16 February 2011
The voluntary and private sectors are trailing behind the public sector in attempting to tackle fraud, prompting questions over their ability to take on greater public funds as part of the Big Society.
A report published today shows 93% of public sector organisations have a counter-fraud strategy in place. By contrast less than half (46%) of voluntary bodies and only 75% of private companies do.
Some 376 organisations from across the public, private and voluntary sectors were surveyed for the study, by PKF accountants and the University of Portsmouth’s Centre for Counter Fraud Studies.
Public sector organisations were rated best for fraud resilience in eight areas, which included ensuring staff had the correct training and adopting a zero tolerance approach to fraud. The private sector came top in four areas and voluntary bodies in none.
Fraud is estimated to cost the UK economy £38bn a year, with £21bn lost by the public sector alone.
Writing on the PublicFinance blog Jim Gee, report author and director of counter fraud studies at PKF, says that while some parts of the public sector were ‘far from perfect’, many voluntary and private sector organisations were ‘quite simply, poorly protected against fraud’.
Gee warns that the government’s drive to transfer services from the public sector to private and voluntary sector as part of the Big Society was likely to increase instances of fraud.
‘The evidence is clear, unless private companies and voluntary sector organisations make some rapid improvements, this will mean a bigger role for entities that are less well protected against fraud, and bigger fraud losses will inevitably follow,’ he writes.
The report, The resilience to fraud of UK PLC, shows the public sector leads the way on fraud detection as well as prevention strategy. Four out of five (81%) of public bodies have a formal detection policy in place, compared to just 58% of private companies and 45% of voluntary organisations.
