NAO publishes report on tackling fraud and corruption against government

The National Audit Office (NAO) published a report on tackling fraud and corruption against the government on 30 March, which finds that despite some progress being made since the last report in 2016, the ‘government still lacks robust assessments of where and what its fraud risks are, and most public bodies cannot demonstrate that they have counter-fraud resources commensurate with the risk.’

The report states that the establishment of the Public Sector Fraud Authority (PSFA), which was launched on 3 August 2022, is a welcome step by the government and presents the opportunity for a renewed focus on fraud and corruption in the public sector. The NAO report states that the PSFA, which aims to improve the government’s understanding of the fraud threats it is facing and the standards in the counter-fraud profession, will need to have influence across government if it is to be successful in improving the culture, preventative approach and robustness of risk assessments needed to effectively combat the fraud threat.

The NAO report includes nine suggestions for the PSFA on measures that can be taken to help the government reduce fraud and corruption against the public sector. The proposed measures include that the PFSA should help government departments by developing a better methodology to assess and measure fraud, as well as helping departments use data to prevent fraud and corruption.

The latest statistics on the amount of fraud in government expenditure featured in the accounts audited by the NAO rose from £5.5 billion in the two years before the pandemic (2018-19 and 2019-20) to £21 billion in the following two years. The proportion of the total £21 billion that relates to temporary covid-19 schemes is £7.3 billion, according to the NAO. In addition to this, an estimated £10 billion of tax revenue is also thought to be lost to evasion and crime every year.

Concerning the government’s response to the covid-19 pandemic, the report states that public sector bodies could have better managed the fraud risk in the circumstances without impairing their emergency response, which includes faster transparency, better management of conflicts of interest, addressing known vulnerabilities more quickly, and timely financial reporting.

Head of the NAO, Gareth Davies, said: “There has been a substantial increase in the level of fraud reported in the annual reports and accounts we audit. In addition to the loss of taxpayer money, it creates the risk that people come to perceive fraud and corruption across government as normal and tolerated. If not tackled, this could affect public confidence in the integrity of public services. Government has more to do to understand the scale of the problem it faces and cannot yet demonstrate that it is tackling fraud effectively. The creation of the Public Sector Fraud Authority creates a real opportunity to address this.”