Fraud Prevention in Local Government

Audit focus and scope

This audit assessed whether local government entities have taken appropriate steps to prevent fraud. We asked the following questions:

  1. Have entities implemented a coordinated approach to manage fraud risks?
  2. Do entities have adequate controls for preventing and detecting fraud?
  3. Do entities respond appropriately to suspected fraud?

During our audit we considered:

  • key principles from the Fraud and Corruption Control Standard (AS 8001-2008)
  • guidance issued to entities by the Department of Local Government, Sport and Cultural Industries
  • guidance material issued by audit offices in other jurisdictions
  • reports published by the CCC and the PSC
  • the best practice guide for fraud and corruption control published by the Crime and Corruption Commission in Queensland
  • international research.

During the audit we:

  • provided a questionnaire to all 148 local government entities, requesting information about approaches to managing fraud risks
    • 118 entities responded to the questionnaire (see Appendix 3)
    • 91 provided copies of their Codes of Conduct
    • 26 provided copies of their Plans. We reviewed the Plans for key elements of the Standard, including an entity position statement, accountabilities, a fraud risk assessment, outline of key controls, and reporting avenues and protections.
  • reviewed approaches in more depth at 5 entities. This included interviews with key staff, and reviews of policies, registers and complaints systems. This sample included entities ranging from relatively small to large, from both metropolitan and regional areas.

We did not conduct detailed reviews of procurement, record keeping or systems for verifying employee identities. These areas were the focus of recent performance audits by this Office.

This was a narrow scope performance audit, conducted under section 18 of the Auditor General Act 2006 and in accordance with Australian Auditing and Assurance Standards. Narrow scope performance audits have a tight focus and generally target entity compliance with legislation, public sector policies and accepted good practice. The approximate cost of undertaking and tabling this audit is $300,000.

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