Insights into fraud: the 2019 Fraud Census

The Commonwealth Fraud Prevention Centre and the Australian Institute of Criminology (AIC) are working together to improve the evidence base on fraud against the Australian Government.

The AIC has recently released two new statistical reports which present the findings of the most recent annual census of fraud against Commonwealth entities:

• Commonwealth fraud investigations 2017-18 and 2018-19
• Fraud within and against the Commonwealth: The most harmful frauds, 2016-17 to 2018-19.

The 2018-19 census included responses from 157 entities across regulatory, policy, research, service delivery, welfare and other areas of government. The AIC’s fraud against the Commonwealth census and reports aim to:

• identify significant fraud risk areas
• strengthen fraud control policies
• guide the targeting of resources
• gain a clearer understanding of how fraud may occur.

Estimates by responding entities indicated that 8 per cent of total departmental resourcing could potentially have involved fraud in 2018-19. The study identified a 73 per cent increase in the amount lost to external fraud and 59 per cent decrease in the amount lost to internal fraud between 2017-18 and 2018-19.  

‘External fraud’ relates to fraud committed by people who are not employees or contractors of a Commonwealth entity while ‘internal fraud’ relates to fraud committed by employees or contractors of the Commonwealth. The report found that fraud risks are constantly evolving and are faced by all Commonwealth entities no matter what their primary role is.

The most prevalent risk for internal fraud involved accessing information and IT systems. The most prevalent risk for external fraud involved financial fraud.

Inadequate resourcing and understanding of fraud risks were themes that emerged from participants’ opinions of what made the prevention and detection of fraud difficult within their departments. A recurrent theme in this year’s census along with previous findings concerned frustration at the lack of accessible evidence and sharing of information to prevent, detect, investigate and deal with fraud against the Commonwealth. The AIC found that the number of staff whose duties were solely focussed on fraud control dropped by almost two thirds from 1,873 to 646 between 2017-18 and 2018-19.

In 2018-19, 44 organisations finalised 6,759 investigations of internal and external fraud. The majority of these investigations were done by medium to large sized organisations. Of these investigations only 57% of internal and external fraud investigations resulted in fraud being proved. Compared to 2016-17, there was a substantial decline in cases where fraud was detected via data analytics and an increase in fraud cases found though external tip-offs.

As at 30 June 2019, the Australian Federal Police was investigating 105 fraud matters which were valued over $1.2 billion. In 2018-19, 717 fraud matters were prosecuted by the Commonwealth Director of Public Prosecutions and 590 convictions were obtained.

Author: Ingrid Baader-Irwin (Attorney-General's Department)