'This is significant': Public sector organizations need better fraud risk measures, B.C. auditor says

B.C.'s auditor general, Michael Pickup, is seen in this 2017 file photo when he was auditor general for Nova Scotia. (THE CANADIAN PRESS/Andrew Vaughan)

Public sector organizations in British Columbia must do more to strengthen their fraud risk assessment and management practices, says auditor general Michael Pickup.

A survey of 140 public sector organizations, including ministries, Crown corporations and post-secondary institutions, found that more than half are not doing enough to protect against fraud, he said Tuesday at a news conference.

Pickup said the timing for improving fraud risk assessment practices could not be more crucial as many public organizations have undergone major workplace transitions over the past year during the COVID-19 pandemic.

“It is widely accepted by those who study fraud and work in this area and survey organizations, that it is expected that the level of fraud impacting organizations to be significantly increased over the next year,” he said.

Pickup said experts estimate organizations can lose up to five per cent of their revenue every year to fraud and thorough approaches to risk management will protect against the crime.

A B.C. government spokesperson was not immediately available to comment on the survey's findings.

The survey found that 52 per cent of B.C.'s public sector organizations do not have fraud risk management policies in place, while among the organizations with anti-fraud policies, only 12 per cent have focused programs, he said.

“Fifty-five per cent of those who responded indicated they have not established a regular fraud risk assessment process,” said Pickup. “I believe this is significant, because without robust fraud risk management, organizations, of course, will face a higher risk of fraud.”

The survey did not seek or identify any actual cases of fraud among the public sector organizations, he said.

Pickup said the survey recommended organizations implement formal fraud risk management policies, conduct regular fraud risk assessments and provide staff training on fraud-related issues.

This report by The Canadian Press was first published Nov. 2, 2021.