Corruption prevention in the University sector

1. Corruption prevention in the University sector Friday 25th June 2004 Australia New Zealand Internal Audit Group – Annual Conference

2. Overview • About the ICAC • Protected Disclosures • “Degrees of Risk” • ICAC data • ICAC investigations • The Public – Private Interface • Probity Auditing • The Sarbanes-Oxley Act • What can Internal Audit do ? • Contacting the ICAC

3. About the ICAC • What we do: • investigate and prevent corruption in the NSW public sector • help build and sustain integrity in the public sector • ‘public sector’ includes NSW universities • What we don’t do: • maladministration • serious and substantial waste

4. ICAC powers • The ICAC can: • use advanced and covert investigative resources • use coercive powers • hold private or public hearings • publish a report • make findings about public officials and elected members • make recommendations (prosecution, disciplinary, preventative) • monitor those recommendations • The trade off is: we cannot prosecute

5. How we learn about corruption • Principal officer must report any matter suspected on reasonable grounds that concerns or may concern corrupt conduct (s.11) – eg. Glen Oakley investigation • Protected Disclosure (s.10) • General complaint from public (s.10) • ICAC’s own initiative • Cooperation with other watchdog agencies

6. What is a Protected Disclosure? • Covered by Protected Disclosures Act (1994) – aka Whistleblowers leg’n • Must be made to CEO, authorised manager or investigative authority • Must be voluntary & in good faith • Act specifies penalties for recriminations & harassment including fines and prison

7. Corruption risks in universities “Degrees of Risk”- August 2002 • University staff as ‘public officials’ • Culture of academic freedom • New cost / revenue drivers • Policy & reporting framework not enforced • Poor record keeping • No understanding of ‘conflict of interest’ • Interface with private sector

8. Source: ICAC

9. ICAC Data – Umbrella report • Identified Risks • Fraud / Forgery • Misuse / theft of resources • Misuse of travel claims • Emerging Risks • Electronic Fraud / Corruption • Increase in Commercial Activity • Identified Strengths • Audit • Encourages reporting corruption • Code of Conduct • Committed / Ethical Staff

10. ICAC investigations • Altered student records – UTS (Aug.02) • Forged qualifications – Oakley (Dec. 03) • Bribery, travel & credit card rorts, nepotism, undeclared consultancies, fabricated documents • Australian Museum - > 2,000 stolen specimens (97-02) • Parliamentary Library – disposal of collections

11. Public – Private Interface • Cost & revenue drivers • Emphasis on applied research (vs curiosity / pure) • Partnerships, sponsorships, spin off companies & their distance from IA • Commercial-in-Confidence problems • Academics as ‘entrepreneurs’ not ‘public officials’ • Universities as developers

12. Probity Auditing • What is it ? • ICAC research • When to do it • External vs Internal probity oversight • Probity Plans • Real time auditing ?

13. Probity Audit / Plan examples • Research • Joint ventures / Spin Offs • Commissioned research • Sponsorships, Secondments • Venture capitalism • Non-Research • Building & Construction • Disposal of land & assets • Accessing private finance • IT acquisitions

14. Sarbanes–Oxley Act 2002 • Separating auditing and non-auditing functions • Making audit c’ttee responsible for protected disclosures • Mandatory fraud reporting to audit c’ttee • Falsifying records – 20 years imprisonment • Implications for Australia ?

15. What can IA do ? • Get involved in ‘probity auditing’ • Facilitate protected disclosures • Cherry-pick the SOX Act • Reduce dependence on IA • Use enforcement for prevention • Share intelligence & prevent forum shopping

16. ICAC contact details • Ph: 8281 5999 • Toll free: 1800 463 909 • PO Box 500, Sydney 2001 • www.icac.nsw.gov.au