Federal, state and local funds used to provide public services and to stimulate the economy are extremely enticing to fraudsters. Texas public sector funds alone are measured in billions of dollars, which leaves plenty of room for fraud. Fraud can halt progress on projects intended to better the economy, leave money wasted for public works and instill doubt in constituents and stakeholders who begin to question use of tax dollars. Prevention strategies and crisis management planning are a couple of ways to help mitigate the burdens of fraud before they happen.
- Prevention. Common methods of fraud include asset misappropriation, corruption and financial statement fraud. Implementing internal controls can help diffuse fraud, but in the instances of human ingenuity, preparing a strong response plan could be the best line of defense.
- Response. Forensic accountants possess the unique skills and knowledge necessary to appropriately respond to fraud. Just like first responders, forensic professionals are well trained to manage fraud emergencies and crisis situations.
- Prosecution. Laws currently in place to help address fraudulent conduct include The Fraud Enforcement and Recovery Act of 2009 (FERA), The False Claims Act (FCA), and The Racketeer Influenced and Corrupt Organizations Act (RICO).
The TSCPA article Public Sector Fraud: Combating Efforts to Steal ‘Other People’s Money’ by Trish Fritsche, Weaver senior manager in forensic and litigation services, elaborates further on the methods available to combat public sector fraud, as well as the laws in place to protect the public.