We have seen good practice at some public bodies in identifying and sharing the latest fraud risks associated with COVID-19. But, from examining the overall effectiveness of counter fraud arrangements at some 40 public bodies, it is clear they collectively need to raise their game and learn from others to tackle fraud in Wales more effectively. This is according to a new report today by the Auditor General for Wales.

Fraud is a constant threat, and every pound stolen from the public sector means that there is less to spend on key services such as health, education and social services.

Fraudsters take every opportunity to exploit weaknesses and vulnerable people, and the COVID-19 pandemic has generated an explosion in fraudulent activities. The first COVID-19 case in the UK was reported on 31 January 2020 and the first COVID-19 fraud case was recorded just nine days later. Since that time, the number of fraud reports has increased significantly across the UK – the media reporting an unprecedented number of scams linked to the virus.

Our report identifies seven key themes (see Notes to Editors) that all public bodies need to focus on in raising their game to tackle fraud more effectively. It paints a picture of the current arrangements for preventing and detecting fraud across Wales and makes 15 recommendations, including the need to strengthen strategic leadership, co-ordination and oversight of counter-fraud across the Welsh public sector.  

The effectiveness of counter fraud arrangements across the Welsh public sector varies considerably. NHS Wales is clearly leading the way, but local government bodies generally need to raise their game to at least the standard seen in the NHS. That said, even the best counter fraud arrangements currently operated in Wales could be strengthened, drawing on good practice elsewhere in the UK and internationally.

In public bodies where counter-fraud is currently under-resourced, this is sometimes due to unfounded assumptions around presumed low levels of fraud activity. This shows the need for more robust fraud risk assessments, together with awareness raising and enhanced staff training. Greater use of data analytics is also needed to strengthen both the prevention and detection of fraud.

Notes to Editors:

• Our report identifies seven key themes that all Welsh public bodies within the Auditor General’s remit need to focus on in raising their game to tackle fraud more effectively:
  • Culture and leadership
  • Risk management and control
  • Policies and training
  • Capacity and expertise
  • Tools and data
  • Collaboration
  • Reporting and scrutiny.
• In June 2019, we published a report on counter fraud giving an overview of the scale of fraud in the Welsh public sector, together with a description of counter-fraud arrangements across the Welsh Government, the NHS and Local Government. That report estimated that the cost of fraud to the Welsh public sector could be in the region of between £100 million and £1 billion annually. We arrived at that estimate by applying the UK Cabinet Office’s percentage range estimate for public sector fraud, of between 0.5% and 5%, to the total devolved annual expenditure in Wales of £19.6 billion. That figure included the £14.5 billion block grant plus other spending that is funded by local borrowing, taxation and other income
• This latest report makes 15 specific recommendations and addresses how the public sector can best ‘raise its game’ in tackling fraud in Wales.
• The Auditor General is the independent statutory external auditor of the devolved Welsh public sector. He is responsible for the annual audit of the majority of the public money spent in Wales, including the £15 billion of funds that are voted on annually by the Welsh Parliament. Elements of this funding are passed by the Welsh Government to the NHS in Wales (over £7 billion) and to local government (over £4 billion).
• The audit independence of the Auditor General is of paramount importance. He is appointed by the Queen, and his audit work is not subject to direction or control by the Welsh Parliament or government. 
• The Wales Audit Office (WAO) is a corporate body consisting of a nine member statutory Board which employs staff and provides other resources to the Auditor General, who is also the Board’s Chief Executive and Accounting Officer. The Board monitors and advises the Auditor General, regarding the exercise of his functions.
• Audit Wales is the umbrella name for the Auditor General for Wales and the Wales Audit Office. Audit Wales is a registered trademark, but it is not a legal entity in itself.