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The development of the e-government model in the modern world is associated with a high number of challenges. Among them, the following are considered as key sources of risk for the government: technical, organizational, social, and financial challenges. Among key technical challenges, the following are vital: development of information-communication technologies infrastructure, security, and privacy of data. Key organizational challenges are the support of management, resistance to change, and effective collaboration with proper qualifications. Key social challenges include the absence of proper culture and the digital divide. The financial challenge of e-government is associated with high costs.
The most common method of fraud detection and prevention in e-government includes the realization of the fraud risk assessment method. In this context, following steps must be fulfilled: identification of the fraud risk; definition of misstatement probability; definition of the significance of potential risk caused by misstatement; assignment of a rating of risks; identification of compensating controls required; assessment of the effectiveness of existing controls and definition of additional control requirements.
According to the norms of Section 77(1) of the Provision of the Standing Orders, the Public Accounts Committee (PAC) is responsible for the control of the corruption risks in public sector operations. Key roles of the PAC include the following: inspection of the accounts of the Federation; inspection of accounts of public authorities laid before the House; inspection of reports of the Auditor General laid before the House; and inspection of other matters referred to the Committee by the House. The responsibilities of the PAC include ensuring accurate accounting of public money, control of approved legislation of all payments made, proper usage of all assets following rules, accurate maintenance of all accounts and records, and usage of public money according to the approved provisions.
The importance of the forensic accounting for the control of operations of the public sector in Malaysia is explained by the fact of significant risks and losses that can be caused due to the absence of such a control mechanism. The earlier discussion of the role of fraud risk assessment method for the prevention of fraud in e-government operations demonstrated that the absence of proper control can cause significant losses for the government and society in general. From this perspective, state agencies must clearly understand what outcomes of fraud in the public sector can take place. The existence of the forensic accounting practice could allow management of the public sector to effectively identify causes and scale of potential risks.
The problem of corruption in the public sector is relevant for the majority of states, including Malaysia. Among the factors of corruption risks spread, following parameters were identified by the Malaysian Anti-Corruption Commission (MACC): the practice of lifestyle beyond their means organization among public sector employees; the attitude of greed; the presence of conducive opportunities for participation in acts of corruption; and low level of integrity among the employees in the public sector. Based on these findings, it is important to create conditions of strong internal and external control over the performance of public sector organizations to avoid corruption risks.
The careful discussion of the problem of asset misappropriation acts in the study by Norziaton et al demonstrated the fact that employees both in the public and private sectors prefer to perform similar acts despite the fact of high awareness on the associated legal and control risks. In these conditions, it is possible to say that the existing measures of control and legal punishment for the acts of asset misappropriation are not sufficient from the point of the existing risks mitigation. Among the key sources of such actions, factors of corruptive actions in the public sector could be considered. At the same time, specific cultural factors inside the organization could promote such a behavior model. If employees face the situation when asset misappropriation practice is common, it becomes less dangerous and condemned in their interpretation. As a result, the internal culture of the organization can become a source of corruptive actions. In these conditions, organizations must orient on careful control and punishment of acts of asset misappropriation at the highest level, including changes in the culture of organizations.
Procurement fraud remains to be a significant issue in public sector operations in Malaysia. From this perspective, the research by Aida Maria et al demonstrated the fact that the procurement mechanism as a monitoring mechanism can be considered as a single effective method of procurement fraud risk prevention. According to the findings of the study, the role of monitoring mechanisms must be mainly associated with the timely identification of the sources of fraud risks, which guarantees their timely prevention. At the same time, it was stated that the absence of cooperation between internal and external parties in the public sector can lead to poor effectiveness of monitoring mechanisms. Taken together, monitoring mechanisms can contribute to the effective control of fraud risks only if properly organized.
According to the findings of the study by Aida Maria et al, the following top five factors of the procurement fraud development in the public sector were identified: “no job rotation in high-risk areas, management override of control, lack of top management support, poor segregation of duties and inadequate continuous monitoring by management” (p.166). According to these findings, the absence of effective rotation together with the absence of strict management control can provoke corruptive actions among employees. At the same time, effective support of senior management must contribute to the prevention of the fraud risks, while the opposite situation takes place. Low segregation of duties creates conditions when employees can take part in activities not related to their primary work sphere, provoking risks of corruption. Finally, inadequate monitoring contributes to the full image of fraud risks, when employees are left alone with fraud challenges and risks.