Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Departments’ lack of urgency to robustly measure fraud and error hinders their ability to direct...
Conclusion
Departments’ lack of urgency to robustly measure fraud and error hinders their ability to direct their counter fraud and error efforts. The robust measurement of fraud and error is a crucial aspect of any counter fraud response because it shows where controls need to be improved and effort directed. BEIS, DWP and HMRC have committed to producing an estimate of fraud and error for some of their COVID-19 schemes and publishing this in their annual report and accounts. But we are concerned that this work is not being given the priority it deserves and comes too late to direct efforts to minimise fraud and error in the schemes. HMRC does not expect to have a statistically valid estimate of fraud and error in the Coronavirus Job Retention Scheme until December 2021, around 22 months after it was first introduced. HMRC also does not intend to measure the rate of fraud and error in the Self-Employed Income Support Scheme and Eat Out To Help out schemes. DWP cannot say when it will set a target for reducing fraud, citing that COVID-19 has changed its traditional mix of cases within the benefits system. BEIS does not expect its fraud sampling exercise on the Bounce Back Loan Scheme to complete until the end of May 2021, 12 months after the scheme opened for applications. Other departments, that have not had as much scrutiny of their fraud and error risk, have not made public commitments to measure the extent of fraud and error in their COVID-19 schemes. Recommendation: HM Treasury should, within three months, strengthen current reporting requirements and ensure that all departments measure and report on the risks of fraud and error within each of their COVID-19 support schemes. This should include: • the estimated value of fraud and error within their COVID-19 response, • how identified risks of fraud and error are being addressed, and • any planned action to recover taxpayer money lost to fraud and error, including timescales. HMRC and BEIS should write to the Committee wit
Government Response
Not Addressed
HM Government
Not Addressed
3: PAC conclusion: Departments’ lack of urgency to robustly measure fraud and error hinders their ability to direct their counter fraud and error efforts. 3a: PAC recommendation: HM Treasury should, within three months, strengthen current reporting requirements and ensure that all departments measure and report on the risks of fraud and error within each of their COVID-19 support schemes. This should include: • The estimated value of fraud and error within their COVID-19 response; • How identified risks of fraud and error are being addressed, and • Any planned action to recover taxpayer money lost to fraud and error, including timescales. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: November 2021 3.2 HM Treasury mandated that departments claiming COVID-19 support scheme funds must provide details within their 2020-21 annual report and accounts of the nature and extent to which these grants were claimed. In 2021-22, guidance goes further, requiring that departments estimate the level of fraud and error in their COVID-19 support schemes. Departments need to identify risks, make an evidenced estimate of the extent of fraud and error, and explain how risks are being managed. 3.3 Additionally, the Ministerial Implementation Group, in May 2020, required departmental action plans for all COVID-19 schemes, detailing how they will identify, measure and recover irregular payments made through stimulus packages, repurposed spending and areas of increased demand. These plans, and progress against them, will be reviewed by the GCFF and Fraud Ministerial Board. 3.4 HM Treasury sets financial reporting policy for central government entities and has enhanced the level of departmental risk reporting. From 2020-21, the Government Financial Reporting Manual (FReM) requires entities to provide detailed explanations of their key risks, how risks affected achievements against organisational objectives, mitigations and how residual risks may affect future plans and performance. This risk reporting applies to the delivery of COVID-19 support schemes, and the impact of the pandemic on other business operations. Fraud and error risk is covered where it is considered a material risk to the organisation by the accounting officer. 3.5 Departments are required to disclose details of material fraud, evasion and error within annual report and accounts in respect of receipts and payments recorded in the Trust Statement.