$40 million in NSW emergency grants lacked fraud safeguards

The audit examined special disaster assistance (SDA) grants to primary producers affected by severe floods in August and September 2022. Administered by the NSW Rural Assistance Authority (RAA) and the NSW Reconstruction Authority, the program offered financial support to businesses.

The audit found that while agencies met most program guidelines, as well as the requirements set out in the NSW Grants Administration Guide, the RAA failed to implement appropriate controls for $25,000 upfront payments.

The RAA did not require applicants to show evidence of how those funds would be spent and it did not validate damage estimates before distributing the funds.

In total, the SDA program received 10,715 applications, approved 8,959 grants, and disbursed $536.5 million, with an average grant value of $59,881.

The audit also found that that the memorandum of understanding (MOU) between the RAA and the Reconstruction Authority had not been updated since 2015, leading to unclear responsibilities in grant administration. In addition, neither agency conducted a cost-benefit analysis or planned an evaluation of the program, activities that are mandatory under NSW grants guidelines.

The auditor recommended that:

• the organisations update their MOU
• the RAA improve risk management, increase fraud controls, better manage conflict-of-interest declarations, update cost estimate modes, and develop new performance measures for future grant programs
• the Reconstruction Authority complete the cost-benefit analysis and outcome evaluation for the program.

The organisations were asked to address the recommendations by December.

Read the full report

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