The Inspector-General of Taxation has published the report ‘Review into the ATO’s Fraud Control Management’.

The review was commenced at the request of the Senate Economics References Committee. It followed events connected to Operation Elbrus including allegations of tax fraud that may be linked to abuse of position by a public official.

Findings and recommendations

The review has not found evidence of systemic internal fraud or corruption. Generally, the ATO has sound systems in place for managing risks of internal fraud, however, the review has uncovered a number of areas which require improvement.

One of the areas identified for improvement concerns the ATO controls to appropriately identify and manage conflicts of interest as inadequate management of such conflicts can lead to risk of corruption. In this regard, following Operation Elbrus, the ATO has made significant improvements to its staff instructions and guidance, however, further improvements are required.

Another area identified as requiring improvement relates to senior ATO officer intervention in individual cases. A recommendation has been made 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.

In total, 13 recommendations were made to the ATO and one to Government. The ATO has agreed in full or in part to all 13 recommendations and has advised that some have already been implemented. The Government has agreed in principle with the recommendation made to it.

‘The next stage in the development of international collaboration should be for tax avoidance and fraud to be increasingly uncovered by revenue agencies rather than relying on whistleblowers and the media,’ said Inspector-General of Taxation Mr Ali Noroozi.

(Source: News release | Executive summary)

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