Tax Office Fraud Control Planning: Tools and Techniques

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Tax Office Fraud Control Planning Tools and
Techniques
AUDIENCE
SUBJECT
DATE

• PRESENTED BY
• Annalissa Hilton
• Fraud Prevention Control

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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
Micro Enterprise and Individuals
Small and Medium Enterprises
Goods and Services Tax
Large Business and International
Process
Provision of Advice
BAS end to end
Corporate Risk
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(No Transcript)
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TOOLS AND TECHNIQUES
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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.

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Asymmetrically linked assessment methodology

• The ASLAM methodology considers both threat and
  risk assessment
• This concept evolved from ASIOs 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
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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
  Offices 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_at_ato.gov.au
• 02 6216 3260