DFAT’s fraud control arrangements ‘largely effective’, audit found

By Shannon Jenkins

Monday June 22, 2020


The Department of Foreign Affairs and Trade’s failure to address non-compliance with staff training requirements could lead employees to believe that compliance is optional, according to the national auditor general.

The Australian National Audit Office’s latest report looked at the department’s fraud control arrangements from September 2019 to early February 2020, noting that the federal government activated its emergency response plan for COVID-19 on February 18.

DFAT’s fraud control arrangements were “largely effective”, the audit found, and comply with the Commonwealth Fraud Control Framework, as well as the whole-of-government better practice fraud guidance.

While the department has promoted a “fraud aware culture”, the audit identified issues with staff compliance and inconsistencies with internal requirements.

For example, completion rates for DFAT’s program of mandatory fraud awareness training were “consistently low”, sitting in the range of 31-65% between 2018 and 2020, the report noted.

“Recent remediation measures are credited with improved compliance, but continued attention is required as failure to adequately address non-compliance with mandatory requirements communicates to staff that compliance is optional,” it said.

ANAO found DFAT has implemented a fraud control plan, and has created reporting channels which can be used by staff and the public.

The department’s main source of fraud detection has been tip offs. Out of the 205 fraud investigations finalised in 2018–19, 74% of those were first identified from a tip off from staff or the public.

The audit noted DFAT’s other fraud-detection methods include internal audits, data analytics, and forensic examination. As at June 2019, DFAT had 39 staff dedicated to fraud related duties, out of its 6078 strong workforce.

Read more: Eight percent of federal agency resources may be affected by fraud, new research found

The coronavirus pandemic has seen an increase in fraud risks. The DFAT has taken a range of measures to address this, including ensuring continuity in case referrals and management under remote working, and engagement with stakeholders “emphasising practical up-front counter-measures to disrupt and reduce the impacts of fraud”, the report said.

“DFAT is participating in the whole of Australian government Senior Officers Fraud Forum. The Fraud Control Section has sent a cable to all staff and portfolio agencies sharing fraud related insights from the Australian Criminal Intelligence Commission,” it noted.

The department agreed to all three audit recommendations, which called on DFAT to update its policy and processes for fraud investigations in order to comply with Australian Government Investigations Standards, and to improve staff compliance relating to mandatory fraud awareness training.

ANAO also recommended DFAT’s department-level fraud risk assessments identify control owners by position, and suggested the department strengthen internal reporting and oversight by requiring business areas to report on progress to reduce fraud risks above the tolerance level.

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