Partner Article

Global public sector at threat from fraud

Public sector organisations around the world are increasingly at risk from being defrauded by their own employees and their suppliers, according to findings from PwC’s latest Global Economic Crime Survey.

The views of 180 respondents from public sector organisations in 36 countries indicate that fraud is on the rise, given the onset of public sector cuts.

46% of respondents from government and public sector organisations experienced one or more incidents of economic crime in the last 12 months; the figure up from 37% in 2009.

Cybercrime was shown to have risen, as were almost all types of fraud, including the ‘big three’ of asset misappropriation, accounting fraud and bribery and corruption.

Asset misappropriation was highlighted as the most common, suffered by 75% of respondents, and causing damage to an organisation’s reputation and relationships with regulators, suppliers, employees and the public.

Ian Elliott, of PwC forensic services and partner, said: “It can be all too easy for an individual to simply transfer departments, leaving them free to commit their crimes over and over again.

“If public sector organisations are to adopt a zero tolerance approach to economic crime, they need to consider seriously the actions taken against fraudulent behaviour.”

Supplier fraud was also shown to have increased significantly, accounting for 32% of all frauds committed by external parties, up from 13%.

False invoicing schemes and requests for unauthorised changes of supplier details are on the rise, and the report shows these types of crimes can often involve some collusion from within public sector organisations.

Mr Elliott continued: ““As the public service market becomes more open in many countries, suppliers more diverse, and more voluntary and private sector organisations become involved in delivering services, procurement departments will also face a whole raft of new challenges to ensure that the quality and cost-efficiency of the services being delivered are not compromised.”

Respondents demonstrated their awareness of cybercrime, with 28% expecting an attack in the next 12 months.

Andrew Miller, PwC’s head of information security in government, said: “Damage to an organisation’s reputation and the potential loss of data are high on the public sector’s agenda when it comes to the impact of cyber attacks.

“This is hardly surprising given recent high profile cases of data security breaches. Therefore, it is vital that organisations continue to ensure they are investing in cybercrime monitoring capabilities and align their management structures to take timely actions if a cyber incident occurs.”

This was posted in Bdaily's Members' News section by Tom Keighley .