The outgoing Inspector-General of Taxation, Mr Ali Noroozi, has released his report into the ATO’s fraud control management. This review arose due to concerns surrounding the ATO’s Operation Elbrus, including allegations of tax fraud that may be associated to abuse of position by a public official.
The report announced that the ATO has sound systems for managing internal fraud risks. However, the review uncovered a number of areas requiring improvement.
One of the areas identified for improvement concerns the ATO’s identification and management of conflicts of interest. The report suggested that, in determining whether conflicts of interest have occurred, the ATO should consider the nature of the interest, such as the closeness of the personal relationship giving rise to a potential conflict, the seniority of the officers’ roles and the nature of the official duties, such as relevant transactions or other responsibilities.
Another issue identified relates to senior ATO officer intervention in individual cases. The report particularly considered the ATO’s controls with respect to medium to high risk roles. The report makes recommendations to improve the transparency of such interventions by clearly specifying when they may occur, requiring appropriate documentation of all resulting actions in an accessible form and periodically reviewing compliance with such policies.
The review also examined aspects of the ATO’s management of the risks posed by external parties who seek to exploit the tax system and commit fraud against the Commonwealth, in particular those attracting criminal sanctions.
Another area of particular focus in this review was the ATO’s response to alleged fraud in the precious metals industry, where $2.5 billion was estimated to be at risk due to weaknesses in the GST regime. The report found that there were lessons to be learnt from this experience such as identifying risks early and taking prompt action to prevent the propagation of fraud.
The report provides a total of 13 recommendations to bolster the ATO’s management of fraud and corruption risks. The ATO has agreed to implement all of the recommendations.