Which process helps prevent fraud in budgetary accounting?

Implementing a system of requisitions and encumbrances is an effective measure in preventing fraud in budgetary accounting due to its role in promoting accountability and transparency in financial transactions. This system requires that any commitments or obligations for funds be formally approved before they are incurred, which creates a clear record of spending intentions.

When requisitions are made, they document the specific amounts being requested for certain purposes, while encumbrances help track the commitments against the budget. This dual-layered approach provides checks and balances that make it more difficult for individuals to misuse funds. By necessitating approval and documentation, the risk of unauthorized or fraudulent transactions decreases significantly as all spending is subject to review and must align with available budgetary allocations.

This proactive approach is critical in governmental operations, where the integrity of public funds and trust in how they are managed is paramount. Such systems not only help to prevent fraud but also enhance the overall financial management and accountability within governmental entities.