The ABC’s 2004 Annual Report makes much of the various types of audits and reviews conducted by the broadcaster in response to fraud allegations and yet frauds reaching into the millions are still being uncovered. Terry Television wonders just how well are our taxpayer dollars being accounted for at the ABC?
The latest fraud allegations from within the ABC question assertions in the Corporation’s 2004 Annual Report about the quality and scope of the internal audit process.
It may sound very boring and very unglamorous, but a vigorous internal audit process inside an organization adds to its efficiency, working environment and reputation.
Just look at the damage to the National Australia Bank from poor internal audit and risk management over the huge forex options losses.
While the situation in the ABC is much smaller than the NAB, there’s a similarity with the self-satisfied, self-congratulatory comments from the board in the 2004 Annual Report.
From pages 159 to 161 the ABC makes much of the various types of audits and reviews, but much of these are of process, and there seems very little work was done on actual programs and their finances to see whether the amounts allocated have been actually spent and spent properly.
There are lots of fine words about its audit control and audits but these are undermined by the latest fraud allegations inside the huge news and current affairs department that straddles ABC TV and ABC Radio.
And with reports of no action over a second claim of a million dollar plus defalcation (using fake airline tickets and receipts) you have to ask if anything has improved inside the ABC with its internal audit functions?
Here is the most amusing sections, under the heading “Fraud Control”:
During the year the Fraud Control Plan was updated to ensure that the Corporation continues to meet the requirements of the Commonwealth Fraud Control Guidelines. This exercise involved business evaluations, interviews with management and staff, completion of questionnaires and also served as a fraud awareness campaign across the Corporation.
In this regard, the Corporation’s fraud control strategies were assessed against recognised better practice by an external firm who concluded that the strategy is ‘highly effective’ and existing fraud control efforts are considered to be ‘excellent’.
In addition, fraud awareness continued to be highlighted across the Corporation, with involvement in the Sydney Induction Program and presentations provided to divisional management and staff used to raise the level of fraud awareness within the Corporation.
Well, the latest claims have blown that self-satisfied approach out of the water. Anywhere from $800,000 to well over a million via a combination of a company issuing false receipts and invoices are involved. There were also claims of falsified expense reports in the names of other people and perhaps falsified petty cash claims as well.
All significant and truth be known, all very tried and true methods adopted by fraudsters and others who loot money from public companies, the government and the like.
And all so easily preventable if the fraud controls in place were matched by a vigorous and testing internal audit process, especially in the probing of the accounts of the various programs, including news in the news and current affairs division, with its collection of powerful egos and personalities.
Here’s another pointer to yet another problem, the integrity of the 2004 Annual Reports and accounts.
This is what the Annual Report says:
Group Audit continued to build on the close working relationship with the ANAO (Australian national Audit Office) and Ernst & Young, as well as their predecessors, KPMG (to whom the ANAO outsourced the external audit work). This was demonstrated by the external auditors continued reliance on ABC Group Audit reviews in the audit of the financial statements for the year ending 30 June 2003 (KPMG) and 30 June 2004 (Ernst & Young).
So the external auditors did no testing of the ABC accounts and from the above statement accepted (“continued reliance”) on the ABC Audit group reviews. Says a lot for the outside auditors, doesn’t it, in the light of the latest claims?
It is claimed this latest problem only came to light when the person named was moved out of the area they were working in to another position and some of their false paperwork fell into the hands of another ABC employee who started questioning them, especially as they related to alleged expense claims from that individual.
So far from tracking down this person, it seems serendipity was responsible for it coming to light, not the watchdogs of the ABC internal audit group, nor the external auditors.
The ABC board has an audit and risk committee. Here are details from the 2004 Annual Report:
The Audit and Risk Committee held five meetings in 2003-04.
The members and the number of meeting attended were: Ross McLean Chairman (5 meetings), Leith Boully Director (5), Judith Sloan Director (3) while also in attendance at some of these meetings were ABC chairman, Donald McDonald (5), Ramona Koval Staff-Elected Director (4), Russell Balding Managing Director (5) and Ron Brunton Director (2).
Annual Reports are important documents, for any organization because they contain the financial and operation history of the past year and hopes for the year ahead. Their veracity of the highest importance to all stakeholders.
Nowhere has this been more apparent than at the National Australia Bank where those wonderfully uplifting words on corporate governance, risk management and audit controls were blown apart by the $360 forex options debacle.
The NAB had audit and risk management controls in place, or thought it did, and it had board committees, with the risk management committee the newest of them all.
But that still didn’t stop some members being forced to leave the NAB board as a result of the disclosures of the forex losses and the lack of controls.
There’s a big difference between the sums at the NAB and that at the ABC, but the principal remains the same, fine words, but in practice, large holes and deficiencies exposed.
Being a board appointed by the Federal Government, no one will go, but it does add to the feeling that the Federal Government has poor oversight in place in many departments and authorities. Just look at the problems in the Defence Department with hundreds of millions of dollars in assets unaccounted for.
It’s Our ABC, Your ABC or what have you and that makes it of great importance to everyone that the money the national broadcaster gets from taxpayers is spent well and well accounted for, with a minimum of fraud.