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COMMISSION STUDY URGES VIGILANCE AS FRAUD LEAPS

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Councils uncover around 54,000 cases of fraud and corruption each year costing a total of£25 million, the Audit Co...
Councils uncover around 54,000 cases of fraud and corruption each year costing a total of £25 million, the Audit Commission revealed yesterday. Protecting the Public Purse, its long awaited study of fraud and corruption in local government, found the amount lost had jumped more than 40% in three years.

Around 96% of the detected cases were false benefit claims. Corruption by council staff was relatively rare, with only 143 cases costing a total of £1.2m uncovered in the past three years. While the commission said most councils were in good order it warned them against complacency.

The report says councils should generate an anti fraud culture by stressing the fundamental importance of probity, financial control and honest administration, and encourage staff and others to blow the whistle on anyone conning the council.They must ensure there are well documented and tested procedures for handling budgets and cash. They should also use computers to the full and agree procedures with the police to ensure management of investigations is improved.

In its research across the country the commission found 97% of councils administering benefit had uncovered fraud, and 81% had suffered at least one other type of fraud. Losses from benefit fraud over the three years totalled £50m, and other losses totalled £12m. When councils ended their accounts in March, almost 12,000 fraud and corruption cases involving at least £10m were being investigated.

District auditor and report co-author Derek Elliot said councils should recognise the increased dangers of fraud and corruption caused by changes in local government, such as greater devolution of budgetary control and the restructuring of shire areas. 'The big issue is prevention. The commission and the district auditors will be looking with local authorities at their weaknesses,' he said. 'They must have rigorous standards of personal conduct, discipline, procedures and control. Staff must know exactly what is expected of them'. He praised the work of the London Committee for Action Against Fraud, which the commission set up in June with the Society of London Treasurers. Every London borough has been the victim of fraud in the past three years.

The commission's report recommends councils elsewhere set up similar schemes to share information, experiences and expertise. The commission is setting up a dedicated fraud unit to disseminate information about how to fight fraud and to encourage closer ties between councils, government departments and other agencies. Next year the unit will be studying fraud and corruption in the health service. The publication of the fraud report coincided with the release of Regular as Clockwork, aimed at encouraging councils to raise standards of local government accounting.

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