Corporate entities have significant responsibilities in managing and allocating resources effectively. The need to ensure proper use of funds for critical development and construction projects, as well as other large-scale initiatives, is of particular concern. Both public and corporate entities utilize Integrity Monitors to combat fraud, waste, and abuse (FWA) and safeguard these resources. The transparency and accountability brought by an Integrity Monitor has resulted in significant cost savings and improved transparency for executive leadership and outside investors. For example, New York City’s Department of Investigation (DOI) reported that Integrity Monitors resulted in approximately $30 million in cost savings during the Hurricane Sandy recovery efforts—money that could be used for legitimate purposes instead of being put to waste.

What is Integrity Monitoring?

Integrity monitoring is a practice aimed at maintaining legal compliance, transparency, accountability, and efficiency in the distribution and use of funds. This process involves the engagement of Integrity Monitors, which are individuals or entities with legal, auditing, investigative, and other skills, who scrutinize projects, contracts, and initiatives that involve company resources.

Three Key Attributes of Integrity Monitors

When the stakes are high, ensuring there is a recipe for success is critical. For Integrity Monitors, there are typically three common elements across projects:

1. Integration into Project Teams – Integrity Monitors become an integral part of the project core team. They work closely with project stakeholders, conduct proactive field and desk audits, and provide an unbiased perspective on the project’s progress.
2. Independence – Integrity Monitors function independently from the project team’s contractors, vendors, and suppliers. This independence ensures that the focus remains solely on monitoring and reporting, free from external influence.
3. Reporting Structure – Integrity Monitors typically report directly to the entity’s oversight body. However, they may also report to other appropriate relevant departments, such as the Chief Financial Officer or Legal Department, which ensures a multi-layer approach to oversight.

Defining the Integrity Monitor’s Scope

To define the project scope, the entity can request the Integrity Monitor to conduct a risk assessment. A review of the entity’s organizational structure, internal controls, any relevant jurisdictional requirements, and the unique characteristics of the program or expenditure and associated level of potential risk will focus the scope of the work of the Integrity Monitor and ensure that the Integrity Monitor will have sufficient time to complete its engagement.

Why Appoint an Integrity Monitor?

Integrity Monitors play a pivotal role in preventing, reducing, and mitigating FWA, particularly in large-scale construction projects and large-scale corporate initiatives. Real-time monitoring helps ensure that every dollar is spent efficiently and responsibly, and overseeing resource allocation ensures optimal utilization of funds. By scrutinizing operations, Integrity Monitors  identify potential areas of improvement, contributing to cost savings and preventing misuse of resources.

Integrity Monitors can assist in implementing the fiscal controls necessary to maintain proper documentation, flagging potential issues in real time, and making recommendations to resolve or remediate those issues. On complex and high-profile projects, Integrity Monitors help uphold ethical standards and maintain the integrity of the company’s operations. They act as a safeguard against potential irregularities. Accordingly, a company facing public criticism could engage an Integrity Monitor to display transparency and build credibility with external groups and organizations.

Reporting to the Overseeing Body

Integrity Monitors summarize all monitoring, audits, investigations, forensic reviews, and policy recommendations into monthly Integrity Monitor activity reports submitted to the overseeing agency. The reports highlight actions that resulted in cost savings, and the identification of any improper practices that would have resulted in lost funds.

Major Success Stories

Integrity Monitors have a long history of success, including through some of the largest disasters over the last two decades:

1. Hurricane Sandy Recovery: After Hurricane Sandy inflicted significant damage on the East Coast, the DOI implemented a monitoring program to oversee the federally funded repairs and cleanup efforts by contractors at over 13,000 residential units through the Rapid Repairs Program (RRP). This resulted in the aforementioned significant cost savings of $30 million and prevented potential waste and mismanagement of funds.
2. COVID-19 Recovery Funds: In response to the COVID-19 pandemic, Integrity Monitors were appointed to oversee the disbursement of COVID-19 Recover Funds. The Monitors worked in collaboration with the Recovery Program Participants to ensure funds were spent efficiently and in compliance with guidelines, maximizing the value of each dollar.
3. 9/11 World Trade Center Cleanup: The DOI utilized Integrity Monitors to oversee the cleanup of the World Trade Center after the 9/11 attacks. The DOI reported that the Integrity Monitors intercepted a conversation between two organized crime associates, and said that this on-site presence and scrutiny made it “impossible” for anyone to overbill New York City using the usual scams.

There are also non-public success stories for corporations that utilize integrity monitors. Organizations who are seeking to expand their physical footprint, or upgrade the one they currently have, can see significant cost savings both now and in the long term.

For entities grappling with resource management, Integrity Monitoring is a valuable tool they can employ to ensure the responsible allocation of resources, maintain the highest ethical standards, and enhance accountability to establish a trustworthy corporate image. By engaging skilled independent Integrity Monitors as an integral component of their corporate governance and risk management strategies, companies can proactively prevent and detect fraud, waste, and abuse.

Erica Levy contributed to this article.