Internal Audit
Management Audit Branch, in the Inspector-General Division, provided internal audit services in accordance with an annual work program approved by both the Defence Audit Committee and the Materiel Audit Committee. The Branch undertook a number of investigative tasks as requested by the Minister for Defence, senior Defence officials, and as a result of suspect transactions identified through computer-aided audit techniques.
In 2005–06, Management Audit Branch completed 57 audits, 48 of which were Defence-related and nine of which were DMO-related. Management Audit Branch also completed 51 management directed tasks, 37 of which were Defence-related and 14 were DMO-related. Management directed tasks can be requested by Ministers and senior Defence managers and are given priority for action.
The Inspector-General is an adviser on both the Defence Audit Committee and the Materiel Audit Committee.
Ethics Awareness and Fraud Control
Defence has a well-developed program of ethics and fraud awareness. In 2005–06, over 200 ethics and fraud awareness presentations were given to approximately 10,000 Defence personnel across Australia. In addition, over 5,000 Defence personnel undertook awareness training through the Defence 'CAMPUS' online learning program.
Ethics Awareness
The awareness program also includes provision of material such as videos, newsletters, brochures and a dedicated intranet site for information and advice. During 2005–06, a new series of on line learning modules, was developed and launched on the Defence 'CAMPUS' website.
Fraud Control
During 2005–06, in line with the Commonwealth Fraud Control Guidelines, Defence developed a new Defence Fraud Control Plan (No.6), based upon fraud risk assessments undertaken in 2005.
There were 524 fraud investigations registered within Defence during 2005–06 and 447 investigations were completed (a number of those completed had been registered in the previous year). Approximately 30 per cent of completed investigations resulted in criminal, disciplinary or administrative action. Of these, approximately 60 per cent related to action under the Defence Force Discipline Act 1982.
Over the last ten fiscal years, detected fraud has averaged an estimated $1.6m per year, within a range of $1.0m to $3.1m per annum. Table 6.14 provides a detailed breakdown of the cost of detected fraud for the period 1 July 2001 to 30 June 2006, including statistics from the Service police.
| 2001–02 | 2002–03 | 2003–04 | 2004–05 | 2005–06 | |
|---|---|---|---|---|---|
| Loss | 1,507,713 | 1,119,668 | 1,195,805 | 1,003,642 | 962,339 |
| Recovery(1) | 381,507 | 788,924 | 125,050 | 52,984 | 114,524 |
Note:
- Monies are often not awarded and/or recovered in the same financial year the loss occurred, this may be due to the time lag in obtaining reparation orders from successful prosecution and civil actions.
Defence Whistleblower Scheme
The Defence Whistleblower Scheme is run by the Inspector-General Division and when reflecting upon the Division's performance throughout 2005–2006, the incidence of reports suggests that Defence and the DMO personnel have confidence in our capacity to protect their identity in the event they decide to use the Scheme to report some form of wrongdoing. The figures also indicate there is a fair amount of confidence we will actually do something about any allegations made.
Allegations of fraud and unethical conduct account for about two-thirds of all reports made through the scheme. The remainder consist of matters such as harassment, mismanagement of resources, use of drugs, discrimination, occupational health and safety, security and assault.
In delivering a range of performance improvement tools to advance Defence management policies such as providing independent audit, review and evaluation services and investigating fraud and educating Defence staff about ethics and fraud awareness, the Inspector-General Division has been able to provide a valuable contribution to the efficient and effective management of Defence. In 2005–06, the Division also demonstrated its flexibility in responding rapidly to the needs of senior managers by completing some 50 requested tasks requiring about 1,300 days of effort. Table 6.15 shows the number of allegations made to the scheme over the past four years.
| 2002–03 | 2003–04 | 2004–05 | 2005–06 | |
|---|---|---|---|---|
| Allegations | 131 | 219 | 162 | 178 |