Agenda item

To present the report of the Head of Audit and Risk.

The report of the Head of Audit and Risk incorporating the Counter Fraud, Bribery and Corruption Annual Report for 2022/23 was presented for the Committee’s consideration. The report set out the activity carried out by Internal Audit during 2022/23 to minimise the risk of fraud, bribery, and corruption within and against the Council, highlighting some of the current and emerging areas of fraud risk and providing a conclusion on the effectiveness of the Council’s arrangements to minimise the risk of fraud.

The Head of Audit and Risk provided an overview of the report highlighting that at a time of increasing financial pressures, it is more important than ever for all public bodies in Wales to seek to minimise the risk of losses through fraud and support financial sustainability. She referred to the Council’s counter fraud arrangements which were assessed against the five principles contained in CIPFA’s Code of Practice on Managing the Risk of Fraud and Corruption, namely, acknowledging responsibility for countering fraud and corruption; identifying fraud and corruption risks; having in place a counter fraud and corruption strategy; providing resources to implement the strategy and taking action in response to fraud and corruption. The report noted that during 2022/23 28 days of the Internal Audit team’s work was involved in counter fraud activities including 8 days undertaking work for the National Fraud Initiative and 20 days involved with proactive fraud work, general fraud queries and investigations. The report also cited instances of fraud attempted against the Council during 2022/23, how those were dealt with and the actions taken to prevent reoccurrence in future.

The Head of Audit and Risk concluded that good progress is being made with delivering the Counter Fraud, Bribery and Corruption Strategy 2022-25. The continued delivery of the Action Plan (attached as Appendix 1 to the report) will ensure the Council is successful in fighting fraud. A key next step is the development of a Council wide fraud risk assessment which will help improve the Council’s ability to identify potential instances of fraud as well as any weaknesses in its counter-fraud arrangements or areas at higher risk of fraud. This will allow the Council to better target its limited resources and activities appropriately, especially if and when new fraud risks emerge.

In the ensuing discussion the following matters were raised –

·      In accepting the importance of raising awareness of fraud and of having policies to that effect, the Committee wanted to know what controls are in place to prevent fraud occurring in the first place on a day-to-day basis e.g. mandate fraud whereby an attempt is made to change an individual or company’s bank details.

·      The avoidance of the second homes premium payment whereby the second home is cited as the main residence.

·      The occurrence of fraud in relation to Disabled Facilities Grants and how it is perpetrated with regard to the grant.

The Committee was advised that every Internal Audit review examines the controls in place for the area reviewed and makes recommendations for improvement where shortcomings or weaknesses have been identified. Counter Fraud Working Group activity will also help ensure that the issue of fraud and possibility of fraud will be at the forefront of people’s minds and awareness as they conduct their everyday business. Additionally staff have been instructed to conduct due diligence checks and to verify contact details in the form of e-mail addresses and telephone numbers to avert bank mandate fraud and in re-contracting for the Bacs software, the Council will ensure that the software incorporates identity authentication as a matter of course. Disabled Facilities grant fraud can occur when the recipient of the grant moves house after the property has been adapted without repaying the grant or where works have not been completed to required standards or not at all or in the case of inflated quotations for the work.

With regard to second homes, as legislation does not specify the criteria for what constitutes a main residence the onus is on the Council to form its own view supported by information obtained about the individual’s lifestyle e.g. place of work, GP surgery address, children’s schools to build a picture of where the individual lives and to come to a determination on that basis. The Council’s decision can be challenged by way of an appeals process. However, as an increasing number of councils in England decide to levy a second homes premium, avoidance/fraud of this type is likely to reduce.

It was resolved to note the Annual Counter Fraud, Bribery and Corruption Report for 2022/23 and the activity carried out during the year to minimise the risk of fraud, bribery and corruption occurring within and against the Council.