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Bell Pottinger North - Client News
Friday, March 03, 2006
PUBLIC SECTOR MANAGERS UNDERESTIMATE THE "FRAUD ICEBERG"


Less than 40 per cent of public sector managers believe that the financial cost of fraud is well understood by senior management, according to a new report 'Public sector fraud - are you prepared?' from business advisors RSM Robson Rhodes.

The report does however highlight the fact that the health sector is leading the way and making positive steps to reduce fraud. For example, the Counter-Fraud and Security Management Service in the NHS estimates that it has saved the equivalent cost of building ten new hospitals since its formation. Interestingly, respondents to the survey from the health sector demonstrated a greater level of awareness and preparedness to tackle fraud when compared with managers from other parts of the public sector.

David Prior, Forensic Services Partner at RSM Robson Rhodes comments: "The report highlights an awareness gap and a certain degree of complacency. The fact is that the fraudsters are getting away with it and their fellow workers and the organisations they work for are not even aware of it happening."

Eugene Sullivan, head of public sector services at RSM Robson Rhodes, says: "Fraud can be compared to an iceberg. You may know about the tip but how big is it beneath the surface? Just because an organisation is not detecting and reporting losses through fraud - it doesn't mean it's not happening."

This awareness gap appears to be further supported by the fact that expenses fraud causes 45 per cent of respondents most concern followed by payment fraud (29 per cent), employee collusion (26 per cent) and procurement fraud (26 per cent).

David Prior comments: "This finding raised a few eyebrows - if you look past expenses fraud, the next few forms of fraud are far, far more significant in terms of the risk and the level of losses involved. Organisations must direct their anti-fraud concerns into the area of highest risk."

Based on the views of over 350 board members and managers from across the public and voluntary sector, the findings strongly suggest that there is a lack of an anti-fraud culture within most public sector organisations. All members of staff, and not just the audit specialists, need to be aware of the threat and recognise possible occurrences of fraud but the survey revealed that less than one in five agreed that staff received on-going training in this area.

David Prior concludes: "The public sector has a huge resource at its disposal to help stamp out fraud. The majority of those that work within the sector are honest and could and should be used in the fight against fraud. However, unless a strong anti-fraud culture, including training and communication is built into the sector, life will be still all too easy for the fraudsters."

Eugene Sullivan adds: "Staff can act as eyes and ears and with some training they can play a major part in helping to reduce opportunity for fraudsters to operate. The real danger is that complacency will mean that the issue is not tackled."

The survey was undertaken with the readers of Public magazine.

Ends

Press contacts: Joanne Fletcher-Wall or Alex Henshall at Bell Pottinger North (01625) 617611 - jfletcher-wall@bellpottingernorth.co.uk or ahenshall@bellpottingernorth.co.uk

Notes to editors
RSM Robson Rhodes LLP is a Limited Liability Partnership. The firm practices from nine offices in the UK and Ireland, offering a full range of services to the public and private sectors. As the UK member of the world's sixth largest accounting and consultancy organisation, it is able to call upon the skills and experience of more than 20,000 professionals in over 70 countries. RSM Robson Rhodes is registered to carry on audit work by the Institute of Chartered Accountants in England and Wales and is regulated and authorised by the Financial Services Authority for investment business.
http://www.rsmi.co.uk

 

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