Next week is Fraud Awareness and Prevention Week in the State of Minnesota!

November 15-21, 2015 is “Fraud Awareness and Prevention Week in the State of Minnesota.” The week will be dedicated to educating and training employees about fraud prevention, detection, and reporting techniques, with an emphasis on proactively fighting fraud to safeguard state assets and resources.

Fraud Awareness Week Lunch and Learn Schedule

Want to learn more about fraud prevention? Attend agency specific training activities or join and open "lunch and learn" session on November 16, 17, or 19. Go to the 2015 Fraud Awareness website for times and locations. Sessions are free and open to all state employees, with in-person and WebEx options available.

Why is fraud prevention and awareness important?

Fraud costs organizations an estimated five percent of their annual revenues, according to a study by the Association of Certified Fraud Examiners (AFCE), an organization dedicated to reducing the incidence of fraud worldwide.

The government sector is the second most victimized by fraud, behind only banking and financial service organizations. Fraud can result in the increased cost of governmental services, loss of public funds and resources, and increased expenses associated with the investigation, prosecution, and eventual incarceration of those who commit fraud.

What is Fraud?

Black’s Law Dictionary defines fraud as a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.

Consequently, fraud includes any intentional or deliberate act to deprive another of property, or money by guile, deception, or other unfair means.

In general, an error, omission or misstatement is not sufficient to conclude a fraud has occurred.  Intent is critical.

Examples of Internal Fraud in Government include:

• Personal use of purchasing cards
• Intentionally submitting unlawful, inaccurate or inflated travel expenses
• Not properly recording vacation or sick time used
• Theft of cash receipts
• Improperly setting up vendors and making illegal payments
• Steering government procurement activity to vendors in which you have a personal interest

Examples of External Fraud in Government include:

• False claims by vendors
• Intentional double billing
• Misrepresentation of services provided
• Grantee deception or non-performance
• Filing false financial or legal records with the State
• Taxpayer under-reporting income or over reporting deductible expenses
• Falsifying information to receive government benefits

10 ways to reduce fraud

1. Follow all policies and procedures. They often have built-in fraud protections.
2. Make sure all transactions have a “second set of eyes.” No one person should have control over an entire financial transaction (this is called separation of duties).
3. Understand your code of ethics and code of conduct responsibilities.
4. Avoid conflicts of interest. Consult your supervisor or your agency’s ethics officer if you are unsure about something.
5. Know you agency’s established reporting channels. Report weak internal controls or suspicious behavior. Whistleblower statutes prevent employer retaliation for all good faith reports of possible wrongdoing.
6. Protect (lock-up or secure out of sight) valuable agency assets, including cash and checks, vehicles, cell phones, state issued credit cards, equipment, sensitive data, and information.
7. Do not share your passwords or credentials with others.
8. Do not post confidential information about your work on social media or share with unknown parties.
9. Do not open unexpected email attachments or click on links within suspicious emails. Contact your IT staff if you receive or open suspicious email.
10. Be alert! If something seems wrong, ask questions or report.

Suspect fraud? Report it!

ACFE studies show that tips from employees and/or external whistleblowers are the number one way to detect fraud. Each state employee is the first line of defense against fraud. All employees must immediately report suspected fraud or any other violation of the state’s code of conduct policy or ethics laws. Familiarize yourself with the communication channels to report suspected fraud.

Furthermore, Minnesota Statute 609.456 requires any employee who obtains evidence of theft, embezzlement, unlawful use of public funds or property, or other public resources to report their suspicions/evidence to the Office of the Legislative Auditor.

Any employee who makes a good faith report or provides evidence of fraudulent activities and/or violation of code of conduct policy and/or ethics statute is protected by the state’s Whistleblower Act. This act prohibits the employer from disciplining, discharging, threatening, penalizing or otherwise discriminating against the reporting employee.

Learn more!

mn.gov/nofraud

Code of Ethics for Employees in the Executive Branch

Your agency code of conduct

Your agency fraud reporting channels

Office of the Legislative Auditor (OLA) Allegation Reporting Form

MMB Fraud Prevention: A Quick Reference Guide (Includes Common Signs of Fraud)

Fraud 101:  Fraud Awareness training videos

Association of Certified Fraud Examiners (ACFE)

2014 ACFE Report to the Nations

United States Office of Government Ethics

Anti-Fraud Collaboration

Ethics Resource Center

MMB Internal Control Bulletins (the fraud-related bulletins)

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