Which practice best prevents fraud in an LCPAA's financial management?

• A. Publicly posting all transactions.
• B. Ignoring vendors' invoices.
• C. Regular internal audits and segregation of duties.
• D. Relying solely on external audits every decade.

Answer: (C)

Strong internal controls and governance are essential to prevent fraud in an LCPAA’s financial management. Segregation of duties ensures that no single person handles all steps of a financial transaction—authorization, custody, and record-keeping—creating built-in checks and balances that make it much harder to misappropriate funds without detection. Regular internal audits independently review records, verify that transactions align with policies, and quickly raise red flags when anomalies appear. This ongoing, proactive approach deters fraudulent activity and helps ensure compliance with funding rules and reporting requirements.

Public posting of all transactions might increase transparency, but it doesn’t by itself establish the necessary safeguards or protect confidential information. Ignoring vendors’ invoices directly enables fraud and undermines the control environment. Relying only on external audits every decade leaves a long window for fraud to occur undetected and misses timely corrective action. Regular internal controls paired with routine internal audits provide timely deterrence and detection, making this the best practice for preventing fraud.