Tuesday: Perception of Detection
In 2012, Rita Crundwell was arrested for embezzling over $50 million in funds from the city she worked for. Rita used much of this money to purchase horses to which she gave peculiar names like "I Found a Penny" and "Have Faith in Money.” In 2019 Simon Leviev was arrested for accumulating millions of dollars through a slew of financial crimes, including romance fraud. He lived a lavish lifestyle which he brazenly advertised on social media. What could cause these individuals to broadcast their criminal gains in such an outrageous fashion? They thought they would never get caught.
What is Perception of Detection?
Perception of Detection is the belief that if an individual or organization commits fraud, it will be discovered. It is an often-inexpensive measure that can increase the effectiveness of your internal controls by deterring fraud attempts before they happen.
As public entities, state agencies are often considered a prime target by fraudsters. Your agency may have strong internal controls in place to prevent fraud, but if no one is aware of that, the fraud may still be attempted. By making some of our fraud prevention efforts known, state agencies can contribute to the perception that fraud will be found and stopped. It is important not to give specifics of our efforts, but simply to make it known that measures are in place to prevent fraud.
Creating a Perception of Detection
There are many ways to show that you are being watchful without revealing sensitive information. Law enforcement employs methods such as placing radar signs that tell you your driving speed and branded cameras placed in high crime areas. If you watch a press conference announcing criminal charges, law enforcement will often share some of the methods they used to uncover the crime and catch the those involved. They also make direct statements like “if you commit this crime, you will be caught and held accountable.”
Banks have a multitude of simple and complex measures to prevent all types of fraud, many of which are made visible to the public. Bank branches have bullet proof glass, cameras, and panic buttons in case of a robbery. They require proof of identification for certain transactions. Accounts have limits on the amount of money that can be transferred per day. Checks are verified for an accurate signature.
Here are some questions that can help you determine if your agency is cultivating a perception of detection:
- Are employees and external parties aware that fraud detection systems are in place and actively monitored?
- Do we regularly communicate the consequences of fraud and the likelihood of detection?
- Is there visible follow-up on reported or suspected fraud cases?
- Are audit trails and access logs reviewed and publicized internally?
- Are fraud prevention messages included in onboarding, training, and internal communications?
- Do we publicize successful fraud prevention or enforcement actions (internally or externally)?
- Is there a clear, accessible channel for reporting suspected fraud—and do employees know about it?
Fraudsters often operate with the assumption that they are too smart to be discovered or that no one is paying attention. By cultivating a strong perception of detection, we can disrupt that assumption and reduce the likelihood of fraud before it begins. While our measures might not always be as straightforward as a camera in a storefront, if we are willing to think creatively and take fraud seriously, we can use the perception of detection to help build a more fraud-resistant Minnesota.
Resources
Framework for Managing Fraud Risks in Federal Programs
About ICA
Minnesota Management and Budget’s Internal Control and Accountability Unit (ICA) offers resources, training, and consultation for executive agencies to prioritize and document their internal control systems. The unit offers content for Fraud Awareness and Prevention Week for the twelfth consecutive year, aligning with the Association of Certified Fraud Examiners (ACFE) annual International Fraud Awareness Week.