In a survey of all local authorities, the Commission found detected fraud is increasing and has risen from £17.5m to £25m over the last three years. Of this, benefit frauds have risen from £14m to £20m.
The report says probity in local government is generally in 'good order' but warns local authorities not to be complacent. Detected fraud of all types is increasing yet defrauders keep finding new ways to commit their crimes.
The bulk of fraud is committed by people abusing the benefits system - not local government officials. The biggest problems are housing and local tax benefits, says the report, but student awards and improvement grants are giving increasing cause for concern.
The report recommends that council members and managers: - create an anti-fraud culture by stressing honest administration - encourage staff to raise their concerns with those who can take action - ensure internal auditors regularly test their effectiveness - make full use of information technology to cross-check information held by different authorities - agree procedures with the police to improve investigation management
The Audit Commission is setting up a dedicated fraud unit to provide information on fighting fraud.