Agenda item

Report of the Chief Operating Officer (Section 151 Officer)

The Audit and Procurement Committee considered a report of the Director of Finance that provided a summary of the Council's anti-fraud and error activity undertaken by the Internal Audit Service for the financial year 2021-22.

The report documents the Council’s response to fraud and error during 2021-2022 and was presented to the Committee in order to discharge its responsibility, as reflected in its terms of reference ‘to monitor Council policies on whistleblowing and the fraud and corruption strategy’.

The Internal Audit Service is responsible for leading on the Council’s response to the risk of fraud and error.  The work of the team has focused on four main areas during 2021-22: Business Support Grants; National Fraud Initiative; Referrals and investigations considered through the Council’s Fraud and Corruption Strategy; and Council Tax.  A summary of the key activity that had taken place in each of these areas was set out in the report.

Within the International Auditing Standards, there are clear expectations around the level of oversight that the Audit and Procurement Committee should have in relation to the risk of fraud within the Council. This includes an expectation that appropriate detail is provided around significant fraud. The following principles were applied when defining significant fraud:

·  A financial impact in excess of £10,000.

·  Frauds of under £10,000 could be included if the Chief Internal Auditor considered this justified by the nature of the fraud.

·  In terms of establishing when a fraud had occurred, this was normally defined as occurring when the disciplinary process had been concluded, although in cases not involving employees, this would be linked to other management action, such as criminal prosecution.

In the period April 2021 to March 2022, there was one significant fraud identified. 

From time to time the Internal Audit Team receive referrals or are asked to assist in investigations relating to employee misconduct and other fraud against the Council involving external individuals.  During 2021-22, the Council received 23 referrals, 20 of these led to full investigations.  The reasons for referrals not resulting in a full investigation was set out in the report. 

In relation to the work undertaken within the area of Council Tax, a rolling programme of reviews is undertaken on an annual basis to provide an appropriate response to the inherent risk of fraud / error in the area as the Council is reliant on the customer to report any changes in circumstances that would affect their entitlement to an exemption or discount.  During 2021/22, this work has not been progressed during 2021-22 given the focus on other priorities and unplanned absence within the Service. As a rolling programme of work, this was not viewed as significant.

Within the International Auditing Standards, there are clear expectations around the level of oversight that the Committee should have in relation to the risk of fraud.  This includes an expectation that appropriate detail is provided around significant fraud. The report set out the definitions of significant fraud and it was confirmed that in the period April 2021 to March 2021 there had been one significant fraud concluded. 

In response to questions from Members of the Committee, Officers provided the following information and assurance:

·  A risk based approach was taken to the identification of cases using the NFI tool

·  Fraudulent grants were more difficult to recover then those paid in error

·  Reasonable steps were taken to recover the money

RESOLVED that the Audit and Procurement Committee notes the anti-fraud and error activity undertaken in the financial year 2021-22.