By Rachael Tiffen, Head of CIPFA Counter Fraud Centre
The release of Transparency International’s Corruption Perception Index 2016 in early February 2017 has shown that systematic corruption is rife across the globe, with much of the problem linked to the public sector.
The UK public sector is no exception. CIPFA’s Fraud and Corruption Tracker report found more than £325m worth of fraud had been detected or prevented in the public sector in 2015/16 alone.
Fraud, bribery and corruption involving taxpayer money are all becoming more common; for example embezzling petty cash or money for trips, and falsely claiming wages and overtime.
As organisations go through transformation, restructuring and reform, fraud risks may increase in the short term as a result of changing systems and processes.
Public bodies must have the skills in place to identify fraudulent activity and to ensure that they have sound oversight and regular monitoring processes.
Recognising a fraud is only part of the challenge; the greater challenge is addressing the issue, especially in cases where fraud has become embedded in the culture.
All sectors have had to make significant savings during almost ten years of austerity. Limited resources coupled with a lack of the skills to tackle fraud properly have created significant challenges. It is crucial therefore that robust anti-fraud and corruption policies and procedures are developed and maintained. It is better to be in a good position to prevent fraud happening in the first place than to deal with its consequences.
Human resources
Individual organisations must know who they are employing. Employing someone who does not have the necessary qualifications and experience can lead to both reputational and financial damage. It is essential that original documents and proper references on headed paper are provided by potential employees and that potential employers scrutinise what they are given. Qualifications, references and employment history should all be checked thoroughly.
The finances
It is essential that those charged with governance carry out their financial responsibilities effectively. They must ensure they receive the information necessary to allow them to do so and that they ask challenging questions and receive satisfactory answers.
Internal controls
Public bodies must have in place sound internal controls, in accordance with accredited standards. Internal controls can take various forms, including defined roles and responsibilities; clear lines of authority within the organisational structure; appropriate safeguards to limit access to assets, systems and records; authorisation and approval procedures; and agreed accounting procedures.
Policies and procedures
Public bodies should also have a fraud policy statement setting out their stances on fraud and corruption and governing how individuals should act in the event that there is a suspicion of fraud. Staff should know who to report fraud to and management should have a clear fraud response plan that instructs on how to deal with the allegation and how any investigation will be managed.
Stay updated
Finally, to counter fraud, it is essential to know what to look out for. It pays to keep up to date with trends and behaviours and be able to assess the risks that external threats may present.