The Office of the Auditor-General surveyed 140 BC public sector organizations on their fraud risk management practices and found them lacking.
BC’s Auditor General Michael Pickup said organizations could lose a lot of money if they didn’t put proper measures in place.
“The Association of Certified Fraud Examiners estimates that organizations could lose up to 5% of their revenue to fraud every year.”
Pickup’s report said of the 134 organizations that responded to the survey, 55% don’t conduct formal fraud risk management assessments.
“It’s important to do that, and I would add that it’s probably never been more important than now,” said Pickup.
That being said, 91% have internal controls to prevent fraud.
But 57% of public sector organizations don’t have policies and procedures in place when fraud occurs, and of the 43% that do have policies in place, 60% of them don’t have directions on when to contact the police.
The report gave recommendations for government entities and outlined key areas for improvement:
- Designing and implementing a formal fraud risk management policy.
- Conducting a regular fraud risk assessment process.
- Assessing the need for a fraud hotline and for staff to take fraud training.
- Evaluating the effectiveness of internal controls designed to mitigate assessed
fraud risks. - Establishing a compliance monitoring and reporting function.
- Preparing procedures for staff to follow when potential incidents of fraud are identified.
- Strengthening board oversight of fraud risk management and reporting to the board.