Audit finds NSW councils weak on fraud control

Many local councils need to improve their fraud control systems, according to a report released by the Auditor-General for New South Wales, Margaret Crawford.

The report highlights that councils often have fraud control procedures and systems in place, but are not ensuring people understand them and how they work. There is also significant variation between councils in the quality of their fraud controls.

Of the 83 councils that completed the survey:

  • 5 have implemented most of the controls recommended by the kit

  • a further 40 have implemented half or more of the recommended controls

  • 38 have implemented less than half the recommended controls

While 65 of the 83 councils that completed the audit survey have fraud control policies, 52 councils do not have fraud control plans that direct resources to address the specific fraud risks they face. In the last two years only 15 councils that completed the survey have assessed their fraud risks to identify a need for refreshing or improvement.

Common weaknesses in councils’ fraud controls include:

  • not regularly reviewing their fraud control approach and tailoring it to their fraud risks

  • providing only limited information and training to staff on their responsibilities and how to report suspected frauds

  • providing limited information to the community on how they can report fraud in their councils.

The report recommends that the Office of Local Government work with other state agencies to better use the data they collect on fraud to provide a clearer picture of fraud within councils.

The audit surveyed local councils against a model of better practice in fraud control. Eighty-three or 65 per cent of the 128 councils responded to the survey.

A full copy of the report is available here

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