Anti-Fraud Measures in U.S. Local Governments

• In Event: Accounting Fraud and Ethics

Abstract

Fraud surveys (e.g., as conducted by the ACFE and some large CPA firms), and events such as the recent Dixon, Illinois embezzlement case, show that local governments have appreciable fraud exposure. We assess the current state of fraud risk awareness and fraud mitigation practices in the U.S. local government sector thru a survey of finance directors of selected U.S. municipalities. We find that awareness of, and interest in, COSO 2013 is limited, as is the use of anonymous fraud hot-lines. These results suggest ready opportunities for improving formal anti-fraud programs in the local government sector. The survey finds that the most prevalent specific anti-fraud measures include management review and sign-off, and surprise audits. Also, finance directors consider the most effective anti-fraud measures to be internal audits, external audits, management review, and surprise audits.

Authors

• Ellen L Landgraf, Loyola University - Chicago

• Laurence E Johnson, Colorado State University