Source · Select Committees · Public Accounts Committee
Recommendation 10
10
We asked Cabinet Office about fraud and error risks outside the tax and benefits system.
Conclusion
We asked Cabinet Office about fraud and error risks outside the tax and benefits system. Cabinet Office told us that the diversity of risks is “very, very large”, because government spends £850 billion and collects around £800 billion in income. It explained that this covers all the different grants, procurement, and services that the public sector offers, which have a range of different fraud risks.28 Cabinet Office explained that the COVID-19 response has changed the fraud risk profile for many departments who are now exposed to higher levels of risk and loss than they had experienced previously.29 It acknowledged that it still needs to do more work to understand the broader fraud and error picture outside the remit of DWP and HMRC.30
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. 8