Internal reporting systems
An internal reporting system enables agencies to receive and act on complaints as well as implement continuous organisational improvement around non-compliance with its procedures and processes. An internal reporting system that allows the identification, reporting, investigation and management of allegations about corruption is also fundamental to deterring corruption and for protecting people who have reported wrongdoing.
The need for all public sector organisations to have a system for receiving, assessing and dealing with public interest disclosures, is set out in the Public Interest Disclosures Act 1994 (“the PID Act”), which is overseen by the NSW Ombudsman. The PID Act covers corrupt conduct, serious maladministration, serious and substantial waste of public money and government information contravention. The PID Act provides public officials with a number of ways to make disclosures. Model internal reporting policies for state government agencies, local councils and local Aboriginal land councils are available on the NSW Ombudsman’s website.
There is evidence that internal reporting systems reduce the impact of fraud and corruption. The global fraud report produced biennially by the Association of Certified Fraud Examiners (ACFE) usually notes that tips or internal reports are one of the most common methods for uncovering fraud. The ACFE also finds that entities with fraud hotlines or other anonymous reporting mechanisms tend to experience less costly frauds.
One of the key deterrents to corrupt conduct is making staff aware that a complaint management system exists and that the organisation will take action in response to any breaches. Conversely, reporting channels will be of little value if staff think nothing will be done or if they fear reprisals.
Agencies should take steps to encourage and facilitate legitimate reporting of wrongdoing, including providing staff with a simple and quick means of making a complaint, such as a complaints hotline. Brochures, posters and the agency's intranet can be used to advertise the reporting method and the positions (individuals) to which public interest disclosures and other reports can be made.
 In the case of local government, local government pecuniary interest contraventions are also covered.