The project aim was to help the council build an effective sustainable counter fraud capability. This has been achieved through effective fraud awareness to promote an anti-fraud culture and investigating and pursuing those found to be committing fraudulent behaviour by both external parties against council services and internal staff. The council has a zero-tolerance to fraud.
Outputs and outcomes
The funding received by Solihull Audit Services has enabled the set up and development of a counter fraud unit to tackle fraud and create a counter fraud culture throughout the council and its partners. Prior to receiving funding there was a limited resource. This has now developed into a team resourced and equipped to tackle all the main fraud areas highlighted in CIPFA’s Counter Fraud and Corruption Tracker. The team is populated with a range of investigators including ex-police officers and housing professionals.
Initially social housing fraud was targeted and linked in with the housing organisation, Solihull Community Housing (SCH), who manages the council’s housing stock. Controls and procedures have been improved to identify and prevent fraud entering their housing systems through an initial wide-ranging audit of their allocation process.The counter fraud team has been filmed for two series of the BBC TV series ‘Council House Crackdown’ documenting how the team have successfully investigated social housing fraud cases. This has raised the profile of the counter fraud team both to the general public and other teams within the council.
As part of the ongoing counter fraud work fraud risks and national fraud trends are taken into account when developing the council’s Audit Services Annual audit plan. This helps to ensure that audit resource is targeted into high risk areas.
Fraud investigations not only focus on the investigation of the subject(s) but also aim to add value by suggesting, where appropriate improvements in systems or controls. This helps to prevent issues reoccurring; all recommendations are monitored both by management and audit to make sure that they are implemented through an audit recommendation tracker process.
To enable investigations to become more holistic the team works closely with the police and Her Majesty’s Revenue and Customs (HMRC) and now has memoranda of understanding (MOU) with these partner organisations. In addition, local police officers are able to work out of council offices to aid joint working and assist in intelligence led investigations. Tthe council also regularly participates in multi-agency exercises led by the police to identify subjects in proactive fraud exercises.
Financial investigation capabilities have been developed and the team now has several qualified financial investigators and senior authorising officers. This helps the council to recover the proceeds of crime from a variety of offences, including ones investigated by other enforcement teams in the council.
Recently the counter fraud team investigated a large scale internal procurement fraud with a value in excess of £100,000. This is being prosecuted by the Criminal Prosecution Service (CPS) through joint working with the police and is due in Crown Court in April 2019. Since the fraud was uncovered there have been a number of initiatives designed to effect cultural change from senior management including a ‘manager’s handbook’ that reinforces a managers responsibilities to ensure that a fraud of this nature cannot reoccur.
An e-learning fraud awareness module has been rolled out as mandatory to all budget managers and recommended for all new starters to complete when they join the authority.Further specific fraud awareness training has been given to high risk areas such as housing, direct payments, schools and corporate property.This has promoted the work that counter fraud team undertake, highlighted potential fraud indicators and enhanced the awareness of council teams to report fraud to the counter fraud team.As a result internal referrals have increased from other departments and investigation assistance has been sought from counter fraud team by other enforcement departments within the council including Planning, Trading Standards and Licensing.
In utilising best practice methods the counter fraud team has invested in a highly technologically advanced camera for covert surveillance which has become a highly useful tool in investigation enquiries and evidence gathering. The team are able to remotely access the camera, thus removing the need for highly resourced (and therefore costly) static surveillance.
To allow the team to make best use of the data held within the council a software product (IDEA) is used which enables data to be analysed, compared and matched to identify anomalies that are then investigated by the team. In developing this a suite of exception reports has been written to examine and match data from the council’s systems. This has led to several instances where money has been recovered from staff and on occasions it has led to fraud investigations into the staff concerned.
The team have undertaken various data matching exercises for council tax single person discount (SPD) including using a credit reference agency and matching to other data sets held within the council which has led to savings of £871,000.
The team have procured the use of an external company to identify businesses not paying the correct amount of business rates, this identified £343,000 worth of additional business rates for the council, with these additional rates being paid year on year. An investigation by the team identified a business claiming a charitable rate relief that it was not entitled to and obtained £93,000 of business rate discounts, which have now been repaid. Furthermore, the payee has been issued with an administrative penalty of £7,500 to cover the investigation costs and this has been paid in full.
As leaders within the counter fraud arena and recognised locally for best practice the counter fraud team regularly provide the services of the team to undertake fraud investigations and provide a fraud resource for external organisations including other councils and education organisations.
Impact
The original grant of £124,792 enabled Audit Services to establish a fraud presence and get a sustainable budget moving forward for counter-fraud. In the first two years savings of £1,930,300 were identified, yielding a RoI of 15.5. However, as described below, savings have increased significantly since.
The team is now staffed with professionals in a range of disciplines including financial investigation, surveillance, data matching and social media enquiries. In addition, specialist equipment is accessible including a surveillance camera.
Since being formed, the counter fraud team, following the receipt of the grant, has delivered savings in excess of £7,000,000. This figure includes real cash savings and notional savings (as prescribed by the Cabinet Office), for example in respect of social housing recovered and Right To Buy transactions stopped.
Contact details
Steve Sparkes, Head of Audit Services, Solihull Metropolitan Borough Council, [email protected]