Nearly half of B.C. government ministries experienced fraud last year: report

B.C.'s public accounts committee will review the ministerial inconsistencies on fraud and inquire why only half are 'highly vigilant' to fraud.

Nearly half of B.C. government ministries experienced fraud last year: report
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According to British Columbia's auditor general, nearly half of the government departments experienced fraud, especially theft, in 2021 and 2022.

The Canadian Auditing Standards defines fraud as "an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage."

Nearly half (45%) of respondents are affected by at least one type of fraud. Physical theft constituted the most common type of fraud in 36% of cases uncovered by the questionnaire.

However, Pickup clarified that the questionnaire's purpose is not to look for fraud. "The purpose is to get a reading on the public sector's readiness to manage the risk of fraud," he said.

"What we want to know, and bring to the attention of MLAs, is whether these organizations indicate in their questionnaire that they have all the safeguards in place to prevent, detect and respond to fraud."

Pickup learned that not all ministries mitigate risk the same way or are aware of the government framework for managing fraud. According to the report, only half of the 22 ministries that responded have a risk-assessment process in place. 

All except one ministry answered the questionnaire.

"Fraud is much more than stealing money or cash out of the drawer," said the auditor general. "There are many facets to what constitutes fraud. So we have to think of fraud in that broader context."

The report articulates that individual ministries must have internal controls to prevent and detect fraud. Four of the respondents admitted to having no such procedures. All ministries but one said they had at least one person who monitors and reports suspected fraud.

Pickup hopes the report "promotes discussion" about deterring and detecting fraud, with elected officials digging deeper into the results to hold the government accountable for specific instances.

B.C.'s public accounts committee will review the ministerial inconsistencies on fraud and inquire why only half are "highly vigilant" to fraud.

According to a recent poll, the province's Auditor General detected fraud in 61% of 23 public bodies last year. The worst offenders were the B.C. Lottery Corp., the University of British Columbia and the Insurance Corporation of B.C.

 The most common incidents included theft of physical assets (43%), misappropriation of company funds (22%) and information theft, regulatory or compliance breach and internal financial fraud (17% each). 

According to the poll, more than a third did not have a dedicated fraud risk management policy, and almost four in 10 organizations did not have the means to identify and document fraud risks.

Pickup found more than two in 10 organizations polled had not assessed the need for fraud risk management training for staff, and 9% had not assigned a senior manager to oversee fraud risks. 

The auditor general said fraud risk management is standardized across government ministries but not in public sector organizations.

Last May, disgraced former clerk Craig James committed fraud and a breach of trust for using taxpayer dues to buy personal clothing. He spent a month under house arrest and two months under curfew. 

In April 2022, Pickup audited B.C. Hydro and found the NDP-appointed board did not formally assess the potential for fraud at the $16 billion Site C dam project until his staff began investigating. 

In 2020 and 2021, the Provincial Health Services Authority employed a fake nurse at a B.C. Women's Hospital.

Brigitte Cleroux was charged in late 2021 with fraud over $5,000 and personation with intent. She is serving a seven-year jail sentence in Ontario. 

The Office of the Auditor General has since asked Crown corporations, agencies, universities, health boards and school boards to self-report.

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