Fraud requires intent; it's a word that describes what happened, but also the motivations of the people involved. Incompetence doesn't assume any intent at all; it's merely a description of the (lack of) ability of the people involved.

Incompetent people can certainly commit fraud (perhaps to try to cover up their incompetence), but that's by no means required.

> ...insist they just made honest mistakes

If they're lying about that, it's fraud; they're either covering up their unrealized incompetence with fraud, or trying to cover up their intended fraud with protestations of mere incompetence. If they really did make honest mistakes, then it's just garden-variety incompetence. (Or just... mistakes. To me, incompetence is when someone consistently makes mistakes often. One-time or few-time mistakes are just things that happen to people, no matter how good the are at what they do.)