate expectations, and keep improving through metrics and lessons learned.

FAQs

What are the key elements of a fraud waste and abuse policy?

Core elements include definitions and scope; roles and responsibilities led by the Compliance Officer; multiple reporting channels such as an Anonymous Hotline and open‑door options; non‑retaliation; investigation and corrective action procedures; training and communication; monitoring and auditing; disciplinary standards; Documentation Standards and retention; vendor and third‑party controls, including Background Checks; and references to applicable laws like the False Claims Act and Kickbacks Prohibition.

How should suspected fraud be reported?

Report immediately through available channels: the Anonymous Hotline, a dedicated email or web portal, or directly to a manager, HR, or the Compliance Officer. Provide specific facts (who, what, when, where, how, value), preserve evidence, and avoid alerting subjects. Your policy should guarantee confidentiality to the extent possible and prohibit retaliation for good‑faith reports.

What disciplinary actions are taken for confirmed fraud?

Discipline is proportionate and consistent, ranging from coaching and written warnings to suspension, demotion, termination, and restitution. For vendors, actions can include contract termination and disqualification. Severe cases may be referred to authorities, especially where the False Claims Act, Kickbacks Prohibition, or similar requirements are implicated.

How often should employee training on fraud prevention occur?

At a minimum, provide training at onboarding and annually for all employees, with role‑based refreshers for high‑risk functions. Offer interim updates after incidents or policy changes, and use short reminders throughout the year to reinforce reporting expectations and Documentation Standards.