AUDIENCE
EXTERNAL
Corruption Prevention Network
SUBJECT
Fraud Control Planning
DATE
July 2007
Tax Office Fraud Control Planning:
Tools and Techniques
PRESENTED BY:
Annalissa Hilton
Fraud Prevention & Control
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.
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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.
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Our fraud prevention strategy
 Governance framework
 Integrity framework
 Fraud awareness training
 Security and privacy training
 Internal investigations
 Fraud control planning
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Structure of the Fraud Control Plan
Business Lines
Process
Micro
Enterprise and
Individuals
Small and
Medium
Enterprises
Large
Business and
International
Goods and
Services
Tax
Provision of Advice
BAS end to end
Corporate Risk
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TOOLS AND TECHNIQUES
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Use of intelligence
 Consolidation of intelligence from internal and external sources
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–
–
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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.
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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
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T4 model of threat assessment
RISK
Threats are generated by
threat agents (usually a
person or a group). T4
examines the intent and
capability of these threat
agents.
Likelihood
Threat
Intention
Desire
+
Consequence
+
Capability
+
Expectation
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Knowledge
+
Resources
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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
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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
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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
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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
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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
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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
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Contact
Annalissa Hilton
Fraud Prevention Group
Fraud Prevention and Control
Australian Taxation Office
annalissahilton@ato.gov.au
02 6216 3260
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