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Friday, November 22, 2019
The power of teamwork
This week, we learned what fraud is, it can happen anywhere anytime, how it impacts everyone, how to spot fraudulent activity, and how our job responsibilities include fraud prevention, detection, and reporting.
Limit the opportunity for fraud.
As we learned on Wednesday, strong internal controls can limit a fraudster from having any opportunity to commit fraud, which is the only aspect of the fraud triangle management can control.
What are internal controls? Internal controls are the plans, methods, policies, and procedures put into place to provide reasonable assurance that goals will be achieved. In other words, what management wants to happen, will in fact happen, and what they do NOT want to happen, will NOT happen. Every state of Minnesota employee is responsible for detecting and preventing fraud in the State of Minnesota.
Increase the perception of detection! Agency managers and supervisors can set an agency culture that promotes honesty and integrity and take a proactive approach to implement effective anti-fraud strategies. They can do that by providing employees with training and resources necessary to perform their anti-fraud internal control duties. Be open and communicate to staff about participation in fraud prevention training ensuring employees understand their responsibilities. Every state employee is responsible for their professional development including training in fraud prevention, detection and reporting techniques and internal controls.
Examples of effective internal controls for fraud prevention:
- Written Code of Conduct/Code of Ethics policies – employees should read, understand, and comply with the State of Minnesota’s Code of Ethics and Code of Conduct. Management should use periodic and ongoing risk assessment to identify areas of operations vulnerable to fraud and establish anti-fraud controls.
- Implement and follow specific fraud reporting mechanisms, providing ways for employees, contractors, and stakeholders to report suspicious activities.
- Increase the perception of detection. Regular communication and discussion about fraud policies, ways to report misconduct, and potential consequences of fraudulent behavior (including termination and criminal prosecution) will make fraudsters less likely to act.
- Follow established hiring policies and procedures requiring reference and background checks, including educational and employment history (as permitted by law).
- Proactive data monitoring and analysis of internal controls.
- Periodic job rotation.
- Segregation of duties (e.g., separating transaction recording, approval, custody, and reconciliation functions between different divisions or different individuals within a particular business unit).
- Assignment of SWIFT and SEMA4 security roles (limit employee access to only those computer systems and applications needed for an employee to perform their assigned job duties).
- Supervisory review and approval of transactions (e.g., employee timesheets, purchase orders, vendor contracts).
- Delegations of authorities and responsibilities (e.g., formally documented and approved identification of what a specific employee can do/approve/authorize).
Thank you for doing your part to prevent, detect, and report fraud in Minnesota State Government.
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