Strength – A Good Fraud Control Program

When it comes down to it  good fraud control is the application of common sense.

This is demonstrated in a recent Australian National Audit Office (ANAO) report that examined the fraud control practices of three major Australian government entities.

The structure that the report provides is applicable to all organisations irrespective of size or ownership structure.

For the purposes of Australian law, fraud Fraud against the Government is defined as ‘dishonestly obtaining a benefit, or causing a loss, by deception or other means. 

The report notes that fraud against the Government can be broadly categorised as being either external (fraud committed by clients or customers, service providers and members of the public) or internal (fraud committed by employees and contractors). In some cases, fraud against the Governmnet may involve collusion between external and internal parties, which may not only result in loss for the Commonwealth, but may also involve corrupt conduct such as bribery and secret commissions.

The entities selected for the audit were: the Australian Trade Commission (Austrade); Comcare; and the Department of Veterans’ Affairs (DVA). The overall administration of the fraud control framework by the Attorney-General’s Department (AGD) was also examined as part of the audit.  The following chart neatly articulates the organisational circumstances of each entity:

Screenshot 2014-11-06 05.36.50

The ANAO adopted the following criteria in the assessment of the maturity or otherwise of the fraud control mechanisms of the relevant organisations:

  • the selected entity implemented the applicable mandatory requirements of the 2011 Fraud Control Guidelines (2011 Guidelines);
  • the selected entity implemented, on a risk basis, appropriate:
    • strategies to prevent fraud, train staff and raise internal awareness; and
    • processes to monitor, evaluate and report on fraud control arrangements; and
  • AGD effectively administered the fraud control framework and supported entities, as required by the Guidelines, following release of the 2011 Guidelines

The report noted:

Overall, the selected entities—Comcare, the Australian Trade Commission (Austrade) and the Department of Veterans’ Affairs (DVA)—were generally compliant with the applicable mandatory requirements of the 2011 Guidelines in effect during the course of the audit, and had implemented a range of strategies and fraud control measures relevant to their specific circumstances.

AGD’s overall administration of the fraud control framework has been generally effective. The department administers a well-developed framework comprising: documented policy and guidance; clear assignment of roles and responsibilities between AGD and entities; identified points of co-ordination; and the provision of support to entities through networking, communication and training arrangements. 

Perhaps the most telling observation of the report relates to the issue of learning from others.  The report concludes:

Among the selected agencies, those which most actively engaged with the ‘community of practice’ sponsored by AGD had also moved further along the road towards adopting a more contemporary approach to fraud control. Comcare participated actively in AGD networks and events, including hosting and chairing some events, while DVA had only occasional involvement. At least since 2010, Austrade and DVA did not participate in AGD-sponsored forums and the Fraud Control Network. Austrade advised that it started to access the Govdex website during the course of the audit.

Given the change in approach sought by the Australian Government with the release of the 2011 Guidelines, limited entity engagement with the wider community of practice was a lost opportunity to keep abreast of better practice and key developments in fraud control.

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