Prevent fraud and corruption in grants administration

The purpose of grants

Grants are an important way for the Australian Government to meet its policy objectives. It uses grants to deliver valuable services and support to individuals, businesses, industries and communities.

The government provides billions of dollars in grants each year to:

provide and improve social services
provide opportunities for businesses
provide emergency relief and aid
support research and innovation.

While grants are necessary to achieve key government objectives, they also carry fraud and corruption risks. These risks are often higher when a grant program is designed and delivered rapidly or with limited resources. The risks can vary depending on the type of grant.

Principles to consider

Government entities must design and oversee grants so they’re used for expected purposes and achieve desired outcomes. Entities should consider and apply the following principles:

Most grant recipients do the right thing and meet their obligations, but there will always be some who try to make dishonest gains through fraud and corruption.
The most cost-effective way to control fraud and corruption is always prevention. Consider fraud and corruption risks when designing and administering grants. This will reduce the need to detect and correct them after the fact.
Look for vulnerabilities in a grants program that could be exploited.
Keep in mind that the risks of fraud and corruption are not static. New vulnerabilities can arise even in established and formerly secure programs.
Consider potential risks across all 5 stages of the grant life cycle .

The Grants Administration Counter Fraud Toolkit helps government entities identify and manage fraud and corruption risks when designing and administering grants.

How to build risk management into grants administration processes

There are steps you can take throughout the grant life cycle to identify and minimise fraud and corruption risks.

Identify and assess fraud and corruption risks

Understand what the risks are. When officials have a clear and specific understanding of the fraud and corruption risks, they can make better decisions about their risk tolerance or make necessary adjustments to the grant design and processes.

Learn about conducting a fraud risk assessment.

Think like a fraudster

When people commit fraud, they take on one or more 'personas'. By exploring these personas and how they operate, officials can better understand how their grants programs might be vulnerable to fraud. This understanding will help them minimise opportunities for fraud and corruption across the grant life cycle.

Learn about the different types of fraudsters.

Test your controls and assumptions

Control testing is a proactive and proven way to eliminate your blind spots. It helps officials find vulnerabilities and challenge assumptions about how fraud and corruption is managed within grants programs.

When officials know where their programs are vulnerable, they are better informed to prevent fraud or uncover where they are being exploited.

Learn about testing controls to see if they are effective.

Introduce controls

Learn about different control types to help you prevent, detect and respond effectively to fraud and corruption risks in the grants administration process.

Governance, accountability and oversight

Establish governance, accountability and oversight of processes by using delegations and requiring committees and project boards to oversee critical decisions and risk. Good governance, accountability and oversight increases transparency and reduces the opportunity for fraud.

Integrity checks and suitability assessments

Assess the integrity of new employees, contractors or third parties using measures such as entry level checks, probationary periods, suitability assessments and security vetting.

Collaborate with strategic partners

Collaborate with strategic partners such as other government entities, committees, working groups and taskforces. This allows you to share capability, information and intelligence and to prevent and disrupt fraud.

Self-disclosure and reporting processes

Require and support staff and third parties to self-disclose gifts, benefits, incidents, mistakes and real or perceived conflicts of interest.

Procedural instructions or guidance

Develop clear instructions and guidance for activities and processes, such as instructions for collecting the right information to verify eligibility or entitlements, procedures to help staff apply consistent and correct processes, and guidance to help staff make correct and ethical decisions.

Specific and consistent processes

Make sure requests or claims use a specific form, process or system for consistency.

Clear and specific eligibility requirements

Have clear and specific eligibility requirements and only approve requests or claims that meet the criteria. This can include internal requests for staff access to systems or information.

Require mandatory information

Make sure forms or system controls require mandatory information to support claims or requests.

Verify information

Verify any requests or claim information you receive with an independent and credible source.

Match data

Match data with the authoritative source and verify relevant details or supporting evidence. Services such as the Identity Matching Service can be used to verify identity credentials back to the authoritative source when the information is an Australian or state and territory government issued identity credential. This countermeasure is supported by the Office of the Australian Information Commissioner's Guidelines on data matching in Australian Government administration.

Contractual clauses

Develop contractual clauses to help prevent, detect and respond to fraud or non-compliance.

Compliance, performance and contract reviews

Require clients, staff and third parties to have ongoing compliance, performance and contract reviews.

Related resources

Grants Administration Counter Fraud Toolkit

The Grants Administration Counter Fraud Toolkit is designed to help Australian Government entities identify and manage fraud risks in the grants administration process from design to implementation.