Agenda item

Report of the Director of Finance and Resources

The Audit and Procurement Committee considered a report of the Director of Finance and Resources 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 2024-25.

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 states that the level of fraud in the public sector is significant, the current trends in fraud activity includes areas which Coventry City Council does not have responsibility for, for example, social housing, and the levels of identified / reported fraud against the Council remain at relatively low levels, in terms of both numbers and value.

The report documented the Council’s response to fraud and error during the first half of the financial year 2024-25 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 strategic response to the risk of fraud and error. The work of the team had focused on three main areas during 2024-25: National Fraud Initiative; Referrals and Investigations considers through the Council’s Fraud and Corruption Strategy; and Fraud awareness.

A summary of the key activity that has taken place during 2024-25 to date were:

National Fraud Initiative (NFI) – The NFI exercise was led by the Cabinet Office. The exercise took place every two years and matched electronic data within and between public bodies, with the aim of detecting fraud and error.  Internal Audit work in 2024-25 had been mainly focused on collating and submitting the datasets for the next exercise.  This was completed in early October 2024.  The matches were released in January 2025 and form part of the planned programme of work for 2025/26.  Matches relating to council tax single person discounts were released annually and now fall under the responsibility of the Revenues and Benefits Service.

Referrals and Investigations – From time to time, the Internal Audit Service would receive referrals or were asked to assist with investigations relating to employee misconduct and other fraud against the Council involving external individuals. Table two within the report indicated the number of referrals by source in 2024-25, along with figures for the previous three financial years.

It was important to note that there was no mechanism for determining the number of reports the Council should receive on an annual basis and it was very difficult to anticipate or identify the reasons behind fluctuations in numbers.  It was also worth noting that this information only reflected referrals made in respect of concerns relating to fraud and corruption and did not include other matters raised under the Whistleblowing Policy.

Of the nine referrals received, four led to a full investigation. The reasons for referrals not resulting in a full investigation included (a) initial assessment / fact finding did not find any evidence to support the allegations (b) appropriate action had already been taken, e.g. the fraud had been prevented, and (c) the nature of the event meant it was impractical to pursue further.

In addition to the four investigations highlighted above, three further investigations were carried forward from 2023-24.  Six investigations related to fraud / theft or other activities linked to obtaining a financial benefit and one related to a Code of Conduct matter.Three out of the seven investigations were still on-going, whilst of the remaining four:

·  One case involved a direct payment, administration of the payments was moved to a managed account and action had been taken to recover monies.

·  One case involved the provision of false information to support a claim for homelessness assistance, the Council ended its duty to provide temporary accommodation. 

·  For one case, a formal re-setting of standards took place.

·  In one case, the concern was not substantiated.

Fraud Awareness – In 2024-25 to date, the Internal Audit Service had attended a number of training sessions with employees from Adult Social Care to raise awareness of the types of fraud that could occur within the social care environment, and particularly within direct payments. The Service also delivered a fraud awareness session to colleagues from Human Resources as part of their away day

Significant frauds - Within the 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 following principles had been applied when defining significant fraud:

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

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

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

In the period April 2024 to September 2024, no significant frauds had been concluded. 

RESOLVED that the Audit and Procurement Committee note the anti-fraud and error activity undertaken during the first half of the financial year 2024/25.