Recent high profile investigations into fraud in the public sector by the Corruption and Crime Commission (CCC) in Western Australia (WA) have featured a number of local government entities (entities).
There are 148 entities in WA. In 2017-18, the sector spent more than $4 billion, employed around 17,000 staff, and administered $45 billion of assets. Fraud in this sector could result in substantial material and reputational losses, and this level of risk calls for entities to implement strong controls and better practice approaches to reduce the threat of fraud.
This audit reviewed whether entities have taken appropriate steps to prevent fraud, through the following lines of inquiry:
- Have entities implemented a coordinated approach to manage fraud risks?
- Do entities have adequate controls for preventing and detecting fraud?
- Do entities respond appropriately to suspected fraud?
The purpose of this audit was to review the systems that entities had in place. We did not seek to identify any specific instances of fraud.
- Local government entities can do more to prevent fraud. We found entities do have some controls in place, but would benefit from better understanding their specific fraud risks and taking a coordinated approach to managing them.
- Our questionnaire found many entities have not assessed their fraud risks, or created a plan to deal with fraud. The responses highlighted gaps in prevention and detection approaches. Many entities can do more to raise staff awareness of fraud, improve their screening processes, and strengthen protections for informants.
- Our detailed review of 5 entities confirmed these results. We found they had core integrity policies in place, but none had assessed all their fraud risks, and implemented a coordinated approach to manage them. All entities could build on their current policies and practices to make workplaces more fraud resistant, and improve their reporting avenues to strengthen their ability to respond to fraud.