Agenda item

Report of Head of Service, Counter Fraud and Enforcement Unit (CFEU)

The Head of Service, Counter Fraud and Enforcement Unit (CFEU) introduced her biannual report, saying she was planning to change the format slightly, still within the workplan, by presenting a full report on the year’s activities at the first meeting in April, and one more focussed on risks at the second, allowing the opportunity to talk about bigger projects, proactive work, corporate projects etc.  She said tonight’s report concerns risk areas over the last year, including high risk areas and what might be done to mitigate those.  Anything else will be fitted around the workplan. 

Referring to paragraph 3.11 of the report, the Chair asked about the role of the committee, its interaction with the portfolio lead, and who that is.   The Head of Service CFEU said this arises from a checklist in Appendix 2, and what the Local Government Association suggests the council should be doing from a counter fraud point of view.  She was pleased to say that the council is compliant in a lot of areas but that interaction with councillors outside the committee – the wider council, Cabinet and executive committee – isn’t so good.  There is no direct portfolio holder – in her opinion, there is fraud risk in absolutely everything and this should be considered by all Members for all activities;  she doesn’t want to tether responsibility to one particular Cabinet member.  The suggestion across all the councils is that a completed Audit, Compliance and Governance report is complete, she should take it to informal cabinet to ensure they understand the issues and fraud risk in what we do, to ensure general awareness rather than focus on one Cabinet Member.  She added that if there is a particular issue in a particular area, she will liaise directly with the relevant portfolio holder. 

She said she will attend Informal Cabinet to talk about the workplan, CFEU’s works, results and high risk areas, and will roll this into their programme when they have space.

In Appendix 1 Risk Assessment, the Chair was surprised to see the likelihood score bigger than the impact score for the risk Without dedicated specialist staff in place, the Council may be unable to take effective and efficient measures to counter fraud, potentially resulting in authority suffering material losses due to fraud and error.  The Head of Service CFRU said we have to be realistic  - fraud is in everything everywhere, touches the council in many ways, including small scams around council tax support and benefit fraud – these are less impactful that a huge fraud but this is what her team are trying to manage.  She will look at the issue with the Head of Governance, Risk and Assurance

Introducing the updated 2022 Fraud Risk Strategy, the Senior Investigation and Enforcement Office said this high level summary of current risks and mitigation also commits the team to update the council on compliance with the local government fraud checklist, setting out best practice for fraud prevention.  He highlighted the following:

-       the council is compliant in most areas, with one or two exceptions, including data analytics – we do not have the software to do this but do use data from national exercises and fraud initiatives with excellent results;

-       the fraud risk register shows risk to all service areas across the council – in particular in recruitment, housing, and revenues and benefits – and what the council is doing to mitigate.  It is a live working document, updated as new risks emerge;   

-       the fraud response plan is a quite reference guide for all staff, setting out what they should do if they have any concerns, and includes a flow chart to help them identify what they should report, with the aim of protecting the integrity of evidence investigation;

-       high risk areas – mainly grant schemes and polygamous working - have been looked at, with a grant management policy and toolkit introduced to help staff to verify information on grant application forms, and 16 recommendations across the board to help mitigate the risks of polygamous working across the partnership.

Members welcomed the excellent documents, but had a number of questions:

-       regarding the strategy report, a Member noted that weak internal controls and ineffective monitoring of controls appears to be present in some areas, and looked for reassurance that there is a laser focus on what is happening on the ground day to day.  The Head of Service, CFEU, said her team has to rely on referrals and cannot foresee where issues will arise, so her focus tends to be prevention, and the raising of awareness, to avoid losing any money.  She has to consider that where an issue is perceived as fraud but will not get to a criminal level, internal controls can undermine a court case if internal checks have not been carried out – it is a fine balance;

-       she said her team is totally transparent and undertakes any work it is commissioned to do, but with fraud the most prevalent crime, it can be difficult to keep up with.  The CFEU works on awareness and focuses on areas where it can have an impact and help people, such as ensuring grants are being paid correctly, and following up cases of undeclared secondary employment;

-       she said this year is all about procurement, with a significant need to look at the controls around the new act, including fraud, contract management, and pre-tendering.  Everything sent to the teams is triaged and considered, and any concerns are acted upon.  She meets regularly with the Assistant Director SWAP to ensure issues are investigated and to provide reassurance, but they are fighting a massive battle;    

-       regarding the checklist, a Member wondered what the whistle-blowing policy, which is currently only partially compliant,  would look like after it is reviewed, whether contractors or third parties would sign up to the policy, whether training would be provided, and how this would be monitored.  The Head of Service CFEU said we need to look at how we engage contractors to point them in the right direction.  The whistle-blowing policy can be found on the website, and staff are directed to it every year – contractors will be included in this email and encouraged to engage like other staff. She said she would come back next year with any changes rather than the whole checklist, and an update to give reassurance that all the boxes are being ticked;

-       in response to a Member’s question about how the management team are kept up to date, she said she is a member of the governance group at CBC and meets quarterly with all three statutory officers and the Assistant Director SWAP, and her report was considered by that group before being presented to Audit, Compliance and Governance.  Any particular issues, such as polygamous working,  will be presented to corporate management teams across the six councils, setting out the commitment to how CFEU is working with HR and how the organisation will handle the issue;

-       she confirmed that her team is completely compliant in its reporting to Audit, Compliance and Governance committees; it is partially compliant in how it is auditing to councils as a whole.  This will be sorted, with more conversations about fraud risk in all activities;

-       in response to a committee member’s question, she confirmed that the report includes confirmation that there are adequate routine checks and follow-ups within the system – reporting to governance groups, audit groups and corporate management, and working with chief finance officers, as well as a commitment to produce management reports where any significant issues arise from internal cases. 

Members accepted the report by a show of hands.