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QLD councils hit back over critical fraud audit

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The Local Government Association of Queensland (LGAQ) has fired back over a sharply critical report on fraud management in the state’s councils issued by the Queensland Audit Office that has called a tougher approach to compel better reporting of losses and record keeping of allegations.

The Audit report revealed that just one council was responsible for a whopping 42 per cent of alleged and proven frauds over a five year period, triggering a referral to the Queensland’s Crime and Corruption Commission. The council has not been named.

The report also took issue with how accurate the disclosure of fraud is within Queensland councils, saying that “almost two-thirds of councils surveyed (63 per cent) claimed to have had no confirmed cases of fraud over the past five-years” – a figure the Audit Office said was inconsistent with global research.

But the chief executive of the LGAQ, Greg Hallam, has defended councils’ performance on managing fraud.

“We believe systems councils have in place are largely working in that confirmed fraud cases were detected and dealt with,” Mr Hallam said.

“Risk management strategies, increased internal audit function requirements, registers of interest, and disclosure of conflicts of interest and material personal interests, with significant penalties for breaches, are all means by which fraud can be limited and controlled.”

The peak body for councils is also pointing to the low value of fraud losses against the backdrop of large expenditure.

“The Auditor-General established that councils have reported 324 cases of alleged and proven fraud between July 2009 and November 2014 involving sums totalling $8.6 million. This is against the backdrop of some $36 billion of total expenditure by local governments in this period,” Mr Hallam said.

Mr Hallam said there would always be “individuals who attempt to take advantage of the system but there is no evidence of systemic failure requiring more regulatory controls.”

Even so, he said the LGAQ will continue to work with the Queensland (state) Government “to ensure local councils can respond effectively to the risks of fraud.”

The Audit report found, through a survey of councils it conducted, that local governments in Queensland did not provide a fraud loss value for 58 per cent of their fraud cases. Some 44 per cent of councils indicated they do not have a system to manage their fraud information, the Audit Report said.

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