Published: November 14, 2022
Elected officials and members of appointed boards have a responsibility to understand their government’s operations. They also have a key role to play when it comes to preventing, detecting and responding to employee fraud. Employee fraud often comes as a shock to those charged with oversight of a government, but the reality is that any organization—from a large city government to a small special purpose district—is vulnerable to fraud.
While preventing employee fraud is an organization-wide effort in your government, creating a fraud-prevention culture starts at the top with elected officials and members of appointed boards. That’s why SAO’s Special Investigations Team has developed a guide for these leaders to help them better understand their role in fighting employee fraud in their governments.
In Trust, but Verify: A Guide for Elected Officials & Appointed Boards to Prevent Workplace Fraud, we offer tips for implementing policies and internal control best practices. The guide is organized into three sections—preventing fraud, detecting fraud and responding to fraud. Here’s a look at what’s included:
- Preventing Fraud: The first line of defense is to prevent fraud before it can happen. Boards need to set a clear tone that fraud will not be tolerated and design a fraud-prevention framework. This section offers tips to consider when designing your framework, including setting an anti-fraud tone at the top, establishing a fraud policy, and performing fraud risk assessments. You’ll also find links to sample fraud policies, as well as instructions for performing a fraud risk assessment.
- Detecting Fraud: While you can never fully prevent fraud in your organization, it is important to have a process for identifying fraudulent activities or attempts. When your government establishes and properly follows internal controls, your fraud risk decreases and your ability to detect fraud increases. This section offers tips for improving your fraud-detection abilities, including a list of three simple review strategies boards and elected officials can implement immediately to improve their fraud prevention and detection efforts.
- Responding to Fraud: At some point, your government will likely experience fraud. Developing a fraud response plan can help your board navigate through the fraud effectively. This section offers tips for developing a fraud response plan and a communication strategy for responding to public and media attention. You’ll also find guidance for reporting known or suspected losses of public funds to SAO.
Looking for more resources to help you prevent, detect and deter fraud in your government? Visit SAO’s Preventing Fraud page for links to internal control guidebooks, internal control assessment tools, and trainings on fraud detection and reporting.