Fraud in Government: New PWC Study Says its Getting Worse

Government agencies around the globe are at risk from within. Just as in the private sector, more error and misuse occurs from internal employees and partners and suppliers than from anyone else. A recent study from Price Waterhouse Coopers indicates that the problem may be getting worse. According to the consultancy’s latest Global Economic Crime Survey, nearly half of organizations in the public sector have been hit by economic crime in the past 12 months. Cyber crime, employee and supplier fraud in particular are on the rise. The survey also found 46 per cent of respondents had experienced one or more incidents of such crime in the past year. That’s quite a jump from 37 percent in 2009 and considerably higher than the average of 34 per cent across all sectors.
Some of the other key findings from the survey are equally alarming:
• More than two-thirds of the crimes experienced in the past 12 months were committed by public sector employees, compared with just over half in 2009.
• Supplier fraud jumped from 13 per cent to 32 per cent over the same period.
• Over 50% of those surveyed said they had the resources to detect cyber crime, but most lack the forensic capabilities needed to investigate such incidents.
Source: 2011 Global Economic Crime Survey, PWC: http://www.pwc.com/en_GX/gx/economic-crime-survey/assets/GECS_GLOBAL_REPORT.pdf
Further, the study links this rise in activity to the cuts in public sector spending—a trend that is likely to continue and deepen if the current economic reality remains unchanged.
Government agencies are clearly struggling to address internal fraud. Their efforts are complicated by shifting compliance requirements, impaired visibility into user activity, legacy systems that house mission-critical processes, and the limited effectiveness of existing controls and traditional logging capabilities.

Tagged as: challenges, Continuous Monitoring, insider fraud, threats, US Government