Fraud Risks in Local Government: An Analysis of Audit Findings

摘要

Internal controls are a primary means to deter fraud. Failure to establish or to follow a strong program of controls provides opportunities for fraud to occur. Fraud occurs in all types of organizations. This article considers fraud risks in local government. Over 87,000 municipal governments exist in the United States, ranging from the smallest villages and special districts to the largest cities and counties. Smaller municipal units are often likely to suffer from control deficiencies, due to lack of financial and personnel resources and limited oversight. This research examines the findings of 234 audits of town and village governments in New York State, as conducted by the State Comptroller's Office over the period 2003-09. The audits focused on governance and internal control issues, not financial statement issues. The audits presented numerous recommendations for improvements in controls. We analyze the content of 1,387 control recommendations from a fraud prevention perspective. The findings suggest locations of the greatest areas of weakness in the ongoing battle against governmental fraud.