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ANTHONY KLAN

Federal Court of Australia staff spent over $20,000 at liquor stores last financial year, with 90 per cent of the purchases not properly approved, the government’s top auditor has found.

The Australian National Audit Office (ANAO) has uncovered a string of failures regarding management of corporate credit cards and CabCharge cards issued to Federal Court staff, including failures in “preventative and detective controls”.

The 51-page audit found deficient “policies and procedures” around credit card use, that there was “no structured training in place” — and that the Federal Court had provided Parliament with incorrect evidence about its credit card issues.

The ANAO specifically reviewed “credit card expenditure at alcohol merchants” and found there had been 44 transactions in 2022-23 totalling $20,609, including 29 transactions totalling $12,724 at liquor chain Dan Murphy’s.

“38 of 42 tested transactions were not supported by sufficient documented evidence of delegate pre-approval,” the audit found.

“38 of 42 tested transactions were not supported by sufficient documented evidence” — ANAO

In the year there were 83 corporate credit cards provided to staff, about 5 per cent of the total workforce of the Federal Court of Australia, which has offices in each state and territory.

The ANAO said it had uncovered two cases of “purchase splitting”, where transactions are run through separately to avoid transaction limits.

In one case an employee “made three separate purchases” at Dan Murphy’s on the same day — 19 April 2023 — to avoid a $1,000 individual transaction limit.

“The sum of the transactions was $1,166.59,” the audit report states.

The ANAO said there was “no evidence” the Federal Court had taken any action over the incident.

“The ANAO said there was ‘no evidence’ the Federal Court had taken any action over the incident”

“As of April 2024, the three transactions had not been approved in the system, with no evidence of follow up or escalation occurring with the cardholder or relevant manager,” the audit states.

“If Australian Government officials deliberately misuse corporate credit cards, they are committing fraud”.

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90% of alcohol purchases “not supported by sufficient documented evidence”. Source: ANAO. (Image top: Graeme Powell/ABC News).

 

The 51-page report found purchases were made from seven “alcohol merchants” in 2022-23, with the $20,609 spend up from $13,673 the year before.

The ANAO reviewed the reasons for each liquor store transaction stated in the Federal Court’s system.

The most common was “Chief Justice hosted events”, which was cited for 14 of the transactions; followed by “miscellaneous meetings, workshops, seminars or meetings” (11); “ceremonial sittings” (7); and “events for judges” (5).

Alcohol could be purchased in certain circumstances, but the Federal Court’s entertainment policy said such expenditure must receive “prior approval” from “designated senior officials” and “must withstand scrutiny”, the ANAO said.

The Federal Court told the ANAO approval was “usually provided verbally”, which the ANAO said was permitted, but only if the approvals were then recorded.

 

Of the 42 liquor store transactions reviewed, 38 were not supported by “sufficient documented evidence“ of approval. In 23 cases the Federal Court “provided evidence that suggested” verbal approval had been sought but was “not adequately documented”.

For the rest, approval was not sought or obtained — verbal or otherwise.

Of the 83 cards issued, most had a monthly credit limit of $5,000, with $951,612 spent in total in 2022-23.

None of the Federal Court’s 163 judges were assigned corporate credit cards. There were 464 CabCharge cards in use, of which 31 were assigned to judges.

There was a “lack of appropriate controls” over CabCharge cards, the ANAO said.

Taxi rides were “distributed across all days of the week and all hours of the day” and criteria for “determining business needs” for the cards were “not documented”.

There were hundreds of taxi rides over weekends, and “the finance team does not validate all transactions that fall on weekend and outside of standard working hours”, the ANAO said.

“While there are potentially legitimate business reasons for taxi travel to occur on weekends and outside of normal business hours, the (Federal Court’s) lack of appropriate controls over CabCharge cards increases the risk that cards may be used inappropriately”.

Date and time of CabCharge fares. Source: ANAO

 

The Federal Court “has jurisdiction over almost all civil matters arising under Australian federal law and some criminal matters”, the ANAO report states.

The Federal Court, which is part of the Attorney-General’s portfolio, had been asked by Senate Estimates hearings in 2022-23 and 2023-24 to provide responses to questions about credit card usage.

Yet it had provided incorrect information, understating the “number of purchases deemed illegitimate or contrary to policy”.

“The (Federal Court) interpreted ‘illegitimate or contrary to policy’ to be staff misuse, so fraudulent transactions were not reported,” the ANAO states.

“The FCA did not respond to parliamentary questions on notice with accurate reporting on credit card use” — ANAO

The ANAO said that in 2022-23 the Federal Court “identified and recovered” eight instances of “external credit card fraud” and “inadvertent personal misuse”.

The Federal Court did not identify the two cases of purchase splitting and regarding its staff, as opposed to external fraud, only cases of “inadvertent” misuse were recorded.

Overall, the ANAO said the Federal Court’s management of corporate credit cards, had only been “partly effective”.

A key issue was non-compliance issues were not disclosed by the finance division to “executive management”.

“Detailed reporting on credit card non-compliance was not provided to…executive management, diminishing its understanding of fraud, risk and integrity implications arising from non-compliance,” the report states.

The ANAO made six recommendations, including creating a process “to confirm evidence of pre-approval” regarding hospitality and entertainment spend; ensuring CabCharge transactions were approved by managers each month; and that it “formalise and document” a process for conducting periodic analysis of credit card transactions.

Federal Court of Australia CEO and Principal Registrar, Sia Lagos, said the court “agrees with the findings” of the ANAO’s report and had accepted all its recommendations.

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