Barely one in five frauds found out in local government are leading to a prosecution, according to the second CIPFA Fraud and Corruption Tracker (CFaCT). That’s an annual survey of the fraud and corruption detected in local authorities across the UK.
Of identified frauds (not including hosuing benefit fraud) 21 per cent had a prosecution as an outcome, compared with 22 per cent ending in a caution, 19pc in ‘disciplinary outcomes’ (where the fraudster may be working for a council) and 38pc saw ‘other sanctions’.
As the document points out, since the closure of the Audit Commission there has been no requirement for councils to report fraud committed against them. The largest area of growth in fraud investigation is in procurement. Investigations in this area went up by five times in the year. Business rates continue to be an area of concern; and Right to Buy is becoming an emerging risk, particularly in London, according to the report. London boroughs identified housing fraud as their highest fraud risk. Procurement and fraud to do with the business rates were also named as emerging risks. Council tax fraud represents the highest number of fraud cases reported by local authorities. According to respondents 59 local authorities responsible for the collection of council tax made no investigations into the area of single person discounts, though that is a common cover for such fraud.
Among the case studies in the report, the corporate anti-fraud team at the London Borough of Tower Hamlets worked with the London Borough of Redbridge, the police and the DWP to investigate a serious and organised fraud that involved a claim for housing benefit and tax credit totalling £1.6m. The most common type of fraud was to do with council tax, although its average value is £470, far lower than the average housing fraud case, which is £38,630.
At the Chartered Institute of Public Finance and Accountancy (CIPFA), head of the Counter Fraud Centre, Rachael Tiffen says: “Fraudsters beware – local authorities are getting smarter and more effective. This is saving taxpayers’ money and helping to get council houses, disabled parking badges and other vital services to the people who really need them. However, more needs to be done. At least 10pc of authorities still don’t have a dedicated counter fraud team and there remain many barriers to data sharing that could help to expose fraudsters. We recommend that local authorities work together to pool resources and information. The first step will be to agree a common approach to recording and measuring fraud.”
As for who’s work on counter-fraud, the report found that nearly half of respondents to the survey had no access to financial investigation resource (44pc), while 56pc did. Financial investigators are those professionally accredited for the purpose of recovering assets in accordance with the Proceeds of Crime Act (POCA).
Among the CIPFA recommendations, the institute says that it’s as important to prevent fraud that has no direct financial interest such as data manipulation and recruitment as it is high value fraud. Employees may change data to indicate better performance than actually occurred and staff may be using their position to change and manipulate data fraudulently or in assisting or providing access to a family member or friend.
About the report
It is similar to the former Annual Fraud and Corruption Survey delivered by the Audit Commission and includes questions commissioned by the Fighting Fraud and Corruption Locally Board and the Home Office to give a picture of the preparedness and actions being taken by councils.
It examines:
– levels of fraud and corruption detected each financial year
– number of investigations undertaken
– types of fraud encountered; and emerging trends.
For the full 27-page document visit http://www.cipfa.org/services/counter-fraud-centre/fraud-and-corruption-tracker.
