“Mind the gap”, progress towards developing anti‐fraud culture strategies in UK central government bodies
| Date | 17 July 2009 |
| Published date | 17 July 2009 |
| Pages | 229-244 |
| DOI | https://doi.org/10.1108/13590790910971784 |
| Author | Mark Button,Graham Brooks |
| Subject Matter | Accounting & finance |
“Mind the gap”, progress towards
developing anti-fraud culture
strategies in UK central
government bodies
Mark Button and Graham Brooks
Institute of Criminal Justice Studies, University of Portsmouth,
Portsmouth, UK
Abstract
Purpose – There is increasing guidance for public bodies on the appropriate counter fraud strategies
to pursue. One area covered is anti-fraud culture strategies. Building upon the work of the UK
Government’s HM Treasury, the purpose of this paper is to assess the extent and quality of anti-fraud
culture strategies in UK central government bodies.
Design/methodology/approach – Based upon analysis of HM Treasury survey data as well as a
survey undertaken by the authors.
Findings – The paper shows that the quantitative data from HM Treasury surveys when compared
to the qualitative data also drawn from the authors survey highlights significant numbers of central
public bodies with limited anti-fraud culture strategies.
Research limitations/implications – Some of the responses on screening strategies used by
central government bodies varied in the detail offered in response to the authors’ survey.
Originality/value – Provides much greater depth to the strategies utilised by central government
bodies to develop an anti-fraud culture.
Keywords Fraud, National government, United Kingdom,Government departments,
Corporate governance
Paper type Research paper
Introduction
Recent research by Levi et al. (2007) and Levi and Burrows (2008) has conservatively
estimated the extent of fraud to be in the region of £14 billion per annum in the UK
alone. Almost half (£6 billion) of this estimated £14 billion is lost to fraud in the public
sector. Given the scale of the problem in the public sector the measures to tackle this
problem should have importance in political priorities, given the ever-tighter fiscal
climate in the public sector. Fraud is, however, relatively neglected by academics and
policy-makers in comparison to other crimes (Doig, 2006; Levi, 2007). Research on the
counter fraud strategies used in the public and private sector is relatively rare. Some of
the large professional services firms publish research on counter fraud strategies,
although largely on the private sector (Ernst & Young, 2006; Bussmann and Werle,
2007). The UK Government through HM Treasury (2008, 2007, 2006, 2005), does
conduct annual surveys of fraud in central government bodies, covering both the
extent of the problem and the measures used to combat it. Much of the data, however,
are very quantitative and this led the authors to pursue a similar survey, but which
also provided much more qualitative data on the strategies used. Analysis of both the
treasury surveys and the authors’ survey revealed a number of issues, but one of the
The current issue and full text archive of this journal is available at
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Anti-fraud
culture
strategies
229
Journal of Financial Crime
Vol. 16 No. 3, 2009
pp. 229-244
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790910971784
most prominent was weaknesses in the preventative strategies pursued to develop an
anti-fraud culture, which are a very important aspect of preventing fraud (Levi, 1987).
This paper will analyse this gap in more depth based upon both the quantitative data
from the HM Treasury and the authors’ survey, as well as some of the qualitative data
from the latter primarily focussing on the two most significant strategies of staff
awareness training and screening procedures.
Before this analysis is undertaken, however, it is necessary to first explore what a
model counter fraud strategy is and in particular what is considered as best practice in
creating an anti-fraud culture. The paper will then move on to analyse the HM
Treasury data on counter fraud strategies, before then examining the methodology for
the survey. The paper will then explore some of the findings from it, relating to the
strategies in central government bodies to create an anti-fraud culture, before
concluding with recommendations for reforms and further research.
Model counter fraud strategy
Before the gaps in counter fraud strategies are considered,it is first necessary to set out
what themodel strategies are and particularlythose for creatingan anti-fraud culture.It is
possible to do this because there are a number of model counter fraud strategies and
organisationsthat stand out for best practice. There have been a number of publications
produced in recentyears setting out best practicein tackling fraud for public bodies.The
three mostsignificant are the HM Treasury’s(2003) Managing the Risk of Fraud:A Guide
for Managers,the joint HM Treasuryand National Audit Office – HM Treasuryand NAO
(2004) and NAO (2003) Good Practice in Tackling External Fraud and the CIPFA (2006)
“Managing the risk offraud actions to counter fraud and corruption”.
The National Health Service Counter Fraud and Security Management Service
(NHSCFSMS) is also considered a very successful counter fraud agency. It was
established in 1998 charged with tackling fraud and corruption in the NHS. It has
developed a holistic strategy based upon changing the culture towards fraud,
preventing it as well as investigating, prosecuting, and seeking financial redress.
Central to its role has been to focus on the proactive preventative strategy. Its success
is illustrated by statistics showing a saving from fraud of £811 million to the NHS,
which amounted to a 12-1 return on the investment in the NHSCFSMS (2007a, b). Its
strategic approach is based upon seven key parts:
(1) the creation of an anti-fraud culture;
(2) maximum deterrence of fraud;
(3) successful prevention where it cannot be deterred;
(4) prompt detection when fraud cannot be prevented;
(5) professional investigation of detected fraud;
(6) effective sanctions; and
(7) measures to seek redress in respect of monies defrauded.
A wide range of initiatives have been identified to develop the most effective counter
fraud strategy, from fraud awareness presentations at induction to the pursuit of
parallel sanctions against fraudsters. There is not the space to deal with them all here,
rather what will be considered are examples of some of the tools that are advocated to
prevent fraud through creating an anti-fraud culture.
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