Rationalization

completely. At the personal and global level, an ethical culture will fortify and assist compliance where accountable systems are assessed and proactively evaluated.

Preventing Fraud with a Culture of Accountability

The Fraud Triangle (seen in Figure 1) demonstrates that to commit an act of fraud, someone experiences pressure (often financial), they then rationalize their action, and there must be opportunity to do so. Organizational cultures can help address pressure. Ethics and values training can reduce self-serving rationalization. However, reducing opportunity is where local government leaders can make the biggest impact to minimizing their risk. This means a fraud may not start with the perpetrator intending to profit from it, but that those involved gradually read the possibilities, and then develop and refine the fraud over time.

The fact that fraud and embezzlement remain a growing problem within our organizations is a clarion call for a more robust focus on their elimination and prevention. Portraying our unqualified annual audits as a flag of purity in our operations is a surefire way of setting ourselves up for embarrassment. As ICMA managers, we need to embrace creating a culture of accountability and continuous improvement to prevent fraud. A culture where we use proactive risk assessment, strategically update policies aligned with technology and workforce changes, and utilize modern disaggregated data analytics to routinely manage records, test our systems, and verify that checks and balances are in place will protect public resources and remove temptations from our employees during these socially and economically stressful times.

ENDNOTE

1 UK poised to finalize ‘failure to prevent fraud’ offense, February 1, 2023, retrieved from https://www.strategic-risk-europe. com/home/uk-poised-to-finalise-failureto-prevent-fraud-offence/1443682.article