Australian Institute of Criminology

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Fraud has been estimated to cost Australia many billions of dollars each year. It affects all sectors of the community but in particular government agencies that handle large sums of public money such as taxation revenue and welfare payments. Government agencies are also at risk of public servants and contractors exploiting security weaknesses in systems to obtain financial advantage dishonestly. Fraud risks also arise in connection with implementing new, large-scale government programs.

This report presents the findings of the eighth annual survey of the fraud experiences of Australian Government agencies reported pursuant to the Commonwealth Fraud Control Guidelines 2002 (the Guidelines). The Guidelines require the Australian Institute of Criminology (AIC) to produce a report each year on fraud experienced by Australian Government agencies and the fraud control arrangements they use to minimise the risk of fraud.

The report is based on information from the 2009–10 financial year supplied by Australian Government agencies to the AIC before 30 September 2010. The 152 agencies that responded to the present survey reported experiencing 706,000 incidents of fraud, worth almost $498m, during 2009–10—almost 12 percent fewer incidents than in 2008–09 with a net worth almost 17 percent less than the amount lost in 2008–09. Reported losses arising from internal fraud, however, increased by almost 10 percent between 2008–09 and 2009–10, with more than $2m lost in 2009–10.

Responses vary when fraud is identified within agencies. Some responses are obligatory under official policies and laws, and others are optional, depending on the scale and circumstances of the offence. Fraud is often not reported officially and sometimes repeat victimisation occurs—occasionally by the same offender against the same agency. The Australian Government has developed an extensive range of responses to this problem, including extensive fraud control policies, regular risk assessments, enhanced information security measures—and last, but by no means least, the use of prosecution and punishment when all else fails.

In 2009–10, over 5,000 defendants were referred to the Commonwealth Director of Public Prosecutions (CDPP) for prosecution involving allegations of fraud worth almost $100m. Of these only 29 were acquitted. The CDPP secured more than $59m by way of reparation under the Crimes Act 1914 (Cth) and pecuniary orders under the Proceeds of Crime Act 1987 (Cth).

This is the final AIC survey to be conducted pursuant to the 2002 Guidelines. Early in 2011 revised guidelines were issued by the Attorney-General’s Department, and the AIC has taken the opportunity to revise the data collection instrument for 2011. This will enable agencies to distinguish clearly between incidents of non-compliance and of fraud and also to provide more detailed information on the most serious incident of fraud experienced during the year—including demographic information on the principal suspect, as well as judicial outcome results.

I believe this report will provide important evidence that agencies can use to improve their fraud control measures and keep the risks of financial crime involving Commonwealth funds to a minimum.

Adam Tomison