 Advice on tackling £21 billion public sector fraud announced ahead of new government report
7 June - Ahead of tomorrow’s National Fraud Authority (NFA) and Cabinet Office conference, PKF Accountants & business advisers has identified five key areas where public sector bodies need to improve their counter fraud activities.
The conference, which will focus on ‘Tackling fraud and error across the public sector’, will be held in London on 8 June. Francis Maude MP, Minister for the Cabinet Office and Paymaster General, and NFA Chief Executive Bernard Herdan will use the event to launch the government’s much anticipated Counter Fraud Taskforce report. The NFA estimates that £21.2 billion is lost to fraud in the public sector each year.
PKF’s guidance has been developed from a recent survey of 267 public sector bodies - ‘The Resilience to Fraud of the UK Public Sector’ - by the top ten accountancy practice and University of Portsmouth. The report found that the public sector has adequate measures in place to tackle fraud after losses have been incurred, but identified a number of areas where organisations could improve their pre-emptive counter fraud activities.
In advance of the conference, PKF calls on the public sector to reassess its counter fraud measures and to focus on five key areas of fraud prevention. It encourages organisations to:
- Assess risk and quantify losses – fewer than 50% of public sector bodies accurately estimate the cost of fraud at present, making it difficult for such organisations to devise appropriate and adequately resourced counter strategies
- Use loss estimates to make judgements about how much to invest in countering fraud – less than half of the public sector uses information about the cost of fraud to assess what they should spend on countering it. This implies that the driver to do something to counter fraud is currently reputational and regulatory rather than financial
- Adopt best practice techniques to spot weaknesses in processes and counter fraud strategies – currently, 55% of central government organisations and 40% of local authorities do not use best practice analytical intelligence to identify potential fraud and corruption
- Monitor progress – 53% of central government organisations and 44% of local authorities do not currently review the effectiveness of their counter fraud activities
- Invest in staff training - 49% of central government organisations do not provide professional training for their counter fraud staff.
Jim Gee - Director of Counter Fraud Services at PKF (UK) LLP - said: “The Government recognises that fraud can be hugely damaging to any organisation, especially to taxpayer funded public bodies at a time when the government is making serious reductions in expenditure. The scale of the problem is thought to run into tens of billions of pounds each year, and the Government's Counter Fraud Taskforce should be congratulated for raising the profile of this issue and creating a real sense of momentum."
“We believe that there is a clear need to examine how well our public services protect themselves – and, by extension, all of us - against the unnecessary cost of fraud. Our advice is intended to move forward thinking on this important issue with practical, relevant solutions that reflect the enormous progress made by the counter fraud profession over the past decade. Organisations can now treat fraud as a business issue like any other – something that can be quantified, tackled and monitored. Hoping that fraud will not happen, or just reacting when it inevitably does, simply does not constitute a viable approach in today’s world.”
ENDS
For further information, please contact: Andy Konieczko, PR Manager, 020 7065 0537, andrew.konieczko@uk.pkf.com
Notes to Editors:
PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF (Isle of Man) LLC is a limited liability company registered in the Isle of Man. PKF (Guernsey) Limited is incorporated in Guernsey.
PKF (UK) LLP is a member firm of the PKF International Limited (PKFI) network of legally independent member firms. The PKFI member firms have around 2,200 partners and more than 21,000 staff in around 125 countries.
‘The Resilience to Fraud of the UK Public Sector’ was published by PKF (UK) LLP and University of Portsmouth and written by Jim Gee, Dr Mark Button and Dr Ian R. Cook.
Jim Gee is Director of Counter Fraud Services at PKF (UK) LLP, and business services firm and Chair of the Centre for Counter Fraud Studies at University of Portsmouth.
During more than 25 years as a counter fraud specialist, he led the team which cleaned up one of the most corrupt local authorities in the UK - London Borough of Lambeth - in the late 1990s; he advised the House of Commons Social Security Select Committee on fraud and Frank Field M.P. during his time as Minister of State for Welfare Reform; between 1998 and 2006 he was Director of Counter Fraud Services for the Department of Health and CEO of the NHS Counter Fraud Service, achieving reductions in losses of up to 60% and financial benefits equivalent to a 12 : 1 return on the costs of the work.
Between 2004 and 2006 he was the founding Director-General of the European Healthcare Fraud and Corruption Network; and he has since worked as a senior advisor to the UK Attorney-General on the UK Government’s Fraud Review as well as delivering counter fraud and regulatory services to public bodies and private companies both in this country and internationally. He has worked with organisations from more than 30 countries to counter fraud and is currently working with the EU – China Social Security Reform Cooperation Project to advise the Chinese Government about how to measure, pre-empt and reduce the financial cost of fraud.
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