Simon Lane, ACFM, MSc. (Counter Fraud and Corruption Studies), CIPFA member and Associate Director of Finance at Guy's and St Thomas' NHS Foundation Trust, reflects on recent changes to the counter fraud landscape and why CIPFA membership will benefit counter fraud practitioners.
Although constituent parts of the public sector have individual counter fraud strategies, there is a lack of strategic co-ordination and leadership for the whole sector. It falls to individual investigators, teams and their managers to deliver professional and effective counter fraud services within a complex statutory and, sometimes, political environment. Navigating through criminal and disciplinary investigations, dealing with data protection and human rights issues, developing fraud risk assessment strategies and the myriad of other competencies required of the modern counter fraud professional is far from straightforward.
The true scale of public sector fraud loss is not known. The last measurement exercise by the National Fraud Authority in 2013, which mixed detected and undetected fraud, put estimated losses at £20.6bn. However, there is little, robust, new insight into undetected fraud losses. There is a lack of academic research in the area notwithstanding the efforts of Portsmouth University’s Counter Fraud Centre and a handful of notable authors.
Practitioners in local government quote the same perceived fraud risks in 2016 as they did in the Audit Commission’s Protecting the Public Purse swansong in 2014. Over the past two years the DWP have completed their transfer of 910 investigators from local government into SFIS, the benefits of which are yet to be realised with fraud and claimant error overpayments remaining unchanged over the past two years.
CIPFA’s own counter fraud tracker survey, published this July, recorded an increase of some 250 non-benefit investigation staff across 211 (mostly local authorities) between 2014 and 2016. There are 650 counter fraud staff within these organisations, dealing with a range of fraud risks from procurement to blue badge fraud. These officers include those who previously dealt exclusively with housing benefit fraud and now have to deal with a wider range of fraud typologies.
There is a mixed economy within the NHS with much of the counter fraud effort being delivered through outsourced contracts to either accountancy firms or consortia with some bodies retaining in-house directly employed resource, all of whom are required to hold relevant accreditation. Knowledge transfer within this area is often hindered by the need to maintain competitive advantage.
Statistically sound fraud measurement is non-existent other than in relation to DWP administered benefits and tax credit. Albeit currently at its lowest level since 2010/11 the reduction in overpaid benefit as a % of expenditure shows only a very modest fall of 0.3% over the past 10 years, during which there have been various fraud reduction strategies. Hardly enough to satisfy the NAO who, once again, qualified the 2015/16 DWP accounts due to the level of fraud. The NHS has not measured its stock of fraud for a considerable time and when it did, only provided estimates for patient charges and dental contractors.
Detected fraud in local government, as reported in the Audit Commission’s Protecting the Public Purse reports, increased from £135m in 2010 to £188m by 2014 and, despite a great start in 2011, the local government strategy to combat fraud, “Fighting Fraud Locally”, lost some of its early impetus. This strategy has just had a timely refresh but will need co-ordination, commitment and drive to deliver meaningful reductions in loss.
After the Task Force efforts of the Treasury in 2011 and later the Cabinet Office, it feels to me as if there has been a lack of co-ordination across central government, the NAO concluding earlier this year that, “…the government lacks a clear understanding of the scale of the fraud problem and departments vary in their ability to identify and address the risk of fraud”.
Add to this various other factors: The lack of “stick” in local government as a result of disbanding the Audit Commission; the disappearance of the National Fraud Authority; the financial imperative; the thrust for greater collaboration/shared services; NHS Protect with their own efficiency challenges - all placing additional pressure on individual counter fraud staff to demonstrate their effectiveness and value to their home organisations.
What better time, then, for CIPFA to step up and provide leadership in this area, as the recognised public sector professional accountancy body and offer structured support to counter fraud specialists?
The London Boroughs Fraud Investigators Group, supported by its member local authorities, was first to identify the need for a new breed of officer with fraud investigation skills, as opposed to the role being an adjunct to internal audit work. This concept was then developed and formalised by the NHS and subsequently adopted by DWP, culminating in the accredited training route we see today.
As a CIPFA member, with some 26 years post qualification experience, I have spent much of my career specialising in counter fraud and was involved in the early stages of professionalising the function. It is good to see CIPFA now providing guidance in this area and support to counter fraud practitioners. With new qualification and training offers, a seat on the Professional Accreditation Board and the dedicated Counter Fraud Centre, CIPFA now has a clear leadership role to play helping public bodies to combat fraud risks, to further develop the profession both in the UK and internationally and to provide a voice for practitioners. It is good to see that accredited counter fraud practitioners are now able to join the CIPFA fold through affiliate membership and will benefit from having the weight of a recognised professional body behind them.
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Guy's and St Thomas' NHS Foundation Trust.