Evaluation of frauds in public sector

Abstract

Frauds greatly influence the performance of the enterprises and decisions made by users of accounting information. Therefore, fraud analysis is at high importance among the executives of state-owned enterprises and budgetary institutions. Probability of detecting a fraud is lower than finding errors, since fraudulent activities are deliberately hidden: they are usually pursued using complex and carefully planned schemes. The results of the empirical research have revealed that utmost importance in encouraging frauds can be attributed to the conditions where various individuals can commit frauds. Thorough analysis of scientific literature, accounting and audit regulations had allowed the authors to prepare the classification of principle conditions increasing fraud risk. This classification will aid public sector executives, accountants and auditors in detecting fraudulent activities, identifying their causes and location, objectively evaluating their effect on performance of the enterprise and foreseeing specific measures of prevention.