Agenda item

This report informs Members of the new failure to prevent fraud duty, the results of a self-assessment against Home Office guidance relating to the offence of Failure to Prevent Fraud, and the actions that have been proposed to provide the Council with assurance.

The Head of Internal Audit and Counter Fraud introduced the report. He explained The Economic Crime and Corporate Transparency Act (ECCT) 2023 introduced a new offence of failure to prevent fraud. The offence occurred where a large organisation benefits from the fraudulent activity of an employee or other associated person and the organisation had failed to put in place reasonable procedures to prevent fraud. The service had undertaken a self-assessment against  Home Office guidance for the Council, the results of which were positive. Some actions had been identified which would strengthen counter fraud measures already in place.

The following issues were discussed:

(Local Authority Trading Companies) LATCOs – in response to a question whether the LATCOs were undertaking a similar review, the Head of Internal Audit and Counter Fraud stated that he had undertaken some work with the LATCOs and would meet directors as required. He was aware they were undertaking a governance assurance self-assessment which would be considered by the relevant Shareholder Boards. The LATCOs could request the Council to undertake the assessment against Home Office guidance, however, this would be chargeable.

Training – further information was requested in relation to awareness training for staff. The Head of Internal Audit and Counter Fraud stated that the Council was considering online training options which could be made mandatory through Meta Compliance. This format of training had been used by other services to provide to staff in other areas. The Service would also continue to offer tailored sessions for specific teams as necessary.

Resources – it was asked what resources had been required to undertake the self-assessment as the likelihood of an issue to the Council was low. The Head of Internal Audit and Counter Fraud explained that he could not provide a figure in terms of level of resource required, however, although the likelihood of the Council being the beneficiary of fraud was low the impact could be high with potential for unlimited fines. In addition, the self-assessment provided opportunities for the Council to strengthen its Counter Fraud measures, so it was a useful exercise.

A Member asked if the Council had the necessary resources to undertake proposed action 4: review contracts with third parties. The Head of Internal Audit and Counter Fraud stated that he did not know how many such contracts would require review, however, the Council would need to reassure itself that the third parties delivering services had appropriate anti-fraud measures in place.

It was asked if there was a cost associated with membership of the CIFAS Insider Threat Database as suggested in Action 8. The Head of Internal Audit and Counter Fraud acknowledged that there would be a cost incurred, however, it was proposed to explore the benefits of membership, and no decision had been taken. Membership of the database would assist in identifying candidates who may have a record of poor conduct at recruitment stage which would reduce the Council’s risk of exposure.

Review – in response to a question whether the self-assessment would require an annual review, the Head of Internal Audit and Counter Fraud stated that it would not need to be repeated unless the guidance changed.

Procurement – it was asked whether collaborative working with the Procurement Service would be helpful to enable the Council to review suppliers and traceability to provide additional reassurance, the Head of Internal Audit and Counter Fraud agreed and undertook to liaise with the Procurement service to consider potential benefits of further joint working.

Decision:

a)    The Committee noted the outcomes of the self-assessment and proposed actions.

b)    The Committee asked the Head of Internal Audit and Counter Fraud to liaise with the Procurement service to consider opportunities to provide additional reassurance for the Council in relation to anti-fraud policies for suppliers.