potential implications for fraud detection by councils in a post ......irrv – keele university...
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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,
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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
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A little bit about myself • Head of Counter Fraud
• Qualified external auditor
• Accredited investigator
• MSc in Counter Fraud and Counter Corruption
• Former police officer
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And the question for today is?
What is the most effective way of
reducing the level of detected fraud in local government?
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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
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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
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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?
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So is this fraud?
• Personal budgets example
• Procurement fraud example
• Council Tax Discount fraud example
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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
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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
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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
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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)
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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?
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The local picture How your district council compares to all other districts in your county Total detected cases and value 2012/13
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Mets & UA with housing stock 2012/13 Region X The “detected zero” councils account for 95,802 homes (23% of total in region)
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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
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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
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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????
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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
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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
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ANY QUESTIONS