Protecting the Public Purse potential implications for fraud detection by councils in a post SFIS world IRRV Keele University 30th April 2014

Transcription

1 Protecting the Public Purse potential implications for fraud detection by councils in a post SFIS world IRRV Keele University 30th April 2014 Alan Bryce, Head of Counter Fraud,

2 Agenda Treat fraud as fraud a few reflections Protecting the Public Purse 2013 National messages Local messages Post SFIS, areas of non-benefit fraud focus Questions

3 A little bit about myself Head of Counter Fraud Qualified external auditor Accredited investigator MSc in Counter Fraud and Counter Corruption Former police officer

4 And the question for today is? What is the most effective way of reducing the level of detected fraud in local government?

5 I believe that. Fraud is endemic Civil definition of fraud, on balance of probabilities No fraud detected does not mean no fraud committed, OR that all fraud has been prevented Prevention is cheaper than cure Do not forget deterrence!!!! Counter fraud specialists in post SFIS world should have combined investigative and audit role

6 Protecting the Public Purse Audit Commission report on fraud targeted English local government bodies Re-introduced in 2009 Annual report, only one of its kind in UK (and worldwide?) Identifies and promotes good practice Unique survey on levels of detected fraud & counter-fraud arrangements, with a 100% submission rate

7 We define detected fraud as: On the balance of probabilities, civil definition A manager makes that determination Some form of action has been taken The vast majority of local government fraud is not dealt with criminally Treat fraud as fraud but do all departments, and would colleagues recognise a fraud?

8 So is this fraud? Personal budgets example Procurement fraud example Council Tax Discount fraud example

9 So what have we been reporting since 2009 Protecting the Public Purse 2009/10 financial year - 119,000 cases of all fraud with a value of 135M - nearly 1,600 cases of social housing fraud - 63,000 cases of HB/CTB fraud worth 99M - 48,000 cases of CT Discount fraud, worth 15M Protecting the Public Purse 2012/13 financial yar - 107,000 cases of all fraud with a value of 178M - 2,642 cases of social housing fraud - 47,000 cases of HB/CTB fraud worth 120M - 54,000 cases of CT Discount fraud, worth 19.6M

10 Variation in detected non-benefit fraud by authority type, excluding county councils 3000 Numbers of detected non-benefit frauds cases arranged by council type (excluding county councils) 2012/ districts councils detected no non-benefit fraud cases 0 London Boroughs Metropolitan Districts Unitary Authorities District Councils

11 Total and average number of non-benefit fraud cases detected in 2012/13 by the top quartile performers for each authority type Council Type Proportion of cases detected of non-benefit fraud by top quartile councils in each group Average number of detected non-benefit fraud cases in the top performing quartile of each group. London Boroughs 70% 2,288 Metropolitan Districts 63% 829 Unitary Authorities 88% 734 District Councils 90% 234 County Councils* 76% 37 All councils 76% 549

12 Individual Fraud Briefings 353 individual fraud briefings developed by Audit Commission Tailored comparative information on fraud detection activities For audit committees or equivalent, on request from your external auditor London Boroughs, unitary authorities/ metropolitan districts and county councils (from late 2013) District councils (January 2014)

13 Interpreting fraud detection results Is the value of fraud detected or the number of cases detected the better indicator of counter fraud performance? Snapshot of annual performance And a caveat high value/low volume versus low value/ high volume DOES your organisation use fraud detection results to inform fraud risk, prevention and PERFORMANCE?

14 The local picture How your district council compares to all other districts in your county Total detected cases and value 2012/13

15 Mets & UA with housing stock 2012/13 Region X The detected zero councils account for 95,802 homes (23% of total in region)

16 Region X -Metropolitan districts and unitary authorities 2012/13 Council tax (CTAX) discount fraud Detected value and detected value as a percentage of council tax income 350, , , , , , , Detected value Detected value as % of CTAX incom e Average: 188 cases, valued at 53,054

17 2012/13 Average value of frauds detected low volume/high value vs high volume/low value Business rates - 48k RTB 58k Tenancy fraud - 18k nominal value Insurance - 41k Social care 20k Abuse of position (internal) 13k Grants 35k Procurement 10k (was 100k three years ago) Schools- 12k (mostly internal) CT discount 363 HB/CTB - 2.5k Blue badges per badge

18 Prevention Report fraud prevention work Does your organisation pro-actively review counter fraud defences? A recent mandate fraud example over 200k of loss!!! Fraud proofing systems a role for investigators and auditors????

19 Deterrence Evidence is that the risk of detection is more important than punishment The council tax SPD example nationally about a third of households claim SPD typically 4% to 6% of all SPD claims are fraudulent

20 Deterrence the council tax SPD fraud example In councils had 40% or more households claiming SPD Highest, at one authority 48% of households claimed SPD By councils had 40% or more households claiming SPD Highest, at one authority 41.2% of households claimed SPD

21 ANY QUESTIONS