Do you know the red flags of governmental fraud? Today I tell you what they are.
Fraud is detected by tips more than any other way–over 40% in the most recent Association of Certified Fraud Examiners’ survey. And many of those tips came from employees who knew the signs of fraud.
How can governments make employees aware of fraud signals? Education.
Would your employees recognize fraud if it were occurring? Some red flags are obvious. Others are not. Here are some sample governmental fraud red flags:
External Red Flags
Cash Receipts and Billing Red Flags
Disbursements and Purchasing Red Flags
Payroll Red Flags
Capital Assets Red Flags
General Red Flags
Just because a red flag exists does not mean that fraud has occurred, but it’s still important to know the signs. Often where there’s smoke, there’s fire. Teaching employees the signals of fraud can save your government a great deal of money.
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Charles Hall is a practicing CPA and Certified Fraud Examiner. For the last thirty years, he has primarily audited governments, nonprofits, and small businesses.He is the author of The Little Book of Local Government Fraud Prevention and Preparation of Financial Statements & Compilation Engagements. He frequently speaks at continuing education events.Charles is the quality control partner for McNair, McLemore, Middlebrooks & Co. where he provides daily audit and accounting assistance to over 65 CPAs. In addition, he consults with other CPA firms, assisting them with auditing and accounting issues.
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