Five strategies for fraud prevention in your organisation

Jessica Kimbell, GovNet
July 30, 2021

What is fraud?

Fraud and wider economic crime are a huge problem for the UK public sector – according to Andrew Penhale, Head of Specialist Fraud Division at the CPS, they make up a massive one third of all reported criminal activity.

The last 12 months has shown that criminals are versatile and saw a quick increase in the likes of scam mail, Bounce Back Loan fraud, coronavirus relief scheme scams and NHS phishing calls and text messages. Within this ever-shifting landscape, it’s important to recognise that fraud can come from anywhere, including:

  • staff members
  • contractors and suppliers
  • the public
  • third parties, outside of your organisation

Although completely eliminating public sector fraud is not feasible, the below tips to reduce the risk of fraud will help you take action to mitigate it.

Five fraud prevention strategies
 
1. Identify where your organisation is vulnerable to fraud

Regularly review the procedures and controls you have in place and test the systems that you already use to reduce risk. Make it a routine to review these control measures too – in light of the pandemic many systems were relaxed or suspended to allow staff to work remotely, or to allow organisations to buy goods and services urgently. This not only created gaps for third parties to take advantage of, but also saw an increase in the risk of staff error, and lower levels of scrutiny and due diligence to keep up with the pressure and speed; increasing procurement fraud.

Once you’ve identified your problem areas and put controls in place, you need to effectively communicate the new procedures. “Promoting good corporate governance and compliance is vital”, says John Carroll, COO of the Serious Fraud Office. Develop a strategy and talk about fraud internally. Make sure your staff know about the processes and systems in place, and also how fraud affects them directly.

 

2. Collaboration

Another piece of advice from John Carroll, SFO is that “Cooperation with partners is key [to tackling fraud, bribery and corruption] as well as working and sharing information with the private sector and other government departments.”.

The pandemic has seen criminals look for many new ways to commit fraud. To turn the tide, we need to collaborate and share data, intelligence and knowledge. Local Authorities have access to a number of excellent collaboration networks, such as the regional operational groups to help implement the Fighting Fraud & Corruption Locally (FFCL) strategy, and the Organised Fraud Intelligence Groups (OFIG) facilitated by Cifas.

These initiatives help government keep up to date with the latest tools available to combat public sector fraud, share information about trends and vulnerabilities, and harness the skills of the wider fraud prevention community.

 

3. Staff training

With new or revised systems in place, and scammers adapting all the time, don’t forget the importance of upskilling your workforce. In a report published by The Chartered Institute of Public Finance and Accountancy (CIPFA) last year, it was revealed that 49% of local government professionals felt they lacked fraud awareness training.

Staff are the front line in the fight against fraud. Ensure that current ways of reporting fraud are promoted internally on a regular basis so that they can alert you to bigger problems, for example with anti-fraud hotlines and clear whistleblowing processes.

Government apprenticeship schemes such as the Counter Fraud Investigator Apprenticeship also help to build a knowledgeable and future-proof workforce. The benefits of staff training are two-fold: an increased pool of education and skills in your workforce and a reduction in the presence of fraud in the public sector.

 

4. Harnessing Technology

In order to keep pace with the changing nature of criminality, we need to embrace technology, data and digital communications.

Many instances of fraud linked to cyber crime are caused by user error, for example internal staff downloading malicious software or clicking a link in a spam email. In order to stay protected against cyber crime it's good to stay up to date with the different types of malware out there and how to identify them.

In addition, there are many forms of automated technology that can substantially reduce fraud losses for the public sector. By gaining a better overview of your data, many improper payments become preventable. Systems such as real-time transaction monitoring or analytical control systems help detect fraudulent behaviors and alert counter fraud teams to any fraudulent activity. 

 
5. Easy reporting processes

Finally, as we all know, prevention is always better than a cure. Ensure that your organisation's process for staff to report types of fraud or irregularity are regularly reviewed, and shared openly with all staff members.

Especially after 18 months of upheaval and considerable change, it is vital that your reporting systems are still operating as they used to pre-pandemic, and that staff are still aware of the process e.g. anti fraud hotlines and whistleblowing processes

 

With these five simple strategies in place, you should find that you can significantly decrease your organisation's risk of both fraud and error without having to make big purchases or major process changes. For more information about reducing fraud risks, read our guest article from Audit Scotland here.