Have a Plan: Fraud in Local Government

Administrators and managers must overcome the inherent risks faced by local governments and implement effective controls to offset:

  • The long-established trust culture in business offices
  • Limited resources and/or staff preventing the proper segregation of duties
  • The failure to record revenue streams as receivables
  • Lack of internal oversight in many agencies
  • The failure of Boards and management to conduct risk assessments

Prevention plans reduce the fraud risk, but your agency may still be victimized by rogue employees and unscrupulous vendors. When you fear that something is amiss, or you’ve received an allegation of fraud, consider having a protocol already in place as a guide to help navigate troubled waters.

Having a protocol in place, one created with insight and forethought, eases the burden of decision-making during crunch time when tensions are high and political influences demand quick responses. Download our Fraud Incident Management Protocol below. 

Key Stakeholders in Times of Fraud Allegations

A key part in the protocol is selecting the decision-makers who can evaluate the credibility of any allegations received and, if necessary, put a process in motion to investigate the allegation. Keep in mind that your staff may not have the knowledge, ability, or resources to conduct an internal investigation.  Consider a professional forensic investigator and a computer forensic specialist to assist in properly preserving evidence, interviewing witnesses and the subject of the investigation, and evaluating evidence independent of any outside influences or conflicts of interests.

Other Ways to Prepare

There are also other concerns, including:

  • Amending your insurance policy to include thefts
  • Having counsel review your employment actions – administrative leave or any discipline
  • Disclosing necessary information to the media to maintain the agency’s positive light in the community

Plan with a Fraud Incident Management Protocol

Since local governments are susceptible to being victimized by fraud, handling a fraud incident professionally and responsibly with a thought out plan can protect your agency’s reputation and prevent legal liabilities that arise when incidents are mishandled. Contact our team of experienced forensic investigators for more information on protecting your local government.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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