Fraud control at AusAID

AusAID's Fraud Policy Statement stresses the obligation of all personnel, managing contractors and NGOs to identify and report fraud.

For more information, see the fact sheet Fraud Control at AusAID which outlines how AusAID manages fraud and information on fraud cases.

Policy statement

Fraud Policy Statement [PDF 163kb]
Fraud Policy Statement [Word 441kb]

Online version (below)

Fact sheet

Fraud Control at AusAID fact sheet [PDF 167kb]
Fraud Control at AusAID fact sheet [Word 500kb]

Online version (below)

Fraud management in AusAID

Fraud management in AusAID [PDF 116kb]
Fraud management in AusAID [Word 1.2mb]

Fraud Policy Statement

August 2012

Any case of suspected or detected fraud MUST be reported immediately to the Director, Fraud Control.

The Australian Agency for International Development (AusAID) has a zero tolerance attitude towards fraud and maintains the highest standards of prevention, detection and remediation. All AusAID personnel (including contracted personnel) are responsible for ensuring strong, robust and effective fraud control.  This responsibility extends to Australian Government partners, commercial contractors, non-government organisations (NGOs), other implementing partners, and recipient governments.

AusAID’s Fraud Policy Statement (FPS) is part of AusAID’s fraud control framework, and details the obligation of all personnel, commercial contractors, NGOs and other implementing partners for fraud awareness, reporting and remediation.  The FPS provides assurance that all cases of fraud will be handled and investigated in a confidential, prompt and professional manner.  The FPS also gives AusAID contact points for those who wish to report a suspected fraud or who require further information on AusAID’s fraud control policy.

Definition of fraud

What is AusAID’s definition of fraud?

AusAID uses the Australian Government’s definition of fraud against the Commonwealth which is: dishonestly obtaining a benefit, or causing a loss, by deception or other means (Commonwealth Fraud Control Guidelines [external website] issued by the Minister for Home Affairs).

It extends beyond legally defined dishonesty offences to include any acts where improper benefit is gained or loss to AusAID created. It also allows for the benefits obtained to be either tangible or intangible; encompassing activities and/or behaviours broader than misuse or misappropriation of funds or assets.

Tangible and intangible benefits

Tangible benefits include any real, concrete or physical benefit, for example misappropriated funds and theft of assets. Intangible benefitsare benefits which are not concrete or physical; and include improper access to or dissemination of data or proprietary information, or unauthorised and improper use of AusAID assets such as unauthorised personal use of an AusAID vehicle.

Policy principles

AusAID is committed to protecting public money and property from fraud. As such AusAID maintains a ‘zero tolerance’ attitude towards fraud. AusAID:

• requires that any case of alleged, suspected or detected fraud must be reported immediately to the Director, Fraud Control Section
• adopts a risk management approach to the prevention of fraud which is incorporated into its business processes, management practices, internal controls and related activities
• is committed to training its staff and partners in ethics, privacy and fraud awareness
• prosecutes or applies other appropriate sanctions against those who have committed fraud
• seeks the recovery of misappropriated funds or assets wherever possible.

AusAID compliance with Fraud Control Guidelines

AusAID is required to comply with the Commonwealth Fraud Control Guidelines (‘the Guidelines’) in relation to the prevention, detection, investigation and reporting of fraud.

As Chief Executive Officer of AusAID, the Director General, is responsible under s44 of the Financial Management and Accountability Act 1997 for promoting the ‘efficient, effective and ethical use of Commonwealth resources’. This includes ensuring that AusAID complies with the Guidelines by:

• developing an overall fraud control strategy
• conducting fraud risk assessments and developing an agency wide fraud control plan
• investigating all instances of suspected fraud
• referring serious or complex fraud cases to the Australian Federal Police, where appropriate
• ensuring appropriate training of employees involved in fraud control
• fostering and maintaining the highest standards of ethical behaviour
• reporting on fraud control activities
• informing the Minister for Foreign Affairs of all relevant fraud control initiatives
• certifying in AusAID’s annual reports that:
• a fraud risk assessment and a fraud control plan have been prepared
• appropriate fraud prevention, detection, investigation, training and awareness, reporting and data collection procedures are in place
• AusAID has taken all reasonable measures to minimise the incidence of fraud; and to investigate and recover proceeds when fraud does occur.

The Australian aid program is delivered in some of the most challenging environments in the world. Fraud and corruption can be commonplace in many of the countries in which AusAID delivers aid. AusAID delivers aid in these countries because it is the objective of the aid program to help people overcome poverty—unfortunately poverty and corruption are often present together. For AusAID to do its job it must deliver aid programs while effectively protecting and managing the risks to Australian Government funds.

The introduction of new forms of aid delivery, with strong development outcomes, can be more susceptible to fraud.  For example, sector-wide-approach programs and activities involving imprest and/or trust accounts are higher risk than others and therefore require greater vigilance with regard to fraud prevention, detection and remediation.

To respond to its changing fraud exposure AusAID has:

• created a standalone Risk Management and Fraud Control Branch, more than doubling the resources of  its Fraud Control Section
• created dedicated risk management and fraud control positions in the four countries with the highest incidence of fraud
• improved the way we work with partners to both minimise the occurrence and impact of fraud, including signing the Joint statement on zero tolerance to fraud in Australia’s aid program to PNG with the Government of PNG.

How to report fraud

Contact the Director, Fraud Control Section to report any suspected or detected fraud that may have occurred or is occurring in any activity involving AusAID.  Fraud allegations or concerns can be reported by contacting the Director Fraud Control by email, telephone, fax or mail.

Email:  fraud@ausaid.gov.au
Phone:  (61-02) 6178 4897
Fax:  (61-02) 6178 4871
Mail: 
Director: Fraud Control
AusAID
GPO Box 887
Canberra ACT 2601
Australia

Information on the identity of someone reporting fraud is strictly confidential and will not be released without the consent of the person.

What to report

To report allegations or concerns that fraud has occurred or is occurring, as much detail and information as possible should be provided. If available, the information should include:

• name of the AusAID-funded program, scheme or arrangement
• name of activity
• name of parties involved
• brief details of alleged/detected/suspected fraud
• any other relevant information.

Fraud control at AusAID fact sheet

May 2013

AusAID has a zero tolerance approach to fraud in Australia’s aid program.  AusAID takes all possible steps to ensure that Australian taxpayer funds are protected from fraud and are used to improve the lives of the world’s poor.

AusAID’s definition of fraud

Fraud is dishonestly obtaining a benefit, or causing a loss, by deception or other means.  This is the definition in the Commonwealth Fraud Control Guidelines [external website].

Preventing fraud

AusAID manages thousands of aid activities across more than 70 countries. Many of these countries are inherently difficult environments to operate in; governance arrangements are often weak and attitudes towards accountability and transparency are not as developed as those in Australia.

In such operating environments, there is a much higher risk of fraud than in Australia. For this reason AusAID has strong systems and procedures in place for managing the delivery of Australian aid.

AusAID seeks to reduce the risk of fraud in the followings ways.

• We have a comprehensive Fraud Control Plan and Fraud Policy Statement which includes fraud control policies and guidelines, which are regularly reviewed and updated.
• All of AusAID’s overseas posts have a Risk and Fraud Management Plan that is reviewed and updated annually.
• Fraud awareness training is compulsory for AusAID staff, both in Australia and overseas. AusAID also provides training to contractors, other government and non-government organisations (NGOs) and implementing partners funded under the Australian aid program.
• Due diligence checks are carried out on contractors, NGOs and others involved in the delivery of Australia’s aid program.
• Our programs are designed to minimise the risk of fraud.
• AusAID’s annual audit program examines compliance by major commercial contractors and NGOs with financial, contractual and activity management requirements, including fraud reporting and fraud management.

Managing fraud

Where fraud is alleged, suspected or detected, AusAID:

• investigates the matter
• seeks prosecution of offenders wherever possible and appropriate
• seeks the recovery of misappropriated funds or assets and the application of appropriate penalties wherever possible.

Strengthening fraud control

AusAID has strengthened its management of Australian aid expenditure by significantly enhancing its approach to fraud control. AusAID has:

• created a standalone Risk Management and Fraud Control Branch which has more than doubled the resources of  its Fraud Control Section
• created dedicated risk management and fraud control positions in the four countries with the highest incidence of fraud
• improved the way we work with partners to both minimise the occurrence and impact of fraud, including signing the ‘Joint statement on zero tolerance to fraud in Australia’s aid program to PNG’ with the Government of PNG.

Fraud statistics

AusAID estimates that the potential losses to fraud in 2011–12 are less than half the losses in 2010–11. Potential losses in 2011–12 equate to 0.012 per cent of Australia’s total official development assistance (ODA) for 2011–12 (in dollar terms this is potential losses of $583,071 out of total Australian ODA of $4.864 billion). 

During the 2011–12 financial year 124 cases of alleged, suspected or detected fraud were reported to AusAID. Of these, 12 have subsequently been found not to have involved fraud or not to have involved AusAID funds. It is likely that, as the remaining active cases are further investigated, some additional cases will be found not to have involved fraud and/or AusAID funds.

Fraud cases reported in 2011–12 typically relate to the following types of matters:

• falsification of documentation relating to small grants applications and acquittals
• alteration of payee and payment amount/s on cheques
• collusion among tenderers and falsification of quotes submitted in tender processes
• theft of vehicles, laptops, project materials and other assets
• falsification of qualifications relating to scholarship applications.

Update on 2010-11 fraud statistics (as at 31 March 2013)

At the end of the 2010–11 financial year AusAID reported estimated potential fraud losses of $1,264,125 from 125 cases of alleged, suspected or detected fraud that were reported to AusAID in 2010–11. Following ongoing action these figures have been updated and at 31 March 2013 there were 111 active cases with a potential loss of $1,155,571. These revised figures represent a reduction of 14 cases in total and $108,554 in potential loss and equate to 0.027 per cent of 2010–11 total ODA.

This revised estimate takes into account:

• the addition of fraud losses which were not known at the time of the initial estimate
• recovery of fraud losses since the initial estimate
• matters which following further inquiries and investigation were found not to involve fraud.

For more information about fraud control at AusAID, or to report an alleged, suspected or detected fraud, please contact the Director Fraud Control Section at AusAID:

GPO Box 887, Canberra ACT 2601 Australia
Phone: 61 2 6178 4897
Email: fraud@ausaid.gov.au