Fraud risk too high within Nova Scotia government

The Nova Scotia government is a $12-billion operation, funded by taxpayers.

So every resident has a vested interest in knowing this: Is the province properly managing financial risk in all its forms, from cybersecurity to fraud?

The answer to that question, according to Auditor General Michael Pickup? Not as well as it should.

As usual, Pickup’s latest report, released Oct. 29, covered a lot of ground.

That included testing for weak financial controls, cybersecurity gaps, fraud risks and lack of oversight over government credit cards.

Pickup also looked at the uncertainty around costs for cleaning up contaminated sites around the province.

In too many cases, Pickup found problems that reflect unacceptable levels of financial risk. That included four government organizations — the Cape Breton-Victoria Regional Centre for Education, Halifax-Dartmouth Bridge Commission, IWK Health Centre and Strait Regional Centre for Education — where previous audits identified financial control weaknesses that have still not been fully addressed.

On the topic of cybersecurity, Pickup noted a “government-wide risk register is still in development.” His survey of 10 government organizations showed “varied understanding of cybersecurity responsibilities.”

That’s alarming, given the multiplying threats — from hackers to ransomware extortionists — that lurk online today.

Meanwhile, four government organizations — the Halifax Regional Centre for Education, Nova Scotia Farm Loan Board, Nova Scotia Liquor Corporation and Nova Scotia Municipal Finance Corporation — have yet to assess the risks of using purchasing (credit) cards, the AG’s report stated. The Nova Scotia Municipal Finance Corporation did not even have a policy for using such cards.

Again, that’s not comforting news for Nova Scotians, who rightly expect government to be effective, vigilant stewards of taxpayers’ money.

The auditor general’s report painted a similar concerning picture around fraud risk.

Of the government departments and organizations Pickup surveyed, almost half had not completed fraud risk assessments. Only about a third of staff had fraud training, which is mandatory.

Six educational organizations lacked any fraud policy at all, he said.

Fraud tip hotlines are a proven, effective way to discover fraud, according to Pickup. Yet a quarter of government organizations still haven’t evaluated the need for such services, which enable and encourage whistleblowers.

Given the province’s tight financial constraints and many looming challenges — particularly in health care — it’s vital that government ensure every dollar is spent prudently.

Pickup’s report is a road map to that end.