The Audit Commission study found more than three quarters of all fraud was detected by one quarter of councils, and 79 per cent of district councils detected no non-benefit fraud at all. The number of fraud cases detected by local authorities fell to 107,000 cases with a total value of £178 million in 2012-13, but with an overall 15 per cent increase in the average value per case to £1,664.
The study found procurement fraud made up £1.9 million of the total, but in the report the commission cited National Fraud Authority estimates that such fraud was worth £876 million in 2012-13, making it “the single largest area of financial loss to fraud in local government”, which would suggest that far greater attention should be given to tackling procurement fraud.
Examples of procurement fraud cited within the study include collusion between staff and bidders, collusion between bidders, and bidders failing to tender in accordance with contract specifications and submitting false claims for extra costs under the contract.
Examples of fraud occurring during the contract management phase included providing goods and services of inferior quality to lower costs, ignoring health and safety regulations for financial gain, providing inflated performance information and submitting false invoices.
Commission chairman Jeremy Newman said: “It’s difficult to isolate the specific factors that cause variations between organisations in the level of detection of different types of frauds. This will be influenced by the actual levels of fraud available to detect, differences in the services that bodies provide and their local approach to prioritising and tackling fraud.”
The first steps for any organisation who wish to implement a robust anti – fraud regime, is first to formally recognise procurement fraud as a risk. This should then be followed by a procurement fraud health check and the implementation of a procurement fraud training programme.
