A five-year audit of six Victorian councils revealed deficiencies in the control of fraud against grant programs, as well as cases of potential conflicts of interest, poor record keeping and lack of evaluation.
The Auditor General of Victoria says in Fr. report this week announced that 46 state councils had distributed more than $ 45 million in grants in 2020-21.
The audit examines fraud control measures for grant programs in six of them – Hume City, Knox City, Lodan Shear, Southern Grampians, Warnambul City and West Wimmer Shear – over the past five years.
The largest council, Hume, allocated $ 1.9 million in grants, and the second largest, Knox, spent more than $ 1 million. The Loddon Shire, which has less than 8,000 residents, managed to spend $ 560,000, or a generous $ 75 per capita.
Despite the significant costs, the audit found that boards did not always follow the procedure for staff or advisors to declare conflicts of interest, use recipient selection criteria, document decisions, or evaluate the results of their grant programs.
“This means that they do not always use the means to control fraud when providing grants, which undermines the transparency and fairness of their programs,” concludes Acting Auditor General Dave Barry.
“Instructional advice to staff and advisors who manage grants is insufficient.”
The report found that fraud control tools for grant programs – if they even existed – were not always well designed or acted properly.
Five of the six boards did not have a general grant policy, and none of their fraud training contained grant-related risks.
Lack of transparency
The audit found that councils do not always identify conflicts of interest, use eligibility criteria, document funding decisions, or evaluate programs. There was also no transparency in the communication of the results of the unsuccessful applicants.
“This unnecessarily increases the risk of fraud and makes it difficult for proven councils to show that their grant programs are transparent, fair and beneficial to society,” the statement said.
Although all audited boards had general requirements for employees to declare conflicts of interest, none had a common grant policy that specifically addressed how employees should declare conflicts for grants.
In some cases, councils approved grant applications made by their own staff or advisors. The two councils also had advisors involved in both evaluating and approving grants.
The report includes a number of examples of less than best practices.
An adviser to Lodan-Shire, who chaired the council’s governing committee and was also an advisor to the local parish, applied for $ 150,000 to upgrade the kitchen at the facility. The $ 20,000 grant was eventually awarded after the board staff evaluated it, and the counselor also approved the grant.
Also in Lodan, a member of the counselor’s family successfully applied for a $ 400 grant and even used the counselor’s account on the application portal, which meant it was submitted on behalf of the counselor.
Some councils did not use evaluation criteria to evaluate grant applications, and West Wimmera spent $ 51,559 on grants, sponsorships, and donations without any eligibility criteria.
The Hume Council failed to apply its conflict of interest process to the program, which provided grants of up to $ 250,000 in 2020-21.
None of the boards tested had standard practices or requirements to assess whether their programs benefit society.
The report provides nine recommendations for strengthening fraud control and improving staff training.
This is happening recently review in the administration of grants by the NSW government called for tighter controls and greater transparency.
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