Preventing fraud in governmental entities
How to protect the public trust
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For governmental entities, fraud carries a double risk. Like any organization, there is the risk of financial loss. But governments also face the loss of public trust, which, once lost, is difficult to regain.
Preventing fraud in governmental entities explores common issues that drive fraud and the best ways to prevent it.
Cost-cutting trends in public budgets coupled with difficult economic circumstances have combined to make fraud a serious issue in the public sector. By understanding the fraud triangle, an interlocking set of conditions including incentive, rationalization and access, governments can better understand the unique elements of their environment that make fraud possible, which is a first step toward prevention.
But real prevention must be rooted in an effective ethics and compliance program. While the specifics of any program must be based on each organization’s circumstances, the program must support three key activities:
- Fraud prevention
- Fraud detection
- Fraud investigation and corrective action
Prevention should be a primary focus. Tone at the top, a clear code of conduct, due diligence in hiring and vendor management and a thorough understanding of your organizations specific risks and their related controls are your best prevention tools.
A whistleblower hotline can help make employees your first line of defense in your detection efforts. Effective use of today’s powerful data analysis tools and refinement of your audit procedures can also help ensure that frauds are detected quickly.
Preventing fraud in governmental entities shows how governmental entities can effectively address the growing challenge of fraud.