An audit of Victorian government departments has found contractors and consultants aren’t being adequately screened before they are employed, with fewer than half having a criminal check before starting work.

The audit by the Victorian Auditor General’s Office looked at fraud and corruption controls during the Victorian Public Service recruitment process.

It looked at Victoria’s eight government departments and the Victorian Public Sector Commission (VPSC) with a focus on Health and Human Services, DPC and Treasury.

The report found while all government departments have adequate screening processes for external candidates, the same standards don’t apply to internal candidates or contractors and consultants.

“The same controls are not in place for contractors or consultants, nor are they operating effectively for candidates who are existing VPS employees,” the report concludes.

Conflict of interest and poor reference checking

The audit also identified gaps in controls against conflict of interest during the employment process, which it said exposed the VPS to fraud and corruption.

Six of the nine agencies did not have adequate processes to manage conflict of interest.

Only the Department of Environment, Land, Water and Planning (DELWP), DJCS and VPSC had a thorough process to ensure selection panels identified, declared and managed conflict of interest during shortlisting.

All others considered any conflict at the end of the recruitment phase, by which time it was too late, the auditor said.

“We also found that the level of instruction and training for hiring managers on COI risks during recruitment varies, and in some instances does not exist,” the report said.

“All agencies have COI policies that acknowledge recruitment as a high‐risk activity. However, this has not led to effective recruitment policies and procedures that control the risk of COI.”

The audit also failed to find evidence that references were being checked, although the report said this could be because of poor record keeping.

Some agencies didn’t require any references for internal candidates.

Criminal checks

Seven of nine agencies had unclear or overly broad policies when it came to criminal checks for internal applicants, the audit found, “meaning that internal candidates may not have a police check regardless of the risk of the position they are applying for”.

Of 299 contractors employed between 2017-19, only 40 per cent, or 118 of the sample, had a criminal check and up to 3,430 contractors worked without their criminal history being checked.

“These contractors may have accessed sensitive or financial information or provided services to vulnerable people. Without an assessment of their criminal history, there is the risk that a contractor may not be suitable for work in the VPS,” the report says.

Meanwhile four per cent of employees who had been sacked for misconduct or resigned during a miscondunct investigation were re-employed within the public service.

Between 2017-12019, 205 ex-VPS employees terminated for misconduct were re-employed.

Need to strengthen controls

The auditor said DPC and DTF are currently renegotiating Whole of Government Purchasing Agreements for contractors and this is a good time to strengthen controls.

It says in 2019 the VPSC published a mandatory screening process but this is not a “consolidated and complete guide”, VAGO said.

The report makes 13 recommendations for improvement.

The VPS last year employed almost 48,000 people and advertised over 11,000 positions. More than 300,000 people currently work in the sector.