Appendix C – Other relevant reviews
A3.1 The IGT has considered the findings of other reviews to better understand the fraud and corruption control landscape both within the ATO as well as more broadly amongst Commonwealth agencies. These reviews include the following:
ANAO performance audit of ATO’s use of settlements (2017)
A3.2 The ANAO conducted a performance audit to examine the effectiveness of the ATO’s use of settlements to resolve taxpayer disputes. The audit made a number of recommendations including improvements to pre-settlement assurance mechanisms and record keeping.914
ANAO performance audit of ATO’s internal fraud control arrangements (2000)
A3.3 The ANAO conducted a performance audit into the ATO’s internal fraud control arrangements915 and had identified areas for further improvements to ensure that the ATO’s internal fraud control framework becomes an integral part of the ATO’s corporate governance framework and would be consistent with best practice. The audit made a number of recommendations. Those relevant to this review include:
- adopting a more holistic approach to risk management and planning processes by incorporating relevant aspects of its fraud risk assessment process as explicit elements of the broader ATO risk management processes;
- further refining the performance assessment framework to enable quantitative and qualitative assessment of the internal fraud control function;
- as part of fraud education processes, making greater use of internal publications and other awareness raising techniques to share case studies and results of internal fraud investigations;
- the ATO IT Security Section and, where necessary the Fraud Prevention and Control section (the precursor to the FPII unit), undertaking regular targeted reviews of the ATO IT systems logs to detect and deter unauthorised access to taxpayer data;
- improving the efficiency and effectiveness of internal fraud detection strategies; and
- strengthening the coordination between the IA unit and the Fraud Prevention and Control Section to improve the development of risk mitigation strategies.
Black Economy Taskforce (2017)
A3.4 The black economy refers to people who operate entirely outside the tax and regulatory system or who are known to the authorities but do not correctly report their tax obligations. The Treasury’s Black Economy Taskforce916 was established to develop a forward looking whole-of-government policy response to combat the black economy in Australia, recognising that these issues cannot be tackled by traditional tax enforcement measures alone. The taskforce’s final report was publicly released in May 2018917 along with the Government response which indicated that a number of the report’s recommendations would be implemented. These recommendations include the removal of the tax deductibility of employees’ wages for employers who have not withheld the requisite PAYG918 and the establishment of a taskforce to combat the trade in illicit tobacco.919
A3.5 Illegal phoenix activity refers to the stripping and transfer of assets from one company to another by individuals or entities to avoid paying liabilities. This issue was the subject of an interagency government taskforce with a range of proposed measures being announced by the Government in September 2017.920 Further measures were more recently announced, including the introduction of new phoenix offences to target those who conduct or facilitate illegal phoenixing.921
Fraud within the Commonwealth Census
A3.6 The AIC conducts a periodic ‘Fraud within the Commonwealth’ census on the Commonwealth’s most costly fraud incidents. These studies analysed the information about the most costly incidents each agency experienced each year and those who perpetrated them. A summary of the findings of these censuses is outlined below:
- 2014 census922, identified that the majority of the 166 frauds related to employee entitlements or financial benefits and were committed through misuse of documents or technology;
- 2010–11 and 2012–13 censuses923 revealed that 137 Commonwealth agencies reported 7,809 incidents of internal fraud; and
- 2010–11 and 2012–13 censuses of the most costly incidents924, discovered that across 154 agencies, 60 per cent did not detect or experience any instance of fraud however, there were a total of 265,886 incidents of suspected internal and external fraud with an estimate of over $530m in losses.
Misuse of information and communications technology within the public sector (2015)
A3.7 In 2015, the AIC drew on its findings from the ‘Fraud against the Commonwealth Surveys’ and presented data regarding the misuse of Information and Communication Technology (ICT) within the Commonwealth Government over the three year period between 1 July 2008 and 30 June 2011.925 It was concluded that although the ICT environment is rapidly changing, fraud control plans, organisational policies, and technical standards for data security minimise the risk of ICT misuse and identify intervention points at which prevention and detection methods may be focused.
Review of anti-corruption strategies (2006)
A3.8 In 2006, the AIC released a report on its ‘Review of anti-corruption strategies’926 which outlined what experts consider to be the three most significant causes of corruption:
- norms and values of politicians and public servants;
- lack of control, supervision, auditing; and
A3.9 Similarly, the AIC attributed the size and incidence of corruption to four key factors:
- the level of public benefits available;
- the discretionary power of officials;
- the level of risk associated with corrupt deals; and
- the relative bargaining power of the corruptor and corrupted.
Parliamentary Joint Committee on Corporations and Financial Services’ inquiry into whistleblower protections (2017)
A3.10 The Parliamentary Joint Committee on Corporations and Financial Services in its report on its Whistleblower protections inquiry927 recommended the establishment of a Whistleblower Protection Authority (to be housed within a single body or an existing body) that can support whistleblowers, assess and prioritise the treatment of whistleblowing allegations, conduct investigations of reprisals, and oversee the implementation of the whistleblower regime for both the public and private sectors.
Parliamentary Joint Committee on ACLEI (2016)
A3.11 The Parliamentary Joint Committee’s inquiry into the jurisdiction of the ACLEI928, recommended an independent assessment of the ATO’s corruption risk profile, together with an examination of the feasibility of including the ATO within ACLEI’s jurisdiction.
The Department of the Prime Minister and Cabinet’s Review of the PID Act (2016)
A3.12 The Department of the Prime Minister and Cabinet’s Review of the PID Act929 gathered information and views on whether the PID Act was operating as intended and whether it could be improved. It found that whistleblowers did not have a positive experience after making a disclosure and that the PID Act was difficult to apply by the agencies.
914 Above n 14.
915 ANAO, Australian Taxation Office Internal Fraud Control Arrangements (2000).
917 See, above n 13.
918 Above n 745, pp 22–24.
919 See, Appendix E.
920 Above n 474.
921 ibid.; Above n 745, p 37.
924 AIC, Fraud against the Commonwealth Report to Government 2010–11 to 2012–13 (2015).
926 AIC, Technical and background paper series no. 23 – Review of anti-corruption strategies (2006).
927 Joint Committee on Corporations and Financial Services, Parliament of Australia, Whistleblower protections (13 September 2017).
928 Above n 17.
929 Above n 16.