CIPFA issues warning over poor organisational controls and increased risk for councils of fraud during pandemic

More than two thirds (69%) of local government professionals believe poor organisational controls leave local authorities vulnerable to fraudsters, research by CIPFA has found.

A similar percentage (64%) believe that fraud is a major risk for local authorities.

A total of 303 local government professionals – the majority of whom were senior managers or heads of department, and most worked in finance, human resources, IT, internal audit and counter fraud – took part in the survey, which was conducted for CIPFA by Perpetuity Research.

CIPFA said the results come in the midst of the COVID-19 pandemic, “during which councils are at an increased risk of suffering fraud losses due to the high value of emergency grants they have been given to disburse”. 

The survey - undertaken for a report, Tackling Fraud in the Public Sector - also found that half (49%) of respondents said staff were not adequately trained to identify fraudulent activity. 

A large majority (87%) meanwhile reported that preventative strategies would be the key means of fraud in local government in the future.

Strong governance and long-term planning were also identified as essential to eliminating vulnerabilities within councils. 

CIPFA CEO Rob Whiteman said: “Fraud, bribery and corruption are constantly evolving threats that undermine financial resilience and put even greater pressure on public services at a time of crisis. The increased strain on resources and governance as a result of COVID-19, and the prevalence of technology-enabled frauds, compound these threats even further. 

“We cannot prevent all financial crime. What we can do is put in place measures to ensure that authorities have an awareness of the risks they face in a constantly changing world and are equipped to mitigate these.

“Our focus in the future must shift to long-term planning and preventative strategies to ensure that fraudsters cannot threaten the resources councils need to provide for the most vulnerable.”