Guide for Members of Public Boards and Commissions: Chapter 10

Detect and report suspected fraud, wrongdoing or other misuse of public resources. If you see something, say something.

Set Internal Controls

An ethical work environment with internal controls is essential to the proper use of public resources.

Any misuse of public funds and resources affects a public organization’s financial well-being, reputation and ability to accomplish its mission. If you see something, say something.

As a public board member, you have an important role in preventing and detecting fraud. You and your fellow members are custodians of the public trust. You have the responsibility to protect public resources, including money, assets, real property, employee time, digital records and other types of data. Massachusetts citizens have entrusted these public resources to your care.

Although most employees are honest and hardworking, fraud and other misconduct still occur, so you must diligently apply preventative measures – often referred to as internal controls – to help safeguard public assets and taxpayers’ interests.

As a result, all organizations need internal controls. Every internal control must be based on the specific organization. Some common elements of an internal control plan to protect public resource include the following:

• The segregation of duties performed by employees to ensure no one individual can commit and cover up their own wrongdoing.
• Approval processes for expenditures, with increased oversight for larger expenditures.
• Methods to track and monitor employee time and attendance, including the use of leave time.
• Controls to track the public organization's acquisition and disposition of public assets, such as vehicles, equipment, supplies and petty cash. 
• Fraud-reporting mechanisms, including a telephone or email hotline or an independent complaint review process.
• An anti-fraud policy, as well as employee training on the policy and annual reminders to follow the policy.
• A code of conduct with standards related to conflict of interest and other professional standards that align with the public organization's mission.
• Tone at the top: communication from the organization's administration about its commitment to the highest ethical and professional standards.
• Careful vetting of employees - both before and after hiring - to ensure that their background and professional certifications meet the entity's standards and support the entity's mission.

You should determine whether the board has an internal audit committee to check and verify expenses. If not, advocate for the creation of one.

Ask Important Questions about Fraud Risk and Prevention

Questions to ask:

• What fraud risks exist in the public organizations your board oversees?
• What types of internal controls are in place to properly monitor the use of public resources?
• Does the public organization or your board perform compliance reviews or audits?
• Does your public organization have an anti-fraud program that includes training, policies, new-hire background checks and a fraud hotline or other fraud-reporting mechanisms?

The board needs to set the “tone at the top” and communicate that the public organization has zero tolerance for fraud and other inappropriate activity.

Additional Resources

Guide for Members of Public Boards and Commissions

Red Flags for Fraud

Watch Our Video on Fraud Awareness and Prevention in the Workplace

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Last updated:	August 29, 2022