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MANAGING THE RISK OF FRAUD

MANAGING THE RISK OF FRAUD. ‘ A Standard Approach’. Presented by: Joe Laidler & Tracy Barnett. ALARM Conference November 2007. Audit Commission. Fraud Review Fighting Fraud Together. Recommendations 24

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MANAGING THE RISK OF FRAUD

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  1. MANAGING THE RISK OF FRAUD ‘A Standard Approach’ Presented by: Joe Laidler & Tracy Barnett ALARM Conference November 2007

  2. Audit Commission Fraud Review Fighting Fraud Together Recommendations 24 Public authorities should reinvigorate fraud measurement and risk assessments in their financial processes in order to better assess the scale of fraud, risks faced from fraud, and losses to fraud. Consultation support 100% Recommendations 25 The National Audit Office and the Audit Commission should audit public bodies on the strength of their ant-fraud controls. Consultation support 100%

  3. Extent of Fraud in the Public Sector £7.1 billion in 2005/6 Some Examples: - • Housing Benefits £170m • DVLA £129m • Pharmaceutical/Dental (NHS) £68m • Incapacity Benefit £80m • Carer’s Allowance £40m • Council Tax £40m (Source: Nature, Extent & Economic Impact of Fraud in the UK – ACPO Report, Feb 2007)

  4. Some Major Issues Relating to Public Sector Fraud • Anti Fraud Initiatives & Resources • Working Relationships with Other Internal/External Agencies • Estimating the Losses • Cost/Time of Investigations • Police Expertise/Resources • Attitude of Courts • Impact on the ‘Public Purse’

  5. Fraud – ‘A Key Business Risk’ • Acceptance by the Organisation • A Corporate Risk • Need to Manage the Process • Involvement of Risk Advisors • Joint Working to Combat • A ‘Standard Approach’

  6. ALARM’s Approach • Action/Resources ‘Before’ Occurrence • Linked to the Risk Management Standard • Following the ‘Fraud Risk Cycle’ • Importance of Sound Corporate Governance • Local Reviews • Telling the ‘Top Table’

  7. Key Elements of Corporate Governance • Strategic Approach to Risk Management • Culture – Universally Applied & Designed to Deliver ‘Zero Tolerance’ of Fraud • Anti-fraud & Corruption Framework • Strong Systems of Internal Control • Partnership Working Not exclusive or mandatory : Geared to requirements of organisation

  8. Fraud Risk Cycle

  9. Identifying the Key Risk Areas • Some Essentials that will Always be Apparent where Fraud Occurs • A ‘Local Review’ of Operational Areas • Indicators & Factors in the Review Process

  10. Other Key Review Areas • Impact of Fraud on Organisation • Assessing the Scale/Likelihood of Fraud Occurring • Identifying Key Existing Controls • Action Planning for Improvement

  11. So how do you think your organisation compares against the ALARM Fraud Standard?

  12. In the questionnaire the answers should be marked as follows:

  13. My organisation….. • Has strong political & senior management support for those charged with managing the risk of fraud? • Encourages a culture of ‘Zero Tolerance’ to fraud? • Has published ‘Codes of Conduct’ for staff & training programmes to embed an Anti-fraud Culture? • Has a published Anti-Fraud & Corruption Strategy/Fraud Response Plan that has been agreed at political & executive level? • Has a programme of ‘Fraud Awareness’ training that covers both elected members & all key staff?

  14. My organisation….. • A widely publicised ‘Whistleblowing’ facility that maintains staff confidence & is provided in line with legislative requirements? • Employs appropriately trained staff to undertake anti-fraud work? • Documented key financial & operational procedures (including formal schemes of delegation)? • Supports key legislative requirements relevant to anti-fraud & corruption (e.g. Terrorism Act 2000, Proceeds of Crime Act 2002 [Money Laundering, etc]) • Includes fraud within its risk management arrangements with key strategic & delivery partners?

  15. The Way Forward • Launch/Publication of the ALARM Standard for Risk Advisors • Implementation Suggestions • Advice/Assistance • Working with Partners/Other Agencies

  16. Any Questions?

  17. Joe Laidler Audit & Risk Management Consultant JTL Associates 197 Buckingham Drive, Luton, Beds, LU2 9RE Tel: 07880 952590 joseph.laidler@ntlworld.com Tracy Barnett (Director of ALARM) Head of Internal Audit London Borough of Camden Town Hall, Argyle Street, London, WC1 8NG Tel: 020 7974 6031 tracy.barnett@camden.gov.uk Contact Details:

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