Fraud Week

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.

The COVID-19 pandemic has likely forever changed how we purchase goods and services—at home and at work. E-commerce and contactless payment options have become the norm, and many governments have transitioned to using credit cards for the majority of purchases and for receiving payments. But as more online transactions occur, fraudsters also have more opportunities to steal credit card information. And judging from loss reports to the State Auditor's Office, the fraudsters are finding success in their schemes.

Local governments are moving away from traditional paper checks to more efficient and lower-cost digital payments, such as direct deposit, automated clearing house (ACH) payments, electronic funds transfers (EFT) and wire payments. And the benefits are clear: You can pay a variety of vendors seamlessly, process employee payroll faster, and easily transfer funds between multiple bank accounts.

But alongside the benefits, beware: Digital payments also create new opportunities for employees to conceal and personally benefit from these payments.

When frauds happen, people are often left in disbelief that someone they knew would choose to deceive and harm their organizations. We've all heard stories of the “trusted employee” who proved to be anything but trustworthy. Outside observers often have questions like “how could this have happened?” or “shouldn't someone have noticed?” Answers to these questions usually require a deeper understanding of the “human side” of fraud.

With International Fraud Awareness Week kicking off on Nov. 14, now is a great time to look back at how the COVID-19 pandemic affected the level of fraud in the workplace and understand the roadblocks to preventing and detecting fraud in a post-pandemic work environment.

Fraud trends during the pandemic

To accommodate the effects of the pandemic, organizations had to make changes to their work environments, including:

Employee fraud is on the rise in government, yet it often comes as a shock to those charged with oversight of a government when it happens in their own agencies. It shouldn't. Elected officials and appointed boards have a duty to understand their agency's operations. They also have a key role to play when it comes to fighting fraud.

Welcome to readers who found their way here during the 2021 International Fraud Awareness Week! We first posted this article in September 2020, and the threat of bad actors diverting paychecks or vendor payments remains acute since so many of us are working remotely and doing business electronically. Please take a moment to understand how these schemes work, and consider our tips on how to protect your organization.