Agenda item

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The Senior Internal Auditor explained that the report was aimed to provide the following in respect of the period April 2023 to September 2023 for areas such as Council Tax, Council Tax Reduction Scheme, Business Rates, Housing Waiting List, Duplicate invoices, False payments, Debtor Tracing activities and Internal Fraud where it arises:

•           Progress towards the Anti-Fraud and Anti-Corruption Key Performance Indicators assigned to the Internal Audit Department.

•           Statistical information in respect of fraud and error detection for applications and claims received by the Council deemed to have been false, incorrect, or where a relevant change in circumstances has failed to be declared resulting in a financial gain or where an error has been identified and amended.

•           Statistical information in respect of traced debts where the Internal Audit Team have been contacted for assistance.

•           Statistical information in respect of fraud and error detection for grants retrospectively identified as having been paid to customers/businesses who were not eligible.

•           Statistical information in respect of data matching activities undertaken through the National Fraud Initiative (NFI) and Norfolk Fraud Hub.

•           A look forward for the remainder of the financial year’s anti-fraud and anti-corruption related activities.

The Committee’s attention was drawn to the following sections of the report:

·        Key Issues.

·        Fig 1 – Fraud and Error comparison year to date against previous years.

·        Report overview.

·        Key Performance Indicators.

·        Fig 2 – KPI Target

·        Fig 3 – Overall investigation processing progress.

·        Overview of Fraud/Error Detection.

·        Detailed Overview of Fraud/Error Detection.

·        Other Identified Errors

·        Debtor Tracing Activities.

·        Data Matching Activities.

·        Single Persons Discount Project.

·        Overall Data Matching Activities.

·        Covid-19 Business Grants.

·        Other Schemes.

·        Anti-Fraud and Ant-Corruption Culture.

·        Projects/Future Pipeline of Activities.

The Chair, Councillor Ryves thanked the Senior Internal Auditor for the report and invited comments and questions from the Committee, a summary of which is set out below.

The Senior Internal Auditor clarified the definition of fraud and advised that there had been no serious incidents of fraud and this was a compliance approach. 

Councillor Bearshaw drew attention to Figure 1 – fraud and error comparison year to date against previous years and commented that it would be useful to see the previous four years data illustrating increases.  In response, the Senior Internal Auditor explained that generally there was a rise in the number of cases due to the increase in population within the Borough but not to the level reported and added it would be necessary to look at the data to determine why it had happened.  The Senior Internal Auditor highlighted the importance of undertaking the exercise and added that the data set out at Figure 1 helped to identify fraudulent/errors in activities and advised that efficiencies had been found in the process.

Councillor Dark asked the following questions:

1)               Where the Borough Council was the organisation that draws money in  for other preceptors, for example, Parish Councils, Norfolk County Council and the Police, what was the risk and had this been included in the total figures reported?

2)               Fraud and Error – relating to both external and internal threats and what was the Council’s system/process on the protection of fraud included in the report or subject to a separate report.

The Senior Internal Auditor responded to the above questions as set out below:

1)               The Senior Internal Audit explained that Figure 1 illustrated the overall value of precepts including council tax, etc The last time the figures were checked - 6.91% the Borough Council received from the council tax bill included precepts paid to the Internal Drainage Board.  The Committee was informed that the figures in the report were the full total encompassing council tax, benefit values and anything else identified. 

2)               If whistleblowing cases were brought to the attention of Internal Audit the cases would be included  in the report.  However, if cases were dealt another way, for example by a service area the figures would not be included in the report.  The Committee was given an example of  one incident relating to invoice payments which came out of data matching activities and explained there had been incidents when Internal Audit had been involved in whistleblowing activities and undertaken an investigation.

At the Invitation of the Chair, Councillor Morley, Portfolio Holder for Finance addressed that Committee and commented that the report was unclear and that an explanatory note setting out the fraud and error analysis would provide a better understanding for Councillors.  In response to the comments made by Councillor Dark, the Borough Council had paid out £80.1m Covid-19 business grants and only a small proportion of error had been detected.  In conclusion, Councillor Morley commented that it would be beneficial if the report could be set out on laymen’s terms.

In response to questions and comments from Councillor Devulapalli on the time and cost incurred in relation to chasing and recovery of debt, the Senior Internal Auditor explained that Internal Audit did its best to trace figures to departments and any debt identified would be passed back to the relevant department(s) for discussion and Internal Audit would provide the tools/software for those departments to undertake the required work themselves.  It was noted that the Council would not spend more than it would recover.

Councillor Devulapalli asked if in the vast majority of cases was it that there were multiple people in households.  In response, the Senior Internal Auditor explained that it was often more than one person in a household and outlined the other streams of work being undertaken in relation to the SPD project being funded by Norfolk County Council.  The Senior Internal Auditor invited Councillor Devulapalli to contact him to discuss further details following the meeting.

In response to a question from Councillor de Winton, the Senior Internal Auditor explained that the total cost of fraud related spend during 2022/2023 was £34,051.67 to Internal Audit.

Following questions from the Chair on the net cost of fraud detected, the Senior Internal Auditor drew the Committee’s attention to Figure 5 which set out a detailed overview of fraud and error detected in 2023/2024.

In response to questions from Councillor Jones on data matching, staff resource required and progress made to save time, the Senior Internal Auditor outlined the work undertaken by the Council and highlighted that the authority used the data to go through a sifting process where data was being matched.  Spreadsheets were used to liaise with the revenues systems, etc to carry out the required checks which resulted in a more manageable workload.

Councillor Bearshaw referred to sections 3.6 and 4.1 and asked if there was any direct correlation.  In response, the Senior Internal Auditor explained that this allowed the Council to look at other projects and be more proactive with fraud but would need to try and devise a plan to see what it might look like but this would take time to develop.

The Portfolio Holder, Finance responded to questions from Councillor Bearshaw on the Internal Drainage Board figures not being consistent as discussed at the June meeting and advised that it was his error.

Under Standing Order 34, Councillor Coates addressed the Committee and referred to a recent published article  reporting on West Suffolk Council be defrauded £52,000 and asked if further information was available. A link to the article is set out below:

https://www.bbc.co.uk/news/uk-england-suffolk-67530165

The Senior Internal Auditor explained that the Council ensured that staff were aware in their day to day role of the issues set out in the article through training and awareness and advised that he would highlight this incident in the next staff briefing to be scheduled.

The Senior Internal Auditor responded to questions from the Chair on the current level and future forecast of fraud and error detected.

The Chair drew attention to 13.2 – significant increase in the number of matches received from HMRC.  The Senior Internal Auditor advised that this would require review and sifting.  The Committee was informed that that Internal Audit had assessed the operational delivery plan and had factored in additional days for fraud in 2024/2..  Training had been rolled out across the internal audit team to undertake the required duties.

RESOLVED:  The Committee noted the update of the ant-fraud and anti-corruption work.