Source · Select Committees · Public Accounts Committee
Recommendation 15
15
Accepted
COVID-19 response highlights fraud design failures, leading to new impact assessments
Conclusion
Government’s response to the COVID-19 pandemic underlined the need to design counter-fraud measures, including controls, reporting and recovery, into new initiatives at an early stage of the policy cycle. Government could have maintained several basic standards of public accountability to minimise opportunities for fraud and corruption. It could have: increased transparency to parliament and the public; better managed conflicts of interest; promptly addressed known vulnerabilities; and ensured timely financial reporting.46 The Public Sector Fraud Authority (PSFA) recognised the imperative to build in fraud and corruption controls when new schemes are introduced. HM Treasury and the PSFA told us that government, to achieve its aim of designing out fraud from the start, has now introduced Initial Fraud Impact Assessments (IFIAs), which are embedded within HM Treasury’s formal spending approval processes.47 IFIAs are rapid initial assessments of the likely fraud risks in new major spending initiatives.48 HM Treasury told us that 700 of its staff have been trained on matters relating to fraud to ensure they are able to fulfil their responsibilities on scrutinising departmental IFIAs.49
Government Response Summary
The government accepts the recommendation and confirms Initial Fraud Impact Assessments (IFIAs) are embedded in HMT's approval processes with required training for officials. It further commits to using spending conditions to enforce fraud risk management expectations and requiring Accounting Officers to report irregularities in fraud management to Parliament.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented HMT is embedding counter fraud measures into its own policy making. All officials are required to consider fraud risk against any measure in scope of a fiscal event. Furthermore, civil servants are required to complete an IFIA in all business cases where fraud would, or is likely to, have a high impact. The HMT Counter Fraud function and PSFA provide specialist support to reinforce department-level expertise. HMT and the PSFA have jointly provided counter-fraud training to around 700 HMT officials in the past year. The training covers fraud risk awareness and the new IFIA process. HMT is working to embed this training into a variety of learning and development offers to ensure new staff continue to engage with this content. The joint-reporting of the PSFA to HMT and the Cabinet Office allows the government to bring counter-fraud expertise to bear at an earlier stage in the spending approvals process. For example, the PSFA was used at an early stage in the development of Energy Support Schemes and the PSFA supported the Treasury Approvals Process for the One Login digital identity programme. HMT will use spending conditions to ensure reputational consequences for public bodies and their accounting officers on spending that does not meet expectations for fraud risk management. HMT will use the content of IFIA’s and an assessment of the counter fraud mitigations in the business cases to determine spending conditions. HMT will set implementation of fraud risk mitigations as conditions for spending. Where departments and public bodies do not meet HMT’s expectations on IFIAs or counter-fraud in general, this will be reflected in the advice spending teams provide to Ministers on proposed business cases. Failure to comply with those conditions, in relation to the MPM, will risk that spending being deemed irregular. This would factor into the department’s overall assessment in the annual Government Finance Function's finance assessment process. Accounting Officers will be required to report irregularities in fraud and corruption risk management to Parliament.