Agenda item

Internal Audit Annual Fraud Report

Report of the Senior Finance Manager (Internal Audit)




 7.1     The Senior Finance Manager (Internal Audit) Linda Hunter submitted a report to Committee to inform Members of the outcomes of the work undertaken by Internal Audit on fraud and corruption during 2020/21 and the proposed work for 2021/22.


7.2      Key points raised from the report were internal audit had conducted 8 re-active investigations and assisted managers with a further 13 re-active investigations which arose in 2020/21.  Internal audit also concluded investigation work on 2 re-active investigations and assisted managers with a further 10 investigations which had originated in 2019/20.


7.3      In 2020/21, 155 new cases were opened in term of Housing Tenancy and Right to Buy Fraud, which was a significant rise from the 65 new cases in the previous year.  These cases were investigated by a separate fraud team in housing services including right to buy cases.  The cases investigated included 10 cases of obtaining property by deception, 4 cases of right to buy fraud, including 1 by deception.  There were 134 cases of unlawful subletting.  Many of the ongoing cases were closed and this had resulted in 16 properties being recovered, 3 properties being abandoned and 11 others where the tenancy had been handed back.  This allowed these properties to be re-let.  There were 38 cases where no action was taken and a further 3 where there was no evidence.  In relation to the right to buy cases, 3 cases had stopped prior to valuation with the properties valued at £270,000 and a discount of almost £64,0000 was also prevented. 


7.4      The Senior Finance Manager (Internal Audit) also advised that Bank Mandate Fraud continued to be a significant issue, although the Council had robust controls in place to detect and prevent this. The Council was still targeted by organised criminal gangs who undertake phishing exercises.


7.5      It was advised that the number of Whistleblowing issues reported remained low. Work is being undertaken to promote this policy over the next few months.


7.6      The Senior Finance Manager (Internal Audit) advised that the Council’s internal audit department continued to have an active role in the prevention detection and prosecution of fraud across the council.  The Counter-Fraud Plan 2021/22 included 4 pieces of proactive work which would be mainly to follow up matches received as part of the national fraud initiative (NFI).


7.7      It was advised that the Governance Checklist for Fraud 2020/21, included yes and no answers to each checklist question and it was felt that after member suggestion it would be changed to Red/Amber/Green which would better reflect the status of each point in the checklist.


7.8      The Chair of the Committee advised that the Whistleblowing policy would be coming to a future meeting later in the year.


7.9      Member of the committee asked questions and the key points to note were-


7.10    Councillor Angela Argenzio requested that timeframes be included in the report which would give members an idea of the NFI data matches and completion dates. This was agreed by the Senior Finance Manager (Internal Audit).


7.11    How much was given out in grants in error and how much was still outstanding.  In answer to this the Senior Finance Manager (Internal Audit) advised that there was £300,000 outstanding as of January 2021, however this had almost been recovered.  It was advised that further overpayments had been discovered which again amounted to approximately £300,000. These overpayments are being recovered.


7.12    Councillor Argenzio asked how staff and councillors were made aware of the Whistleblowing policy.  The Senior Finance Manager (Internal Audit) advised that the whistleblowing policy could be found within the officer code of conduct and this needed to be reminded to staff.  It was advised that a Fraud e-learning module had recently been produced and launched on the Learning hub and is available to all staff and councillors.


7.13    Councillor Ben Curran ask if there was a figure for the total amount lost due to fraud.  The Committee were advised that it was difficult to put a monetary value on this, as the council couldn’t quantify fraud, however where possible officers would and figures will be included in future reports. Councillor Curran also asked if the Council had insurance against officer’s dishonesty.


7.14    Councillor Simon Clement-Jones raised a question regarding the 10,000 data matches as mentioned in the report on page 31.  It was asked how many of these were investigated and out of those investigated how many turned out to be something significant. 


7.15    Councillor Sioned Mair-Richards asked whether the blue badges were part of the ‘tell us once’ form, this was a form used to inform the council of any changes in circumstances.


7.16    Councillor Mohammed Mahroof asked whether the Council benchmarked against other authorities in terms of tenancy fraud.  Tenancy fraud was significant, and it was depriving people of accommodation, did the council have a zero-tolerance policy, how well resourced was the Housing tenancy team and was the council missing sub-letting due to inadequate resourcing.  Could the Committee be advised what happens when sub-letting fraud was detected and what rights do the sub-tenants have, as they had gone into an agreement not knowing it was an illegal arrangement.  Councillor Mahroof also asked if the Council did a sample check on right to buy valuations carried out by the Local Authority and were these in line with market value or did another independent person do this if it did not fall in the remit of Internal Audit.


7.17    The Senior Finance Manager (Internal Audit) thanked the Committee for the questions and advised that for the questions she was unable to answer at this point time, she would find out the information from the relevant team and would send responses to all members of the committee after the meeting.


7.18    Councillor Sioned Mair-Richards thanked the Senior Finance Manager (Internal Audit) and advised that she was pleased to see that the Council planned to work with the Sheffield Universities to prevent overseas students becoming victims of unlawful subletting.


7.19    RESOLVED: - that the Committee (1) notes the content of the report with the agreement that the responses to the unanswered questions be circulated to members as soon as possible after the meeting, (2) notes the Council’s policies in relation to fraud and corruption had been reviewed and the required governance arrangements for the council had been fulfilled, and (3) notes the completed checklist for those responsible for governance attached as an appendix to the report.


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