Agenda item

Manager of Audit Cotswolds (see recommendations)

The Head of Audit Cotswolds introduced the report, as circulated with the agenda.  He explained that with the adoption of the Local Government Fraud Strategy, came the concept of the Department of Work and Pensions (DWP) for a Single Fraud Investigation Service (SFIS) which would take on the benefit fraud investigation work that was currently undertaken by Local Government.  The report considered the impact of SFIS, given that the officers currently providing a benefit fraud function, who were some of the most highly skilled fraud officers at the council, would TUPE to DWP on the 1 April 2015.  In effect, all revenue funding for benefit administration would be removed by 2016-17, though the expectation of the DWP that local authorities would provide information to aid their investigations would remain, which existing Internal Audit functions did not have the capacity, tools or skills to deliver.  The concept for this report was; how do you pay for anti-fraud, a service that may recoup properties, rather than money for the council, a service that needed to be self-financing.  At the same time as this, the opportunity to bid for funding from the DCLG to set up a counter fraud unit arose and an initial bid was submitted in September 2014, though this was lost.  The DCLG have agreed to consider the bid and a decision was expected by the end of January 2015.  The question had remained, if the bid was unsuccessful, how could the council do it.  There would be some residual DWP grant and Cheltenham Borough Homes had been very pleased with some of the recent results of counter fraud work and had therefore agreed that they would be willing to buy the service in the future.  The report set out the phased approach that was being proposed, an approach that would evolve slowly were the DCLG bid to be unsuccessful, as a successful bid would accelerate things significantly.  He explained how data matching was used to identify fraud and how involving other partners would enable data matching across different areas.

The Head of Audit Cotswolds provided the following responses to member questions;

·         Non-benefit fraud included a whole raft of things including accounting, payroll, etc. 

·         Shared Services could well flush out fraud.

·         To start with only housing associations would be included, but that was not to say that private sector businesses wouldn’t crop up as a result of data matching and that they may have to answer questions or provide data, but this was outside of the remit for the unit at this time.  

·         PACE (Police and Criminal evidence) interviewing was the term used for a form of interviewing that could be used as evidence in court.  

·         It was not always cost effective to take fraud cases to court; sometimes it was enough to stop the fraud itself.  A risk assessment would be undertaken and a decision made on a case by case basis.

The Governance, Risk and Compliance Officer explained that there were three policies that would need to be reviewed by Audit Cotswolds and reconsidered by this committee as a result of a Counter Fraud Unit being established; Counter Fraud and Corruption, Money Laundering And Anti – Bribery.

Upon a vote it was unanimously

RESOLVED that the Audit Committee recommend to Cabinet;

a)    That a new Counter Fraud Unit delivered by Audit Cotswolds, the internal audit service provider, be established.

b)    That an evolutionary approach be given to the development of the Counter Fraud Unit, as outlined in the report.