Fraud strategy makes spend-recovery audits compulsory

All departments, agencies and non-departmental bodies will have to commission private companies to conduct ‘spend-recovery’ accounts in search of fraudulent or mistaken payments, Cabinet Office minister Francis Maude announced on Monday at the launch of the government’s Fraud and Error Strategy.

By Joshua.Chambers

08 Feb 2012

Speaking at the Fraud, Error and Debt conference, which was hosted by CSW publisher Dods and sponsored by SAS and Experian, Maude said that “analysis by the Cabinet Office shows that if all agencies and non-departmental public bodies undertake these audits we will be able to recover £100m, so by December 2013 everyone will have to do this – it’s low risk, with high potential rewards.”

Departments will employ companies on a ‘payment-by-results’ basis to find fraud and recover the money. “Departments are free to choose their supplier; they’ll just have to report the results,” Amy Wilesdon-Tag, the lead on fraud in the Cabinet Office Fraud, Error and Debt Team, told CSW.

The Home Office and transport department have run pilots, with the Home Office detecting £4m overpayments and transport finding £0.5m, she added.
The strategy sets out a series of actions, including the establishment of a dedicated panel that will, from August 2012, examine all major project proposals to ensure that opportunities for fraud and error are “designed out” before their approval.

By March 2015, all departments that administer benefits, grants and other application processes to obtain public funds will be screening applicants before payments are made. “We are transforming the ‘pay first, check later’ culture of previous years that has been a major contributing factor to the rampant fraud and error in the public sector,” Maude said.

HMRC is currently piloting this approach, using cross-government data and matching it to information held by credit reference agencies. “We need to take off our collective blindfold and share our intelligence on known fraud and fraudsters, and make this the basis of a common defence,” Maude said. “We can’t be hindered here by an outmoded view that data-matching is somehow akin to creating a Big Brother database.”

The Cabinet Office and the National Fraud Authority will have detailed plans for a ‘counter-fraud checking service’ to share data across all departments by April 2012. Further, the Department for Work and Pensions and HMRC will create a Single Fraud Investigation Service that will also work with local authorities. Powers for this body will be set out in the Welfare Reform Bill.

All civil servants will have to undertake a counter-fraud training course by April 2013, the report says. “It lasts about an hour and it’s all done at your desk,” said Wilesdon-Tag.

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