Spotlight on Bayside Council’s Fraud and Corruption Prevention Audit

In a proactive move towards enhancing integrity and operations, Bayside Council took noble steps to strengthen resilience against fraud and corruption. Leveraging support through CivicRisk Mutual’s Risk Enhance Program, the council launched an extensive assessment and prevention audit targeting fraud and corruption risks.

Bayside’s proactive approach not only reflects its dedication to proactive risk management but also its commitment to preserving public trust. Here’s a closer look at how they achieved heightened resilience against fraud and corruption.

Funding Bayside Council’s Risk Resilience

Bayside Council sought funding through the Mutual’s Risk Enhance Program for a project designed to assess and prevent fraud and corruption risks. This initiative stemmed from a recommendation provided by the Mutual’s Continuous Risk Improvement Program (CRIP), which aims to help councils achieve their goals of increased risk resilience.

Conducting a fraud and corruption audit pinpoints vulnerabilities, strengthens preventive measures and upholds compliance with legal standards. Through process optimisation and education, risk assessments and audits help preserve public trust while integrating a culture of integrity. Moreover, they serve as benchmarks for ongoing awareness, empowering councils to refine and adapt their risk management strategies as they evolve.

Taking a Strategic Focus on Fraud and Corruption

Recognising the broad nature of fraud and corruption risks, the council planned to identify, evaluate, and mitigate these challenges across its operations. Bayside’s leadership argued that conducting a council-wide risk analysis would be time-consuming and might not yield significant value across lower-risk areas.

Instead, council members directed their attention towards higher-risk council functions. This approach would economise the assessment process targeting the areas of greatest impact.

Risk Assessment Methodology: Enter InConsult

InConsult was the chosen audit consultant, specialising in local government fraud and corruption risk management. They evaluated Bayside Council’s Fraud and Corruption Prevention framework and risk assessment methods. Based on the results, InConsult developed a risk assessment template.

The council selected relevant high-risk areas from InConsult’s extensive fraud and corruption risk library to populate the template. This effort culminated in a comprehensive fraud and corruption risks outline, providing a structure for targeted risk identification and proactive mitigation.

High-risk areas for local government fraud and corruption prevention can include:

• Procurement and Contracting.
• Financial Management.
• Asset Management.
• Planning and Development.
• Licensing and Permitting.
• Grants and Funding.
• Information Management.

Workshop and Risk Register: Bayside’s Commitment to Collaboration

Bayside Council’s next move was to facilitate a workshop addressing vulnerabilities across each high-risk domain. Key staff from each area collaborated to systematically assess risks, evaluate control procedures, and develop treatment plans.

Following the analysis, Bayside Council’s experts crafted a final fraud and corruption risk register for each field. This would be used as a reference point for the consultant’s post-audit recommendations.

An Independent Audit to Uphold Integrity

InConsult’s fraud and corruption prevention audit was conducted independently of Bayside Council’s risk assessment to ensure audit independence.

Aligned with the standards set forth by the NSW Audit Office Fraud Control Improvement Kit and the Australian Standard AS 8001:2021, the audit served as a litmus test for the council’s prevention framework. The 10 attributes of fraud and corruption prevention set out in the Kit are generally recognised as the pre-eminent framework for fraud and corruption prevention in the NSW public sector.

These attributes include demonstrating strong leadership and commitment to a clear ethical framework to underpin a culture of integrity in the council. By establishing a comprehensive and updated fraud control policy along with internal controls, councils can better assure robust risk management and efficient fraud and corruption detection. Clear reporting and investigation procedures reinforce accountability, while systematic monitoring and evaluation ensure fraud control initiatives remain effective and current.

Regular staff training programs also promote employee awareness so staff can recognise, prevent, and report fraudulent and corrupt activities. Bayside Council’s proactive stance to mitigating fraud and corruption risk exemplifies the attributes outlined in NSW legal frameworks.

Fieldwork and Reporting: Taking Action

Both the council and the consultant’s efforts came together in the fieldwork component of the audit. At this stage, the council’s fraud and corruption prevention policies and procedures were reviewed. Engaging in dialogue with relevant stakeholders, the council encouraged an open exchange of ideas, endorsing continued improvement and accountability.

The final audit report, presented to the Audit, Risk, and Improvement Committee (ARIC), symbolised a corroboration of Bayside Council’s commitment to local government accountability and integrity.

Key Takeaways: Learning From Bayside Council’s Approach

Bayside Council’s initiative demonstrates the importance of a strong workplace culture and a detailed approach to mitigating fraud and corruption risk. Their efforts offer a touchstone we can all learn from by developing a moral, accountable culture in councils.

Cultivating an Ethical Culture

Bayside Council demonstrates a commitment to transparent workplace practices. Engaging staff in workshops and discussions highlights awareness and encourages employees to take ownership of fraud and corruption prevention.

Proactive and Collaborative Approach

The council’s approach involved high collaboration during the audit process. Cooperation between experts resulted in a collective assessment of risks and controls. Teamwork supports thorough risk identification and mitigation and promotes a sense of shared responsibility among employees.

Emphasising Continuous Improvement

By aligning their efforts with the NSW Audit Office Fraud Control Improvement Kit and the Australian Standard AS 8001:2021, the council showcased a dedication to maintaining legal compliance. The audit process demonstrates consistent improvement of fraud prevention measures ensuring long-term accountability.

Enhance Your Risk Resilience

At CivicRisk Mutual, we’re here to support our members’ risk identification and management initiatives. You can access annual funding to strengthen your risk resilience through the Risk Enhance program.

If you want to become a member and develop your risk management and protection, get in touch with our team to join our community.