Fraud within local government agencies poses significant risks to public trust, financial integrity, and effective service delivery. One of the key strategies for mitigating fraud is the establishment of a robust control environment, which includes internal controls, oversight mechanisms, and ethical standards designed to prevent or deter fraudulent activities. This study evaluates the effectiveness of control environments as a deterrent to fraud in local government settings, examining both the structural and behavioral aspects of control mechanisms. By analyzing case studies, internal audit reports, and interviews with public sector officials, the research assesses the strength of control frameworks in identifying vulnerabilities, deterring fraudulent behavior, and ensuring accountability. The findings suggest that while effective control environments can significantly reduce the occurrence of fraud, challenges such as inadequate enforcement, lack of training, and organizational culture remain barriers to optimal effectiveness. The study offers recommendations for enhancing control systems in local government agencies to better prevent fraud and improve overall governance and transparency.

Fraud deterrence, Local government, Control environment

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