Employees would like to believe fraud happens elsewhere and that it can’t happen in their agency. This type of misconception increases the risk of fraud. Employees may ignore obvious “red flags” or not question or report irregularities. Managers who do not acknowledge fraud can happen anywhere may not train staff on prevention and detection techniques, allocate the right resources, or ensure anti-fraud controls are established and monitored.

Governments are frequent victims of fraud.
Government is the third most targeted industry behind only the banking/ financial services industry and manufacturing industry. Government entities only fully recover losses about 19% of the time and 59% of the time there is no recovery of funds lost to fraud.

Three types of fraud often occur in government:

1. Occupational fraud committed by employees (e.g. theft or embezzlement).
2. Consumer fraud, including individual citizens defrauding the government (e.g. benefit fraud).
3. Cyber fraud, including hacking and other cyberattacks (e.g. theft of private or sensitive data).

Fraud prevention is key!
It is vital to stop fraud before it starts. Fraud prevention includes acknowledging that fraud can lurk anywhere, even in your agency, division, and/ or business unit. Once this is realized, be proactive about fraud awareness and prevention. The perception of being detected is a key internal control to prevent fraud, and may cause potential fraudsters to re-think their actions out of fear you may report them. Government agencies that have anti-fraud policies, employee support programs, and codes of conduct are shown to have significantly reduced rates of fraud and faster detection rates compared to those without.

Check back tomorrow to learn how fraud impacts everyone and how to detect fraud.

Thank you for doing your part to prevent, detect, and report fraud in Minnesota State Government.