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ICAC survey shows local government more vulnerable to corruption than state agencies

Tuesday 11 May 2010

The most recent Independent Commission Against Corruption (ICAC) research into the NSW public sector indicates that local councils face a wider range of corruption risks than state agencies, but appear less likely to use the management controls important to sound corporate governance, making them more vulnerable to corruption.

The Commission'sProfiling the NSW public sector II Report 3: Differences between local and state government, released today at an ICAC outreach program in the Central West, finds that this arises from the number of high-risk functions councils perform, and the business processes used to conduct these functions.

The finding that local councils appear less likely to use the management controls that are important to sound corporate governance was observed across a range of management controls including audit mechanisms, risk management processes and fraud control plans. The report found that 58 per cent of councils had an audit plan, compared with 92 per cent of state agencies; 44 per cent of councils had a fraud control plan, compared with 62 per cent of state agencies, and 85 per cent of councils had a risk management process, compared with 95 per cent of state agencies.

The ICAC's Deputy Commissioner, Theresa Hamilton, said that the findings suggest that local councils have increased vulnerability to corruption. "The report notes that management controls are arguably more important in an environment where many corruption risks abound because of a greater need to prioritise and organise the management of corruption risk," she said.

However, there were several areas where local councils appear to use a greater number of specific operational controls relevant to corruption prevention, such as record-keeping, gifts and benefits, and codes of conduct, than state agencies. For example the report found that in relation to record-keeping, 41 per cent of local council staff surveyed were more likely to indicate that emails of business value should be saved  to their organisations' electronic systems, in comparison to 16 per cent of staff from state agencies.

Approximately 95 per cent of councils had a gift register compared with about 75 per cent of state agencies. Local councils were also much more likely to make gift registers publicly available (around 85 per cent), compared with state agencies (approximately 25 per cent). While almost all state agencies and local councils reported having a code of conduct, 100 per cent of council staff reported receiving a copy of their code, compared with 85 per cent of state agency staff. Eighty-one per cent of council staff reported receiving training in the code of conduct, compared with 51 per cent of state agency staff.

"The ICAC advocates a risk management approach to corruption prevention, which requires organisations to undertake a detailed analysis of specific corruption risks and the adequacy of existing controls," Ms Hamilton said. "Further information to assist organisations in this process is available from the specific corruption risk areas detailed on the Commission's website." (http://www.icac.nsw.gov.au/preventing-corruption).

Today's report is the third in a series on profiling the NSW public sector, drawn from ICAC surveys distributed to NSW state and local government chief executive officers and staff in 2007. The first report (2009) presented results from the NSW public sector as a whole, while the second report (2009) compared results with those obtained six years earlier. The full reports, detailed information about the methodology used in the research and copies of the survey questions can be viewed on the ICAC website.

Media inquiries: ICAC Manager Communications & Media, Nicole Thomas, 02 8281 5799/0417 467 801