Agenda item

Report of the Interim Chief Executive (Section 151 Officer)

The Audit and Procurement Committee considered a report of the Interim Chief Executive (Section 151 Officer), that provided a summary of the Council's anti-fraud and error activity undertaken by the Internal Audit Service during the first half of the financial year 2022-23.

Fraud in the public sector had a national focus through the publication of “Fighting Fraud and Corruption Locally – The Local Government Counter Fraud and Corruption Strategy". Whilst the national strategy stated that the level of fraud in the public sector was significant, the current trends in fraud activity included areas which Coventry City Council did not have responsibility for, such as social housing, and the levels of identified / reported fraud against the Council remained at relatively low levels, in both numbers and value.

The report documented the Council’s response to fraud and error during the first half of the financial year 2022-23 and was presented to the Audit and Procurement Committee in order to discharge its responsibility, as reflected in its terms of reference 'to monitor Council policies on whistle blowing and the fraud and corruption strategy'.

The Internal Audit Service was responsible for leading on the Council’s response to the risk of fraud and error.  The establishment of Internal Audit included a Corporate Fraud and Error Officer post to support delivery of this work.  The post became vacant at the end of March 2022.  The Committee noted that a recruitment exercise was undertaken which was unsuccessful and it was viewed that, given the unique remit of the post, it was unlikely that it could be filled in its current format.

Consequently, the role and responsibilities of the post have been reviewed and it has been agreed that the budget will be transferred to the Revenues and Benefits Service and a new post of Revenues and Benefits Compliance Officer will be created.  This role will focus on fraud and error work specifically linked to Revenues and Benefits (including the investigation of National Fraud Initiative matches relating to council tax and benefits.)  The Internal Audit Service will retain responsibility for corporate fraud referrals, co-ordination of the National Fraud Initiative exercise (including the investigation of specific match types) and other ad hoc proactive work linked to the strategic response to fraud.  It is viewed that this will provide more resilient arrangements moving forward and will enable the Internal Audit Service to better focus its resources on the Council’s strategic response to the risk of fraud.

In the interim, arrangements have been put in place to pass referrals relating to council tax and benefits to the Revenues Service. Whilst proactive reviews of council tax exemptions and discounts have not been undertaken in 2022-23, as a rolling programme of work this is not viewed as critical and will form part of the new role within Revenues and Benefits.  In light of this, the work of the team has focused on three main areas during 2022-23, namely:

·  Business Support Grants

·  National Fraud Initiative

·  Referrals and Investigations considered through the Council’s Fraud and Corruption Strategy.

The report provided a summary of the key activity that had taken place during 2022-23 to date under each of the focus areas. 

Within International Auditing Standards there were 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 included an expectation that appropriate detail was provided around significant fraud. The Council had applied the following principles 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 2022 to September 2022, no significant frauds have been concluded.

RESOLVED that the Audit and Procurement Committee notes the anti- fraud and error activity undertaken during the first half of the financial year 2022-23.