City of York Council - Fraud Risk Assessment (February 2021)
Risk Area |
Risk Description |
Risk Controls |
Risk Category |
Risk Mitigation |
Council Tax & Business Rates Frauds (discounts and exemptions) |
Council Tax fraud
can be a common occurrence. CIPFA report that 81% of all local
government related fraud, recorded as part of their annual survey,
involved Council Tax or Business Rates payments. Single Occupancy
Discount fraud accounted for £19.4m of loss due to fraud in
2018/19 according to the survey. |
The
council employs a number of methods to help ensure only valid
applications are accepted. This includes requiring relevant
information on applications forms and visits to properties (where
necessary).
Messages
reminding residents and businesses to update their circumstances
when necessary appear on annual bills issued by the council.
|
High |
Counter fraud
team (CFT) will raise fraud awareness with staff in revenues and
customer services teams about frauds affecting Council Tax and
Business Rates. |
Council Tax Support Fraud |
Council Tax
Support is a council funded reduction in liability introduced in
2013 to replace Council Tax Benefit. Unlike its predecessor,
Council Tax Support is resourced entirely through council funds.
CIPFA’s fraud tracker showed an 18% increase in the value of
fraud found in this area in 2018/19. |
The
council undertakes eligibility checks on those who apply for
support. There are established lines of communication with the
Department for Work and Pensions where claims for support are
linked to externally funded benefits. The council is able to report Housing Benefit and other benefit frauds to the Department for Work and Pensions but this does not necessarily allow the council control over resolving false claims for Council Tax Support.
|
High |
Fraud concerns are reported to the counter fraud team who determine if criminal investigation is required. The CFT can undertake joint investigation with the Department for Work and Pensions where it is mutually beneficial (e.g. joint claims for benefit).
The CFT will continue to raise awareness with relevant staff. |
Covid-19 Grants |
In
response to the covid-19 pandemic, central government has made
funding available for local businesses. Several schemes throughout
2020/21 have been administered by councils; some were linked to
business rates liabilities while others were to assist those
outside this scope. The council had to respond quickly to support
businesses. New processes for managing applications and paying
grants had to be developed quickly. Further schemes were introduced to provide support to businesses during the covid-19 tier system. In addition, schemes were introduced to aid residents unable to work due to self-isolation requirements and support families with children or vulnerable adults.
|
The
council processed over 4300 grant claims for the government's Small
Business Grant Fund, Retail, Hospitality and Leisure Grant Fund,
and Local Authority Discretionary Grant Fund. Checks by
council officers were made into each application to make sure they
met the criteria set by government and that payments were being
made to the correct people. Applications for ongoing business and
resident support schemes continue to be carefully assessed before
payment. |
High |
Any instances where an applicant provided false information to the council are reported to the counter fraud team. Where appropriate, criminal investigations can take place. The Department for Business, Energy & Industrial Strategy have stated that councils should conduct investigations where they have resources available.
The CFT is undertaking a post-payment assurance exercise on the initial business grant schemes and will continue to support post assurance work on later payments.
Additionally, the council is participating in the 2020/21 National Fraud Initiative which will include data matches relating to grant payments. |
Creditor Fraud |
A
range of frauds can be committed against the council as a result of
publically available creditor payment data. Criminals undertaking
these types of fraud are often found to be operating from
overseas.
With increased remote working due to covid-19, there are increased opportunities for fraudsters to impersonate budget holders or suppliers in electronic communications, to divert funds.
|
The council has a number of controls in place to identify fraudulent attempts to divert payments from genuine suppliers and to validate any requests to change supplier details. This includes contacting companies to confirm that any requested change of bank account details for payments is genuine.
Segregation of duties exist between the ordering, invoicing and payment processes. |
High |
The
CFT undertake work to raise staff awareness of these types of
frauds. Increased awareness provides a greater chance of stopping
fraudulent attempts before losses occur. The CFT share intelligence on any attempted frauds occurring nationally to ensure the council can prevent losses. |
Cybercrime |
Cybercrime is a
constantly evolving area. Criminals are continually refining their
techniques in order to overcome controls put in place to protect
organisations.
Councils hold a range of data on residents which can be attractive to criminals.
|
The council has a highly skilled ICT department which helps mitigate the threat of cybercrime.
Where appropriate the CFT investigate specific incidents of cybercrime. |
High |
Raising awareness with staff can be crucial in helping to prevent successful cyberattacks. Any counter fraud training delivered will reinforce anti-cybercrime messages to members of staff.
All
instances of cybercrime and related fraud will be reported to the
police’s Action Fraud Unit and the National Cyber Security
Centre. |
Procurement Fraud |
Procurement fraud has been perceived as a high risk by local authorities in the CIPFA fraud tracker for a number of years.
|
The
council has established Contract Procedure Rules. The rules are
reviewed annually and ensure the requirement for a competitive
process (where required) through an e-tender system. A team of
procurement professionals provide guidance and advice to ensure
that procurement processes are carried out correctly.
Contract
monitoring is implemented to help detect and deter fraud. |
High |
Continued
vigilance by relevant staff is key to identifying and tackling
procurement fraud. The counter fraud team will continue to provide
training to raise awareness of fraud risks in this area. |
Theft of Assets |
The
theft of assets can cause financial loss and reputational damage.
It can also negatively impact on employee morale and disrupt the
delivery of services. The council owns large numbers of physical
items, such as IT equipment, vehicles and tools.
|
Specific
registers of physical assets (e.g. capital items, property and ICT
equipment) are maintained. In addition, there are registers for
information assets held by the council. |
High
|
Members of staff should also be vigilant and report all possible thefts promptly to the police and CFT. |
Internal Fraud |
There are a range of potential employee frauds including falsifying timesheets and expense claims, abusing flexitime or annual leave systems, undertaking alternative work while sick, or working for a third party on council time. Some staff have access to equipment and material that may be misused for private purposes.
|
The
council has an established whistleblowing policy through which
concerns can be raised. Controls are in place surrounding flexitime, annual leave and sickness absence. Participation in the National Fraud Initiative helps the council identify potential cases of internal fraud. |
Medium |
The CFT investigate all suspicions of corruption while internal audit ensure that appropriate checks and balances are in place to help prevent it. |
Recruitment Fraud |
Recruitment fraud can affect all organisations. Applicants can provide false or misleading information in order to gain employment such as bogus employment history and qualifications or providing false identification documents to demonstrate the right to work in the UK.
|
The council has controls in place which include verification of qualifications and reviewing references to help mitigate against the risk of fraud in this area. |
Medium
|
Where there is a suspicion that someone has provided false information to gain employment, the counter fraud team will be consulted on possible criminal action in addition to any disciplinary action that may be taken.
|
Blue Badge & Parking Permit Fraud |
Blue Badge fraud carries low financial risk to the authority but can affect the quality of life for disabled residents and visitors to the city. There is a risk of reputational damage to the council if abuse of this scheme is not addressed. |
CFT and Parking Enforcement work closely together to identify and deter parking fraud. Days of action are held regularly in the city centre where all badges are checked for misuse. |
Low |
The CFT regularly issues warnings to people who choose to misuse parking permits and blue badges. Serious cases are considered for prosecution. |
Fraudulent Insurance Claims |
The council may receive exaggerated or fabricated insurance claims. CIPFA report that in 2019 the average value of a fraudulent claim against local authorities was over £39.5k. |
While insurance fraud is common, the burden of risk is currently shouldered by the council’s insurers who have established fraud investigation systems.
|
Low |
n/a |
Treasury Management
|
The impact of losses in this area could be significant. There are no recorded frauds within the council. |
Treasury Management systems are well controlled and no fraud has been detected in this area.
|
Low |
Internal audit undertake periodic reviews of the controls in this area. |