Falkirk Council Internal Audit and Serious Organised Crime A presentation on collaborative working between Falkirk Coun

1. Falkirk Council Internal Audit and Serious Organised CrimeA presentation on collaborative working between Falkirk Council Internal Audit and the Scottish Crime and Drug Enforcement Agency. CIPFA Scottish Students� Society � September 2010 Gordon O�Connor MIIA CISA Internal Audit Manager Falkirk Council

2. Bit About Me! Internal Audit Manager at Falkirk Council since December 2006. Before that had spells at: Scottish Government � 6 years in Internal Audit; Scott Moncrieff � 3 years in IT Audit and Internal Audit; NHS Forth Valley � 2 years in Internal Audit.

3. Areas to Cover�.. Brief intro to Falkirk Council Serious Organised Crime Taskforce / SCDEA? What�s the link between Falkirk Council and SCDEA? How did the collaboration work? And what were the outcomes? Thanks and Questions.

4. Intro to Falkirk�.. Population c152k and growing (11th biggest by population). Covers 112 Square Miles. Traditionally industrial but growing tourism. �Most Enterprising Place in Scotland 2010� � Enterprising Britain Awards. Location between Glasgow and Edinburgh � advantages and disadvantages.

5. �..and to Falkirk Council Labour / Conservative / Independent coalition Employees: c7,000 across 5 Services and Chief Exec Office Revenue Budget 2010/11: �353.5m Capital Budget 2010/11: �21.6m Housing Stock of c16,400 properties. Service Re-structure on-going in light of financial pressures.

6. Scottish Serious Organised Crime Taskforce Set up in October 2007 to �reduce the harm caused by Serious Organised Crime�. Comprises: Crown Office and Procurator Fiscal Service (COPFS); Association of Chief Police Officers in Scotland (ACPOS); Scottish Crime and Drug Enforcement Agency (SCDEA); Serious Organised Crime Agency (SOCA); Her Majesty�s Revenue and Customs (HMRC); Scottish Prison Service.

7. Letting Our Communities Flourish Published in June 2009 as a Strategy for Tackling Serious Organised Crime in Scotland. Definition of Organised Crime: involves more than one person; involves control, planning and use of specialist resources; causes, or has the potential to cause, significant harm; and involves benefit to the individual concerned, particularly financial gain.

8. LOCF � The 4 Ds DIVERT � individuals (particularly young people) from engaging in or using the products of serious organised crime. DISRUPT � the activities of serious organised crime groups. DETER � through measures to protect communities, businesses and the public sector from serious organised crime. DETECT � by boosting capacity and improving co-ordination to give serious organised criminals no place to hide.

9. SOC Threat to Local Authorities From external individuals and organisations OR From within the organisation- corrupt or corruptible staff Lots of recent examples���..

13. Serious Organised Crime Taskforce - Crime Mapping Project (2009): Over 350 Organised Crime Groups, comprising over 4,000 individuals, operating in Scotland. Top 20 groups impact across all 8 of Scotland�s police forces. 92% of groups involved in drug crime and 40% involved in serious violence. Link to Taskforce report on scale and extent of SOC in Scotland: http://www.sdea.police.uk/Other-publications/Mapping%20Summary%20Report.pdf

14. Professions Lawyers / Solicitors; Estate Agents; Surveyors / Valuators Accountants; Bank employees; Financial Advisers; Travel Agents; Hauliers / Couriers Private Investigators Car Dealerships; Care hire; Recruitment Agents; Security Companies; Employees within, or with access to, organisations that provide a service; Public Sector Employees or Elected Members.

15. 300 city firms in links to crime lords 29 Jun 2010 Police have uncovered gangster links at nearly 300 firms in and around Glasgow, The Evening Times can reveal today. Detectives pinpointed the companies as they carried out their biggest ever campaign against the respectable �fronts� of organised crime in the west of Scotland. They have flushed out firms as varied as second-hand car dealerships and tanning salons that they believe are being used as cover for major gangland figures. Strathclyde Police used Proceeds of Crime laws to freeze some �3.5 million in assets at the companies and seized more than another �300,000 in goods and cash during their six-week Operation Enterprise. But they have also, for the first time, revealed the true scale of criminal infiltration of Glasgow�s business world.

16. Internal Fraudster SCDEA advise (based on work undertaken by KPMG) the following �profile of a fraudster�: Male; 36 � 45 years old; Senior management position; Finance Department; Working alone to perpetrate fraud; Taking advantage of weak controls; Only discovered via tip-off � no prior suspicion; Losses not recovered.

17. Honest, Corruptible, or Corrupt? SCDEA suggest that within any large organisation (including the police force): 96% will be honest � need to educate and protect. 3% will be corruptible � need to ensure robust anti fraud strategy and challenge. 1% will be corrupt � need to detect and investigate.

18. Link Between Falkirk Council Internal Audit and SCDEA SCDEA Interventions looking to LAs to assist in effort to tackle Serious Organised Crime risks + LA Internal Audit provide assurance to Councillors on risk management, governance and control = Internal Audit MUST consider and report on controls established to manage the risks relating to the potential and actual impact of Serious Organised Crime

19. SCDEA Mapping of SOC Risk Areas

20. SCDEA Identification of Audit Specific Risks Risk based Internal Audit Plan for 2010/11; For each planned audit area, SCDEA identified any Serious Organised Crime related risks to be considered; Intention is to build these risks into the Terms of Reference for each individual Internal Audit review. Some examples���

21. Audit Specific Risks � Some Examples Taxi Contracts Risk of link to Serious Organised Crime � ref. Glasgow Network Private Hire example earlier. Consider: a. info / intelligence sharing. b. procurement policy. c. operator and driver licences. d. �fit and proper person�. e. driver Disclosure checks? External Funding Who is the funding being provided to and for what is it being used? Consider: a. clear policy and process. b. risk aware sponsor Service. c. scrutiny of funding application. d. monitoring � outcomes / visits. e. whistle blowing � staff / public.

22. Audit Specific Risks � More Examples Contact Centre Access to personal information � risk of individual being �placed� by SOC group. Consider: a. vetting of staff, incl Disclosure. b. paperless environment. c. restricted access. d. robustness of ICT controls. e. whistle blowing arrangements. Housing Allocations Risk of subletting, illicit drug laboratories, people trafficking, benefit fraud. Consider: a. robust allocations policy. b. landlord registration scheme. c. neighbourhood officer visits. d. community awareness. e. CT / Rent arrears etc.

23. Overarching IA Review of SOC Key Risks: Lack of awareness of, or failure to consider, SOC risks, leading to actual or potential harm to Falkirk Council or the community which the Council serves; Absence of appropriate links with law enforcement bodies and other relevant partners, leading to missed opportunity, compromised and fragmented intelligence, and failure to take robust steps to address actual or potential SOC risks; Failure to consider SOC risks as part of the recruitment and employment process, leading to compromise from within the organisation; Failure to consider SOC risks in dealings and transactions with third parties, leading to financial or reputational loss or the exposure of staff to the threat of corruption or undue pressure or influence.

24. Overarching IA Review of SOC Internal Audit actually reviewed arrangements for: Remit Item 1: Ensuring that the aims and objectives of �Letting Our Communities Flourish� have been communicated to elected Members and Officers; Remit Item 2: Embedding �Letting Our Communities Flourish� aims and objectives in corporate and strategic plans and policies, where appropriate; Remit Item 3: Liaising with local and national law enforcement bodies to ensure joined up working and shared intelligence; Remit Item 4: Recruiting and managing Council staff, with reference to SOC risks; and Remit Item 5: Giving appropriate consideration to the risks posed by SOC at an operational level.

25. Remit Item 1: Ensuring that the aims and objectives of �Letting Our Communities Flourish� have been communicated to elected Members and Officers. discussed roles and responsibilities for progressing LOCF within Falkirk Council, action taken to date, and reporting arrangements; reviewed Committee papers to confirm whether LOCF requirements and recommendations had been communicated to elected Members and to determine whether plans in place to address these.

26. Remit Item 2: Embedding �Letting Our Communities Flourish� aims and objectives in corporate and strategic plans and policies. Established (in conjunction with SCDEA) and reviewed key corporate, strategic and operational plans, policies and procedures that should make reference to LOCF (eg Corporate Plan, Risk Plan, Recruitment Policy, Info Sharing Policy, etc); Considered Extra-Mural Employment Policy and Confidential Reporting Policy.

27. Remit Item 3: Liaising with local and national law enforcement bodies to ensure joined up working and shared intelligence. Met with FC senior managers and CSP Superintendent to discuss information sharing arrangements, perceptions, and expectations; Reviewed and considered existing Forth Valley Information Sharing Protocol; Sought update from SCDEA on national initiatives designed to facilitate information exchange; Reviewed internal Anti Money Laundering arrangements.

28. Remit Item 4: Recruiting and managing Council staff, with reference to SOC risks. Vetting / Disclosure checks on staff and elected Members; Support arrangements for staff (eg those who may be under pressure to act unlawfully); Training to facilitate identification of staff working under duress; Whistle blowing arrangements.

29. Remit Item 5: Giving appropriate consideration to the risks posed by SOC at an operational level. Reviewed arrangements specifically relating to: Corporate Procurement � PQQ / tender, confirmation of accuracy, info sharing. Civic Licensing (Taxi drivers / operators, 2nd hand car dealer, street trader) � application, vetting, approval, compliance, renewal. Private Landlord Registration � registration / approval process, any �fit and proper� check, on-going checks. Anti Money Laundering � identification and reporting of suspicious activity, reporting to SOCA, guidance to staff.

30. Outcomes Report remains in draft but it will raise issues that require to be addressed by Falkirk Council and wider issues that will require to be followed up with the SCDEA and Scottish Government Organised Crime Unit.

31. Conclusions Reliance on SCDEA to progress national initiatives, eg implementation plan, assisting with info sharing, etc; LAs should consider SOC risks within the context of Risk Registers; Internal Auditors should be aware of SOC risks, and should consider including a review of these risks in future audit plans; Remember that the risks posed by Serious Organised Crime are relevant to ALL Local Authorities AND the communities they serve.

32. Thanks for listening and any questions? Gordon O�Connor gordon.oconnor@falkirk.gov.uk 01324 506 339