The Audit Manager presented a report to update Members on the impact of fraud on the UK by summarising the main findings from the Audit Commissions Annual Report on Protecting the Public Purse (PPP) 2013. The purpose of the report was to consider the potential impact of fraud on the Council and Middlesbrough residents, the key risks to be managed, the existing counter fraud arrangements in place and further action that could be taken to safeguard the Council from fraud and loss.
Fraud cost the UK public sector more than £20 billion per annum and local government more than £2 billion. Each year, the Audit Commission requested local government bodies to submit data relating to detected frauds and used this information to help formulate its annual PPP Report. A summary of the key findings and national key fraud risks identified by PPP 2013 were outlined in paragraphs 9 and 10 of the submitted report.
The PPP 2013 report stated that Councillors had a crucial role to play in supporting the Councils approach to prevention and detection of fraud and recommended that a Councillor with portfolio responsibility for fighting fraud should be appointed.
Middlesbrough Council had a number of counter fraud arrangements in place including Whistleblowing, Anti-Fraud and Corruption, Anti-Money Laundering and Prosecution Policies, procedures for declaring gifts, hospitality and interests, internal audit, the Benefit Fraud Team, Data matching, and information sharing with other local authorities and bodies and the National Action Against Fraud Network (NAFN).
Details of the work of the Benefit Fraud Team were included in the submitted report and it was highlighted that the number of referrals had reduced after steadily rising for a number of years. The Team were targeting resources and focussing on areas where successful prosecutions had been made. In 2012/2013, as a consequence of fraud investigations, a total of £460,290 in overpaid housing and council tax benefits was discovered. Of the 192 cases where benefit was found to be incorrect as the result of an investigation, formal action was taken in 102 instances. In addition to prosecutions, there were 29 cautions and 27 Administration Penalties offered and accepted, as an alternative to criminal proceedings.
Tees Valley Audit and Assurance Services (TVAAS) investigated suspected internal fraudulent activity and reviewed anti-fraud controls whilst carrying out audits across the Council. An Annual Risk Assessment was completed using the national fraud risks. TVAAS considered the risk to Middlesbrough as a whole and tried to identify any controls to include in the following years Audit Plan.
The Audit Manager clarified that the number of days that TVAAS was engaged by Middlesbrough was determined by the Section 151 Officer and the Service itself could not employ more resources if a large investigation was required. TVAAS could however, highlight particular risk areas and suggest that audit days were allocated to it within the Plan.
TVAAS also shared information with colleagues at other local authorities and discussed any particular fraud risks that were coming up. It was suggested that it might be beneficial from an audit perspective to run an awareness campaign about the risk of fraud throughout the Council. A summary of other areas where additional action could be taken to strengthen the Councils counter fraud environment was included at paragraph 24 of the submitted report.
AGREED as follows that:
1. the information provided be received and noted.
2. an appropriate officer be invited to the next meeting to provide an update on whether fraud was increasing, decreasing or static within the Council and what measures and resources were being applied to prevention and recovery.