tax office fraud control planning: tools and techniques
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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.
TAX OFFICE FRAUD CONTROL PLANNING 33
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.
TAX OFFICE FRAUD CONTROL PLANNING 44
Our fraud prevention strategy
Governance framework
Integrity framework
Fraud awareness training
Security and privacy training
Internal investigations
Fraud control planning
TAX OFFICE FRAUD CONTROL PLANNING 55
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
TAX OFFICE FRAUD CONTROL PLANNING 66
TAX OFFICE FRAUD CONTROL PLANNING 77
TOOLS AND TECHNIQUES
TAX OFFICE FRAUD CONTROL PLANNING 88
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’
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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.
TAX OFFICE FRAUD CONTROL PLANNING 1010
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
TAX OFFICE FRAUD CONTROL PLANNING 1111
T4 model of threat assessment
Consequence
RISK
+
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
TAX OFFICE FRAUD CONTROL PLANNING 1313
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
TAX OFFICE FRAUD CONTROL PLANNING 1414
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
TAX OFFICE FRAUD CONTROL PLANNING 1515
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
TAX OFFICE FRAUD CONTROL PLANNING 1616
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
TAX OFFICE FRAUD CONTROL PLANNING 1717
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
TAX OFFICE FRAUD CONTROL PLANNING 1818
Contact
Annalissa HiltonFraud Prevention GroupFraud Prevention and ControlAustralian Taxation Office
annalissahilton@ato.gov.au02 6216 3260
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