Public sector tends to have lots of money, hence people are often tempted to misappropriate or misuse these funds. It is not surprising that millions of dollars set aside for worthwhile projects get lost every year due to a lack of transparency or outright fraud.
Financial crime in the public sphere affects millions of lives globally, and it is a problem that is challenging to solve. Most people worldwide expect their governments to manage public funds prudently, and this is a justified stance.
In reality, many governments are struggling or failing to repay their people’s faith in them. According to the Global Corruption Barometer released by Transparency International, 57% of the world population is dissatisfied with how their government is handling corruption. Even worse, the United Nations estimates that $3.6 trillion is acquired illegally or paid as bribes around the world yearly.
Although the figures mentioned above are a pointer that corruption is a global menace, it is manageable and can be eliminated if you use the right approach. Here are five ways that can effectively prevent fraud in the public sector.
1. Set an Example at The Top
The executive board and upper management of a public department can create a culture of accountability throughout the organization by writing a code of conduct. This code should outline the organization's stance on business ethics, describe fraudulent activities, and list their implications.
A simple three-sentence statement is enough, provided it has all the components.
2. Implement Internal Controls
Internal controls help in protecting your assets from fraud, keeping up-to-date transaction records, and ensuring you achieve your goals and objectives. Some of the controls you need in your organization include:
- Segregation of duties: record keepers must be different from those who store assets.
- Monitoring access: it helps to keep a log of every employee’s activities.
- Management review: do regular audits of transaction records and asset inventories.
3. Use Analytics to Detect Potential Fraud
Government departments tend to handle more data than other organizations. However, most of them lack the tools to analyze this information and detect possible fraud. With the right resources, it is easy to identify fraudulent payments before they are made and prioritize investigation for transactions that appear shady.
By using advanced analytics tools to sift through their data, public organizations can detect ongoing and looming corruption scandals and save a substantial amount of public funds.
4. Use Insights for Actionable Intelligence
After analyzing data to detect possible fraud, you will have lots of useful information that needs to be translated into actionable intelligence. The best way to do this is by integrating a business intelligence system that uses the collected data to provide insights to government employees on how they can combat fraud and improve their service delivery.
Besides providing workers with the best course of action, the business intelligence system complements the analytics tool used for fraud detection.
5. Hire, Train and Promote Ethical Employees
During the hiring process, perform thorough background checks on all applicants and train your managers to be vigilant while vetting prospective employees. Implement fraud education for your entire staff, as increased awareness is vital and highly effective in fraud prevention.
Want to prevent or stop existing fraudulent activities in your company? The Performance Institute offers several useful courses that can transform your organization into a corruption-free zone.
For instance, the workforce management course is useful to federal, state, and local governments that are struggling with tighter budgets, massive knowledge gaps, corruption, and decreased human resources. The Performance Institute helps you overcome these challenges and build a sustainable and productive workforce.