potential implications for fraud detection by councils in a post ......irrv – keele university...
TRANSCRIPT
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,
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
A little bit about myself • Head of Counter Fraud
• Qualified external auditor
• Accredited investigator
• MSc in Counter Fraud and Counter Corruption
• Former police officer
And the question for today is?
What is the most effective way of
reducing the level of detected fraud in local government?
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
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
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?
So is this fraud?
• Personal budgets example
• Procurement fraud example
• Council Tax Discount fraud example
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
Variation in detected non-benefit fraud by authority type, excluding county councils
0
500
1000
1500
2000
2500
3000Numbers of detected non-benefit frauds cases arranged by council type (excluding
county councils) 2012/13
LondonBoroughs
Metropolitan Districts
Unitary Authorities
District Councils
79 districts councils detected no non-benefit fraud cases
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
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)
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?
The local picture How your district council compares to all other districts in your county Total detected cases and value 2012/13
Mets & UA with housing stock 2012/13 Region X The “detected zero” councils account for 95,802 homes (23% of total in region)
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
Average:
188 cases, valued at £53,054
£-
£50,000
£100,000
£150,000
£200,000
£250,000
£300,000
£350,000
0.000
0.100
0.200
0.300
0.400
0.500
0.600
Detected value Detected value as % of CTAX income
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 - £500 per badge
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????
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
Deterrence – the council tax SPD fraud example
• In 2008 – 23 councils had 40% or more households claiming
SPD – Highest, at one authority 48% of households claimed
SPD
• By 2013 – 7 councils had 40% or more households claiming
SPD – Highest, at one authority 41.2% of households
claimed SPD
ANY QUESTIONS