Yours is unfortunately the attitude which breeds corruption, and also the attitude of the majority of people. "Not my problem", "not my duty", "covering my own ass", "not getting into trouble" and so on. The reptilian minded people like OPs boss love having you guys around, because they can't do their unethical schemes just by themselves, and you won't make a fuss.

As for the prosecutor; he is first and foremost interested in where the money went. If fraudulent hours didn't give OP an extra paycheck boost, then that money went somewhere else.