Agenda item

(Governance & Development Management Portfolio Holder) To consider the attached report (C-052-2014/15).

(1)        That, with effect from 1 April 2015, the proposed structure for the Internal Audit and Corporate Fraud Investigation Unit be approved, as set out at Appendix 1 of the report;

(2)        That, subject to job evaluation, a new post of Senior Fraud Investigator be created;

(3)        That, subject to job evaluation, three new posts of Fraud Investigator be created;

(4)        That the post of Auditor (0.4FTE) be made full time;

(5)        That, in order to finance the General Fund costs of the above, a Continuing Services Budget growth bid in the sum of £58,075 for 2015/16 be made;

(6)        That the additional £41,265 required funding from the Housing Revenue Account (HRA) be funded from the HRA’s Housing Improvements and Service Enhancements Fund;

(7)        That the location of the existing Benefits Fraud staff be continued within the Resources Directorate, under the management of the Assistant Director (Benefits), until they transfer to the Single Fraud Investigation Service from 1 October 2015; and

(8)        That an annual saving of £134,030, arising partly in 2015/16 and partly in 2016/17, be noted following the transfer of the Benefit Fraud staff to the Single Fraud Investigation Service and other consequent changes to the Benefits Division.

The Portfolio Holder for Governance & Development Management presented a report on the proposed restructure of the Internal Audit Unit and the creation of a Corporate Fraud Team.

The Portfolio Holder stated that the National Fraud Authority, the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Audit Commission had all published advice highlighting the importance of a corporate counter-fraud response within local authorities. The introduction of the Single Fraud Investigation Service, as explained in the previous report concerning the restructure of the Benefits Division, would affect councils' priorities in tackling fraud. Because the Single Fraud Investigation Service would investigate benefit fraud, councils had an opportunity to focus more resources on other frauds that had a local impact, such as housing tenancy and right to buy fraud, procurement, business rate, council tax discounts and local council tax support fraud, grant fraud and internal fraud including such areas as payroll and expenses.

The Portfolio Holder highlighted that 36 properties had been recovered since the appointment of the Council’s Housing Fraud Officers, and investigations into Right-to-Buy applications had resulted in the return of a further 7 properties (saving approximately £500,000). Other investigations into Private Sector Housing Grants had resulted in a further saving of £25,000. The costs for the proposed additional Fraud Investigator posts had been allocated on a 50/50 basis between the General Fund and the Housing Revenue Account, but the current Audit time recording system would be used to charge more accurately. It was proposed that the additional costs for the Housing Revenue Account would be funded from the Housing Improvements and Service Enhancements Fund.

The Portfolio Holder advocated that the creation of a Corporate Fraud Investigation Team working closely with the enhanced Internal Audit Unit would save the Council money and enable the Chief Internal Auditor to provide more robust audit cover, which in turn would give a higher level of assurance in the fraud prevention and detection work within the Council and strengthen the Annual Governance Statement.

Decision:

(1)        That, with effect from 1 April 2015, the proposed structure for the Internal Audit and Corporate Fraud Investigation Unit be approved, as set out at Appendix 1 of the report;

(2)        That, subject to job evaluation, a new post of Senior Fraud Investigator be created;

(3)        That, subject to job evaluation, three new posts of Fraud Investigator be created;

(4)        That the post of Auditor (0.4FTE) be made full time;

(5)        That, in order to finance the General Fund costs of the above, a Continuing Services Budget growth bid in the sum of £58,075 for 2015/16 be made;

(6)        That the additional £41,265 required funding from the Housing Revenue Account (HRA) be funded from the HRA’s Housing Improvements and Service Enhancements Fund;

(7)        That the location of the existing Benefits Fraud staff be continued within the Resources Directorate, under the management of the Assistant Director (Benefits), until they transfer to the Single Fraud Investigation Service from 1 October 2015; and

(8)        That an annual saving of £134,030, arising partly in 2015/16 and partly in 2016/17, be noted following the transfer of the Benefit Fraud staff to the Single Fraud Investigation Service and other consequent changes to the Benefits Division.

Reasons for Decision:

A Corporate Fraud Investigation Team was included in the Directorate restructuring plan approved by the Council on 17 December 2013.

Other Options Considered and Rejected:

To do nothing. However, this would leave the Council vulnerable to financial loss due to fraudulent activity that could remain undetected.