Source · Select Committees · Public Accounts Committee
Recommendation 2
2
Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of...
Conclusion
Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of fraud and error being unidentified or untackled elsewhere. Efforts to tackle fraud and error in the tax and benefits system come under regular scrutiny. While we regularly scrutinise and challenge HMRC and DWP on their approach, both departments have a well-established approach. However, fraud and error threaten many other areas of the public purse with fraud and error going unmeasured in around £503 billion of expenditure each year. Cabinet Office estimates that the rest of government was already losing between £2.5 billion and £25 billion a year as a result of fraud and error before the COVID-19 schemes were introduced. Part of the challenge government faces is the sheer diversity of risks, with fraud and error impacting everything from grants and procurement to income collection. As part of its Global Fraud Risk Assessment, the Cabinet Office Counter Fraud Function identified a large number of COVID-19 schemes as potentially at high risk of fraud but believes scheme owners need to do more work to fully quantify those risks. The Function recognises that it needs to do more work to understand the broader fraud and error picture outside the remit of DWP and HMRC. 6 Fraud and Error Recommendation: HM Treasury and Cabinet Office should, within six months, work with all Departments to build on the existing Global Fraud Risk Assessment and identify and publish all the fraud and error risks to public money across government and commit to updating this publication annually.
Government Response
Not Addressed
HM Government
Not Addressed
2: PAC conclusion: Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of fraud and error being unidentified or untackled elsewhere. 2: PAC recommendation: HM Treasury and Cabinet Office should, within six months, work with all Departments to build on the existing Global Fraud Risk Assessment and identify and publish all the fraud and error risks to public money across government and commit to updating this publication annually. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: February 2022 2.2 The Global Fraud Risk Assessment (GFRA) was created in response to COVID-19 using temporary funding and focuses on COVID-19 and economic recovery spending. The GCFF and departments will continue to build the GFRA throughout 2021-22. 2.3 While greater transparency is welcomed, publishing individual fraud and error risks could increase the overall risk of fraud. As such, the government will not publish fraud risks at this level of detail. However, if the GFRA continues, the GCFF will provide access to it across government (including to Finance leads) and update it annually. 2.4 It should be noted that accounting officers have responsibility for identifying and understanding their risks, including fraud. They assess their organisation’s exposure to fraud risk and provide the response that they consider is appropriate. Where an accounting officer assesses that there are material levels of fraud and error, the department must provide details within their annual report and accounts, explaining the level of fraud and error and the impact on the financial statements. Departments must also report levels of detected, prevented and recovered fraud to the Government’s Counter Fraud Function as well as consider doing so to the National Audit Office (NAO). 2.5 The government will increase transparency on the use of Fraud Risk Assessments across departments in future Fraud Landscape Reports.