Public Sector Fraud Awareness Survey - Findings.


Fraud is a fact of business life in New Zealand. According to the 2009 PwC Global Economic Crime Survey (21% of the respondents in New Zealand were public sector organisations), 42% of New Zealand respondents had suffered from an incident of economic crime in the 12-month period preceding the survey (August 2008 to August 2009) with an average cost of almost $492,000. Of the public sector respondents in New Zealand, 50% reported that they had suffered fraud in that same period.

To compile the PwC Global Economic Crime Survey, we asked more than 3,000 senior representatives of public and private sector organisations in 55 countries about fraud and fraud risks. The survey scrutinised fraud and associated integrity risks during a period of considerable economic turmoil and investigated the root causes and the way in which they affect organisations worldwide.

As the economy declined globally, new threats emerged. When economic survival is threatened (either for the organisation or the individual), the line separating acceptable and unacceptable behaviour can, for some, become blurred. In addition, fraud and other types of economic crime have become a focus of criminal activity in recent years; people who profit from fraud view the current economic conditions as an opportunity, not a threat.

The Survey

On behalf of the Office of the Auditor-General (OAG), PwC undertook an on-line fraud awareness survey to a number of New Zealand public sector organisations. The survey was open from February 2011 to June 2011.

The organisations surveyed were identified by the OAG. The survey sample comprised 1,968 individuals across 20 sectors. The number of respondents who completed the survey was 1,472, realising a pleasing 74% return.

Central Government organisations accounted for 45% of responses, followed by Schools (32.7%) and Local Government organisations (22.3%).

The purpose of the survey

The OAG had identified that there would be significant benefits for the public sector in increasing its awareness of fraud risk, recognition of the benefits of preventing and detecting fraud and assessing the level of fraud prevention and detection activity.

The key objective of the survey was to establish a baseline understanding of the awareness within the public sector as to:

  • Fraud risk factors, prevention, detection and response mechanisms and awareness/use of these.
  • Specific incidents of fraud and quantification/evaluation of the impact of fraud.

The results of this survey will be used to:

  • Raise the awareness of fraud risk factors within the public sector;
  • Inform the work of approved auditors in undertaking their statutory audit responsibilities; and
  • Enable sector specific responses to fraud risks to be taken where appropriate.

Helpful definitions

The online survey included the following definitions:

  • Fraud – is an intentional and dishonest act involving deception or a misrepresentation, to obtain or potentially obtain an advantage for themselves or any other person (e.g. falsifying timesheets, false invoicing).
  • Theft – to dishonestly and without claim or right, take or deal with any property with intent to deprive any owner permanently of the property or interest in it (e.g. theft of IP, theft of company property).
  • Corruption – the abuse of entrusted power for private gain (e.g. soliciting or receiving gifts or other gratuities to perform part of an official function, or omit to perform an official duty.

Throughout this report, we use the term fraud to encompass the above definitions.

How to read the report

The report is divided into five sections:

  1. Fraud prevention
  2. Fraud detection
  3. Fraud response
  4. Incidents of fraud
  5. The Environment

Each section contains a series of questions appropriate to the topic, the results, some comments made by respondents to the survey and PwC’s observation.

Results presented in table form have been rounded and may therefore differ from any associated graphs and text commentary.

On those occasions where the number of respondents differs between tables, this is a result of the survey’s skip logic (i.e. subsequent questions which are not relevant based on prior responses).

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