tax office fraud control planning: tools and techniques

EXTERNAL

Corruption Prevention Network July 2007Fraud Control Planning

Tax Office Fraud Control Planning: Tools and Techniques

PRESENTED BY:

Annalissa HiltonFraud Prevention & Control

AUDIENCE SUBJECT DATE

TAX OFFICE FRAUD CONTROL PLANNING 22

About the Australian Taxation Office Net revenue collection of 232.6 billion*

Operating budget of $2,533.2 million*

21,511 staff nationally*

67 sites across all states and territories*

Currently in the midst of a Change Program incorporating a redesign of systems – integrating 120 existing systems into one interface

Policy initiatives designed to improve taxpayer interactions

[*] These figures have been sourced from the 2005-2006 Commissioner of Taxation Annual Report.


Fraud in the Australian Taxation Office In the 2005-2006 financial year, we finalised 167 allegations

of fraud and serious misconduct by employees.

29 of these cases were found to be substantiated.

This included:– two cases of unauthorised access, with one offender

receiving community service and the other a fine – two cases of fraud against the revenue, with the

severest penalty being four years and seven months imprisonment

A further 11 matters are either with the Commonwealth Director of Public Prosecutions or before the courts.

[2] These figures have been sourced from the 2005-2006 Commissioner of Taxation Annual Report.


Our fraud prevention strategy

Governance framework

Integrity framework

Fraud awareness training

Security and privacy training

Internal investigations

Fraud control planning


Business Lines

Process

Provision of Advice

BAS end to end

Small and Medium

Enterprises

Goods and Services

Tax

Micro Enterprise

and Individuals

Large Business

and International

Structure of the Fraud Control Plan

Corporate Risk


TOOLS AND TECHNIQUES


Use of intelligence

Consolidation of intelligence from internal and external sources

– Chief Knowledge Officer– Internal Audits– External Audits– Change Program design parameters– Previous Fraud Control Plans– External agencies– Professional bodies

Appointment of ‘Fraud Liaison Officers’


Health Check Survey With the permission of the Audit Office of New South Wales, we

have adapted the Fraud Health Check Survey from the Audit Office of New South Wales Fraud Control Improvement Kit Better Practice Guide to fit the Tax Office.

The Tax Office has an electronic system available to deliver the survey to all employees in a BSL and receive anonymous responses.

The results are depicted in a dashboard generated using the Excel spreadsheet tool provided by the Audit Office of NSW. The dashboard results are presented in the fraud control plan chapter for that BSL.

The survey offers the opportunity to obtain the fraud risk perceptions and any offered comments from all employees within the BSLs.


Asymmetrically linked assessment methodology The ASLAM methodology considers both threat and risk

assessment

This concept evolved from ASIO’s T4 threat assessment methodology

Allows for forecasting and the identification of environmental factors which can help to indicate a fraud is imminent

Allows for better understanding of a perpetrators intent and expectations, therefore allowing us to tailor internal awareness training strategies


T4 model of threat assessment

Consequence

RISK

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Knowledge

Capability

Expectation

Threat

Intention

Likelihood

ResourcesDesire + +

Threats are generated by threat agents (usually a person or a group). T4 examines the intent and capability of these threat agents.

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Facilitated workshops and interviews

Provisional classification based on intelligence

Provides time to robustly assess high risk activities

More targeted approach to fraud threats

Testing provisional classification of functions


Control Testing

Proactive testing of control effectiveness

Three perspectives:– Recommendations reported as ‘implemented’– Control deficiencies identified through investigations– Hot topics (unauthorised access, proof of identity)

Every fraud control plan chapter is accompanied by at LEAST one control test


Data Mining

In 2006, the Reporting, Intelligence and Training team was established

Further expand on control testing to include proactive data mining of systems based intelligence

Responsible for most assessments within our Corporate Risk Fraud Control Plan Chapter


Monitoring of recommendations

Recommendations are reported quarterly to the Tax Office’s Audit Committee

Scrutiny of responses and the endorsement of mitigation strategies rest with the Fraud Prevention Group

Reporting feeds back into control testing


We have learnt that:

Facilitated assessment, while time consuming, creates a more consistent overall picture of the threats we face

A mixture of individual perspectives and concrete evidence provides a more rounded view of potential fraud threats.

Prescriptive process assessments allow for the retention of corporate knowledge


The future

Staffing– Getting the right people and retraining them– Developing in-house training

Responding to change

Gaining further advantages from the consolidation of intelligence

Benchmarking against international revenue agencies – ‘Like’ agencies– Change Program environments– Similar systems


Contact

Annalissa HiltonFraud Prevention GroupFraud Prevention and ControlAustralian Taxation Office

[email protected] 6216 3260

tax office fraud control planning: tools and techniques

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