Tyler blames reforms for upsurge in frauds

Press, 26 July 1989, Page 1

Tyler blames reforms for upsurge in frauds

By

PATTRICK SMELLIE

in Wellington A dramatic increase in reported fraud in Government departments is blamed by the Auditor-General, Mr Brian Tyler, on new decentralised decision-making procedures. While the Audit Office strongly supported moves to decentralise departmental structures, the moves were leading to an upsurge in frauds by public servants, Mr Tyler said yesterday. His comments accompanied the .release of the Public Accounts for the year to March 31 1989. “Whereas, until recently, recorded instances of such frauds were reasonably few and far between, there has been a dramatic increase in the last 12 months,” he said in his report. Some 45 cases had been identified, with amounts ranging from small sums to two instances involving nearly $2 million.

The police had been informed of all instances, but he could not comment on whether any or all of the cases would end in legal action. The greatest temptations

appeared to arise in departments which had many clients. The report identified the social welfare and health departments as problem areas. Methods of fraud included falsification of records, theft of cash, management suppression of internal controls, and fictitious employees on the payroll. In some cases, problems were stemming from pressure on inexperienced or underresourced staff who did not

fully understand financial accountability systems. In one instance, 50 cheques requiring two signatories had been signed by the second signatory and left for first signatory to complete. “Where fraud occurs, it’s because of a breakdown of controls which should be in place.” Mr Tyler said despite the fraud increase, New Zealand’s Public Service was still one of the least corrupt in the World. The Audit Office would start a project aimed at determining the extent and effectiveness of fraud prevention and control measures in Government departments and the Accident Compensation Corporation, he said. The project would aim to establish anti-fraud procedures throughout the Public Service, with a second stage involving control measures for high-risk organisations. Mr Tyler’s report also said many user-pays charges by Government departments were arbitrary and had no relationship to the costs involved. The $25 fee for a lifetime driver’s licence was a case in, point, he said. Further reports, page 8