As part of International Fraud Awareness Week, the annual campaign to raise awareness of fraud and how to prevent it, the CIPFA Counter Fraud Centre is focusing on Fighting Fraud and Corruption Locally.
Each day this week, we’re publishing an article on one of the six key themes – the ‘six Cs’ – that emerged when researching the strategy.
Today we’re looking at capacity and the importance of organisations deploying the right level of resources to deal with the level of fraud risk.
Risks vs. resources
The risk of fraud varies. What is true of one local authority in terms of scale, complexity and drivers may not be true of another.
The important point for local authorities is to understand which risks are relevant to their individual circumstances, and to assess whether there is the capacity to deal with the level of fraud risk.
After all, there is little merit and not enough resources to use a tank when a well-honed arrow will do the trick.
Challenges to capacity
When the Fighting Fraud and Corruption Locally strategy was being developed, many of the counter fraud professionals consulted reported that they had either experienced or expected a reduction in their authority’s capacity to tackle fraud and corruption.
The reasons included austerity-related funding reductions and the transfer of skilled investigation resource to the Department for Work and Pensions Single Fraud Investigation Service (SFIS). In many cases, these individuals have not been replaced, and some authorities have been left without a dedicated fraud team.
Furthermore, local authorities highlighted that apart from one-off funds, for example the most recent DCLG Counter Fraud Fund of £16m, it remains difficult to access funding to tackle fraud.
According to the 2016-2019 strategy: “The business case is often not clear cut, which makes it difficult for local authorities to fund initiatives on an invest-to-save basis, and in some instances the business case is frustrated by existing local government funding mechanisms.”
Know your risks
Given these very challenging circumstances, and in order to make the most of the limited resources available, it is essential that local authorities make an honest appraisal of the fraud risks they face and the resources needed to tackle them.
This will help authorities to function effectively now that the SFIS has been implemented, and to respond to the recommendations in the UK Anti-Corruption Plan.
Considerations include whether the appraisal can be done locally, with the support of the national agencies or with neighbouring authorities.
Recommended actions
The Fighting Fraud and Corruption Locally companion document was published alongside the strategy, as a practical document for counter fraud practitioners.
To ensure the correct capacity is in place, the companion document recommends the following actions:
- (If not already completed) conduct a new assessment of the risks of fraud and corruption in the light of the SFIS implementation.
- Use the Fighting Fraud and Corruption Locally Checklist, which forms a standard that local authorities can measure themselves against to create an effective counter fraud and corruption culture and response.
- Understand and acknowledge that they may have risks.
- Use appropriate measurement and a common methodology.
Authorities are also encouraged to access the case studies, guidance and examples of best practice found in the Fighting Fraud and Corruption Good Practice Bank.
How CIPFA can help
The Fighting Fraud and Corruption Locally Checklist can be downloaded from the CIPFA website.
The CIPFA Code of Practice on Managing the Risk of Fraud and Corruption provides guidance on identifying the fraud and corruption risks and making arrangements for appropriate resources.
Our Fraud Risk Wheel is an interactive, web-based tool that presents detailed guidance on different fraud risks. The guidance includes how the different risks arise, the steps or controls that can be put in place to mitigate them and case studies to illustrate how similar organisations have dealt with the issues.
Finally, our Certificate in Fraud Risk Management delivers the in-depth skills and knowledge needed to create an effective risk management framework.
Alternatively, please contact a member of the CIPFA team to discuss your circumstances on 0207 543 5600.
Do you have examples of best practice?
One of the best ways to address the challenge of balancing fraud risks and resources is to contrast and compare what your local authority has in place with another of a similar shape, size and with common risk factors and weighting.
If you have processes or approaches that you would be willing to share with other local authorities via the Fighting Fraud and Corruption Good Practice Bank, please get in touch with us at counterfraudcentre@cipfa.org.