June 14, 2017 by Canadian Underwriter
Government agencies in Canada and the United States performed significantly worse than the business sector on fraud detection and mitigation, according to a new survey from risk management software provider ACL.
The 2017 Fraud Survey involved a poll of more than 500 audit, compliance and risk management professionals in Canada and the United States on anti-fraud practices. According to a press release on Wednesday from ACL, “less than one-third of government respondents said that the majority of fraud is detected and less than half said fraud that is detected ever gets reported, compared to 42 per cent and 60 per cent of respondents from the commercial sector, respectively.”
“Fraud in government agencies is estimated to cost taxpayers more than US$136 billion each year, and that’s just from improper payments,” said Dan Zitting, chief product officer at ACL, in the release, referencing a 2015 fiscal statement from the U.S. Government Accountability Office. “While both the public and private sector need to enhance their anti-fraud practices, the relative underperformance by government agencies should be a major concern of elected officials and their constituents.”
The survey also found that less than 30% of anti-fraud recommendations are fully acted upon by government agencies, compared to about 40% in the business sector. Both government and business respondents said the primary reasons for the failure to take action is lack of time/resources or approvals. However, this leading reason fraud is allowed to go unchecked was reported by less than a quarter of respondents (21%) in corporate firms, compared to nearly 40% of public sector professionals, the release said.
While more than 80% of respondents thought that their organization has medium to no exposure to fraud, nearly two-thirds (63%) reported that a majority of fraud committed in their organizations is not detected and more than 75% of fraud detected goes unreported.
“Having worked with a number of government agencies to help them stop fraud, we were surprised by the differences in fraud management found between government and business,” concluded Scott Robinson, director, public sector, ACL. “It is clear that the public sector remains highly susceptible to fraud, and that many agencies are neglecting to take the necessary action to fulfill the public’s trust.”