Expect the unexpected: SAO releases new guide on protecting unanticipated revenue from fraud

Local governments rely on predictable and stable revenues from things like property and sales taxes, various charges and fees, and transfers from state and other local governments.

But not every revenue is predictable. Most governments also receive revenues from rebates, donations, collection agency payments, agreements with annual payments, or one-time fees. These revenues are infrequent or unanticipated, making them a prime target for misappropriation.

According to the 2022 Report to the Nations from the Association of Certified Fraud Examiners, fraud of unanticipated revenue accounts for about 17 percent of all asset-misappropriation schemes, with a median loss ranging from $45,000 to $50,000. These schemes typically last for 14 to 16 months before being detected.

Washington is no exception, and SAO’s Special Investigations Team has developed a guide to help you: Expect the Unexpected: How to protect unanticipated revenue from fraud. This resource has best practices and other tips to help you evaluate your internal controls around unanticipated revenue, and how to improve them.

Here’s a look at some of what’s included:

• A list of common types of unanticipated revenue, to help you know what to look for
• Common tactics fraudsters use to swipe these funds
• Ideas for how to prevent this type of fraud in your government
• Behavioral red flags to watch for
• Best practices for detecting this type of fraud

Additional fraud-prevention resources

SAO’s Resource Library offers a variety of free guides, checklists, and best practices to help Washington’s governments improve their internal controls to prevent fraud.

SAO’s Preventing Fraud webpage contains multiple internal control assessment tools, guidebooks, free training links, and additional resources to help combat fraud related to cash receipting.