Fighting fraud in the public sector is more important than ever - five steps to enhance your fraud risk environment
July 05, 2021
Last week’s Committee of Public Accounts report into Fraud and Error shines a light into how the UK Government’s annual fraud losses have been impacted by the pandemic. The pre-pandemic public sector fraud bill was estimated to be upto £51.8bn with a further estimated £25bn going undetected.This is set to rise dramatically with rising fraud rates and significant pandemic related spending.
Against this context, fighting fraud in the public sector is more important than ever, and the best defence to this threat is strong and proactive risk management.
Whilst the figures may be stark, we know from PwC’s Global Economic Crime Survey that fighting fraud pays: organisations with a dedicated fraud programme spend up to 42% less on fraud response and 17% less on remediation than their peers. We see a direct correlation between investment in fraud prevention upfront, and reduced cost when a fraud strikes.
Many of the recommendations in the latest Committee of Public Accounts report directly speak to investment in fraud prevention and counter fraud capability such as:
- Introducing mandatory fraud impact assessments requiring formal sign off from the Government Counter Fraud Profession for certain schemes and projects;
- Building counter fraud capability in Government departments aligned with its risk exposure;
- Identifying and addressing gaps in data sharing; and
- Strengthening fraud measurement and reporting.
Taking just the first recommendation, here are five considerations to help ensure that your fraud risk assessments are up to date, fit for purpose and reduce key fraud risks to acceptable levels:
- Who is responsible for the preparation, and what is their role? In order to be effective the fraud risk assessment must be prepared by someone with appropriate expertise, and who has the ability to coordinate the resulting counter fraud activities.
- How are decisions and judgements documented? We’d expect key decisions to be documented to evidence the support for the findings at various levels of the organisation.
- Are both external and internal risk factors assessed by likelihood and impact, and is both financial and non-financial impact considered?
- Are all relevant fraud controls identified and mapped to the relevant risks, and the effectiveness of these controls monitored & assessed, with an effective feedback loop in place so that improvements can be made?
- How regularly are fraud risk assessments updated and is there a process to recognise when events may trigger the need to revisit the assessment at an earlier time?
Our counter fraud and fraud investigations specialists routinely help clients enhance their fraud risk environment, using a range of sophisticated tools, technology and techniques - read more about Fraud Risk Management.