The Australian Institute of Criminology (AIC) has published its annual report on fraud in the Australian Public Service (APS), finding that while internal fraud was significantly lower than external fraud, it increased by 86 per cent in 2016-17.
In its report, Commonwealth Fraud Investigations 2016-17, the AIC found that less than 40 per cent of Commonwealth entities detected fraud in that financial year.
In a statement, the AIC said members of the public, as taxpayers, expected the APS to be accountable for expenditure in the public interest, and Commonwealth entities must do everything necessary to minimise risks of fraud and to ensure that adequate and effective fraud control measures were in place.
“Each year, the AIC conducts a census of Commonwealth entities to document their experience of fraud during the preceding year and to examine the fraud control measures that they employ,” the statement said.
“The findings of the 2016-17 census show that less than 40 per cent of Commonwealth entities
detected fraud in that financial year. Fraud losses were found to be $93.8 million, which was 0.02 per cent of total Government expenditure.”
The AIC said comparable research on fraud against private sector organisations suggested that the losses reported by Commonwealth entities were, proportionally, much lower than might be expected.
However, it said that although the present findings indicated that relatively low levels of fraud against the Commonwealth were detected, it was not known with certainty how much fraud there was.
Digging further into the data, the AIC said 33 entities (out of the 131) began at least one internal fraud investigation in 2016-17.
“The estimated dollar value of all internal frauds that respondents could quantify and that were the subject of investigations commenced in 2016-17 totalled $2,126,594, a substantial decrease from the estimated losses of $3,490,093 in 2015-16,” the Institute said.
“The estimated dollar value of all external frauds that respondents could quantify and that were the subject of investigations commenced in 2016–17 totalled $99,006,782, a substantial decrease from the estimated value of external fraud investigations in 2015-16 of $500,045,551.”
In conclusion, the AIC said the fraud threats facing the Commonwealth arose principally from two areas: “Those people or contractors employed by a Commonwealth entity (internal fraud); and those who are external to the entity, such as customers, clients, third-party providers, vendors, or members of the public from Australia or overseas (external fraud).”
The AIC’s 70-page fraud report can be accessed at this PS News link.
