The Ministry of Housing, Communities and Local Government (MHCLG) has published advice for councils in England on preventing fraud during the procurement process, after almost a quarter reported incidence of losses.
Councils in England spend around £55bn a year on goods, work and services, and MHCLG said estimates have suggested fraud and error costs local government between £275m and £2.75bn annually.
A survey conducted by MHCLG as part of a review of the risks of fraud and corruption in local government procurement showed 23% of respondents reported fraud and/or corruption in the procurement lifecycle during the 2017 to 2018 financial year.
The review has now published its findings, alongside advice with practical examples and case studies showcasing how councils can strengthen their processes and implement prevention measures.
Simon Clarke, local government minister, said: ‘Acknowledging and mitigating the risk of fraud and corruption is critical for sound financial management and to ensuring that every pound spent by councils is used to support the communities they serve.
‘This is true especially at a time when councils continue to work hard in the national effort against the coronavirus pandemic.
‘There is no silver bullet, but I would urge all councils across the country to learn lessons from this report and harness the tools it provides to tackle fraud and corruption.’
Amongst the report’s recommendations are that the public sector focus on putting in place standard definitions and measurement methodologies, ensuring there is a central place to record reports of fraud and corruption and strengthening whistleblowing arrangements.
At the level of individual councils, MHCLG says appropriate capacity is needed to prevent, detect and respond to incidents of fraud and corruption within the procurement lifecycle. This means having in place effective fraud and corruption risk management structures and risk assessments, effective due diligence and management of gifts and hospitality and conflicts of interest.
Capacity and capability within local authority contract management and commercial activities have been identified as areas for improvement and all those involved in procurement must understand their roles and responsibilities, whenever commissioning, procuring or purchasing on behalf of their council.
Councils should consider how the risks of fraud and corruption are managed in their wider networks, including local authority companies, Arms-Length Management Organisations (ALMOS) and other special purpose vehicles.
Rob Whiteman, CIPFA CEO, said: ‘Public sector supply chains facilitate services from major infrastructure projects to social care, and everything in between. These supply chains are vulnerable to the risk of fraud, bribery and corruption, which can be exacerbated by states of emergency.
‘Counter fraud measures must be sufficiently robust to ensure that taxpayers’ money is used as intended and achieves maximum impact. This review will support local authorities to ensure they have the skills and methods in place to continue the fight against fraud even under difficult circumstances.’
Source: Accountancy Daily