Article

Deloitte SA 2015/16 Budget

Fraud, government fraud, corruption and compliance

Fraud and corruption result in increased wastage, diminished public perception of Government and disruption or reduced essential service delivery those most in need. A key priority of Government has been to address the ongoing escalation of fraudulent activity, unfortunately with limited success. The most significant challenge has been the inability to effectively implement holistic proactive prevention measures and keep up with the evolving trends in perpetrating fraud. The use of technology, which is becoming increasingly important to aid in effectively mitigating fraud risks, has not yet been a priority.

Prevalence of fraud and corruption has increasingly taken up more airtime on social and print media over recent years.  Does this mean that fraud and corruption is on the increase or merely reported more broadly? Without a doubt, surveys and statistical trends indicate that fraud and corruption is on the increase; mostly as a result of collusion, poor governance, and inadequate control environments. Many entities in both the public and private sectors allow the opportunities for fraud and corruption to fester rather than proactively addressing these. Whilst preventing and detecting fraud and corruption should be a pervasive goal permeating throughout organisations, especially in Public Sector spheres, the need for a systematic and holistic Managed Forensic approach has never been greater. Preventing, detecting and resolving fraud and corruption serves a number of purposes including:

  • Reducing waste, irregular expenditure, fruitless and wasteful expenditure; 
  • Reducing losses due to fraud and corruption;
  • Improving service delivery through efficient supplier management and vetting;
  • Efficiency enhancements as a result of the delivery of the correct service/product at the correct cost within the desired timeframes; 
  • Reputational and brand protection;
  • Increasing employee confidence, rewards and allegiance; and
  • Increasing accountability and transparency to the citizens and public across our nation.

Fraud and corruption result in increased wastage, diminished public perception of Government and disruption or reduced essential service delivery those most in need. A key priority of Government has been to address the ongoing escalation of fraudulent activity, unfortunately with limited success. The most significant challenge has been the inability to effectively implement holistic proactive prevention measures and keep up with the evolving trends in perpetrating fraud. The use of technology, which is becoming increasingly important to aid in effectively mitigating fraud risks, has not yet been a priority.

The magnitude and complexity of Government structures and processes results in manual or disparate mitigation plan being negatively impacted in achieving the desired objectives. In order to address fraud and corruption risks, Government needs to know where these risks reside, what the likelihood of the risks materialising would be and the resultant impact. This intelligence would allow for a structured approach to effective management of fraud and corruption.

One particular example of this within the procurement environment is where massive volumes of transactions result in significant expenditure. Applying a “back to basics” approach to focusing on key risk areas naturally means that this should be the core area for risk mitigation. It is imperative that Government ensures independent, regular assessment of its processes, procedures and data in order to ensure that the latest technology based solutions are enforced, implemented and integrated within Government operations.

In addressing fraud and corruption risks, these basic elements need to form part of a broader Managed Forensic approach where prevention, detection and response plans are in place and initiated in accordance with ongoing requirements. This allows for a flexible, agile and most up to date mitigation process to reduce and prevent fraud.

One of the key priorities will remain ensuring that the data and information contained within government is cleansed, maintained, accurate and secure. A crucial development area would pertain to all tiers of government working together in applying consistent approaches and more importantly sharing data and intelligence in fighting fraud and corruption.

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