Introduction to the Framework

The Commonwealth Fraud and Corruption Control Framework (Framework), under
the Public Governance, Performance and Accountability Act 2013 (PGPA Act), is designed
to support Australian Government entities to effectively manage the risks of fraud and
corruption.

The Framework has three parts:

• Section 10 of the Public Governance, Performance and Accountability Rule 2014 – The Fraud and Corruption Rule is a legislative instrument binding for all PGPA Act entities. It sets out the minimum standards for accountable authorities of PGPA Act entities in relation to managing the risk and incidents of fraud and corruption relating to their entity.
• The Commonwealth Fraud and Corruption Policy – The Fraud and Corruption Policy is an Australian Government Policy which is binding for all Non-Corporate Commonwealth Entities (NCEs). Further, Corporate Commonwealth Entities (CCEs) and Commonwealth Companies are encouraged to adopt the Fraud and Corruption Policy as better practice. The Fraud and Corruption Policy sets out the procedural requirements entities must implement in relation to specific areas of fraud and corruption control such as investigations and reporting.
• Resource Management Guide 201: Preventing, detecting and dealing with fraud and corruption – This provides further practical guidance on fraud and corruption control arrangements for all Commonwealth entities.

All PGPA Act entities (along with entities that are not subject to the PGPA Act) are also subject to obligations under the National Anti-Corruption Commission Act 2022.

The Framework comprises the core elements of effective fraud and corruption control:

• governance and oversight;
• targeted and rigorous risk assessments;
• informed and targeted control plans; and
• effective controls encompassing appropriate prevention, detection, investigation, referral and reporting mechanisms.

All entities face fraud and corruption risks, but each entity faces different fraud and corruption risks. The Framework acknowledges that effective fraud and corruption control will be different for each entity and allows Commonwealth entities to manage their fraud and corruption risks in a way which is proportionate and best suits the individual circumstances of an entity.

The Australian Government will review the Framework on a three yearly basis or as necessary to ensure it remains current and continues to support entities to apply better practice.

Application of the framework to entities – Summary

The three parts of the Framework apply to entities as follows:

Note: While the framework applies to CCEs and Commonwealth Companies as set out above, adherence to all parts of the Framework is considered better practice and is likely to assist these entities to meet their obligations under the National Anti-Corruption Commission Act 2022 (NACC Act).

Why is a fraud and corruption control framework needed?

The Australian Government takes fraud and corruption extremely seriously.

Fraud and corruption are risks that can undermine the objectives of every Australian Government entity in all areas of their business, including delivery of services and programs, policy-making, regulation, taxation, procurement, grants and internal procedures.

Fraud and corruption divert resources from achieving the public good and increase the costs involved in delivering services to Australians. These potentially criminal activities reduce funding available for building infrastructure, strengthening the economy, educating future generations, providing quality healthcare and a strong safety net for our most vulnerable and disadvantaged.

The hidden nature of fraud and corruption makes it difficult to quantify their true volume and cost to individuals, the private sector and the government – much of it goes undetected. However, we do know that the cost of fraud against the Commonwealth that is detected exceeds hundreds of millions of taxpayer dollars each year. Moreover, when using international comparators, it is estimated that between 3% – 5.95% of Australian Government expenditure is lost to fraud and improper payments. This is unacceptable.

Other costs are less obvious. Corruption is an abuse of trust that undermines the social contract the Government holds with the Australian public. Over time this can erode perceptions of a transparent and accountable government, subverting democratic process and the rule of law. Corruption can perpetuate inequality and poverty, impacting on well-being and undermining opportunities to participate equally in social, economic and political life. Together fraud and corruption undermine program and policy objectives, reducing the availability and quality of essential services and undermining regulatory interventions designed to protect Australia’s economic, social and environmental interests. As such, fraud and corruption are directly at odds with the role of government and deprive Australians of the societal value they rightly expect to receive from the public sector.

The Australian Government has taken a range of actions to counter fraud and corruption, including through the establishment of the National Anti-Corruption Commission to prevent, detect and investigate corrupt conduct (which can include fraud). The update and reissue of this Framework in 2024 complements the Commission’s mandate to prevent corruption and provides clarity to Commonwealth public sector entities on measures to prevent, detect and respond to both fraud and corruption within public sector entities.