An investigation has found nearly half the recent fraud cases within district health boards, local government and at universities and polytechs went unreported to authorities.
The Auditor-General commissioned the surveys and on Monday issued findings on the awareness, prevention and detection of fraud in the sectors.
The survey found 30% of fraud at DHBs was not reported to the appropriate authorities. It says it knows many organisations are reluctant to bring charges, but any decision not to respond can erode staff confidence.
The Office of the Auditor-General says the risk of fraud is greater in uncertain economic times and DHB employees felt less secure than others in the public sector.
Radio New Zealand's health correspondent says 13% of frauds involving DHBs were for more than $100,000 - which was higher than for the wider government sector.
Meanwhile, 39% of fraud in both tertiary and local government sectors went uninvestigated by police.
Some 38% of respondents in councils and 37% in polytechnics and universities said they were aware of a case of fraud in their institution within the past two years - compared to a public sector average of less than a quarter.
Across the entire public sector, theft of cash was the most common form of fraud (21% of known frauds) and 76% of respondents estimated the most recent fraud in their organisation involved less than $10,000.
Most survey respondents said the most recent fraud occurred because the perpetrator did not think they would get caught (40%) or because internal controls were ignored or over-ridden (27%).
Assistant Auditor-General Ann Webster says staff are sent the wrong message any time a manager does not take action on a fraud case.
Ms Webster says the surveys also indicate that simply referring suspected fraud to police also acts as a deterrent and such reporting means an organisation is half as likely to have a repeat incident.
The Auditor-General's report says New Zealand has a clean image when it comes to fraud, but cannot be complacent.
