attractorconsulting.com

A payroll administrator working for government departments was recently sentenced to two years in prison after defrauding the taxpayer of over £137k. The fraud had commenced in July 2005 with the Department of Health, on the payroll of the Mental Health Review Tribunals and continued until March 2008 after payroll had transferred to the Ministry of Justice, with the administrator keeping his job.

Based on the amount of money taken over the period, and the fact that expense payments would have been tax free the crooked scheme was providing the fraudster with the equivalent of income of around £74k per year.

The fraud involved a range of techniques including the creation of false receipts, payment to bank accounts the administrator had set up using false documents, alterations to the computer records for genuine recipients’ bank details and claims attributed to an employee who had died several years earlier.

The case was handled by the NHS Counter Fraud Service – which covers all kinds of fraud against the Department of Health and NHS.

In the video post at the Journal of Accountancy website, Joseph T Wells, a certified fraud examiner, has a clear and simple message

“People who beleive they will be caught commiting fraud are less likely to do it”

He highlights the key actions which organisations can take to deter and prevent fraud -

• clear communication to all employees about what constitutes fraud
• mechanisms for people to seek advice about possibly unethical practices
• access to a reporting hotline which allows anonymous reporting of concerns
• common sense internal controls (e.g. physical safeguards, separation of duties)
• an increased perception of detection through management and audit activity
• including regular fraud risk assessments

Louise Tomkins, a senior manager in the NHS, working at Hammersmith Hospital and then Ealing Hospital, siphoned off more than £200,000 from hospital budgets she controlled.

The fraud, lasting over a period of a year, was discovered by a successor at Imperial College Hospitals when irregularities with invoices for “medical photography services” became apparent.

The full facts were uncovered by the joint investigation involving the the NHS Counter-fraud Service and the Metropolitan Police.

In an unsophisticated fraud, which depended on being in a position of trust, invoices were altered to make them appear genuine and authorised for payment.

The money was actually being channelled to Tomkins’ business breeding competition horses, where it funded upkeep, supplies and transport operations.

Tomkins was suspended in September 2008 and dismissed for gross misconduct last in 2009 and has now sold 14 horses to repay money to the NHS. She will now serve a jail sentence of 2 years and 9 months.

Photo: Anonymous, Flickr

In the UK, new powers available to the Information Commissioner’s Office (ICO) should provide cause for organisations to take data security more seriously.

From 6th April 2010, the ICO can audit organisations without their consent, and may impose penalties of up to £500,000 for major security breaches.

A recent study revealed the UK had one of the lowest costs related to data losses of the 5 countries studied. The average cost per compromised record was -

• $204 in the United States
• $177 in Germany
• $98 in France, Australia, and the UK

The ICO receives around 30 reports of data loss each month. Public sector bodies are reporting the majority of incidents with the NHS responsible for one third of all reports. Read the rest of this entry →

Photo:Security, Anonymous, Flickr

In their Global Economic Survey 2009,  Price Waterhouse Coopers found fraud as one of the most problematic issues facing companies

Organisations commonly reported management attention being focused on business survival in the current recession.

PwC concluded this lack of focus, while understandable, could further increase fraud risk with cutbacks in resources being exploited by fraudsters.

Respondents to the PwC survey reported lower levels of resources were available for internal controls with limited investments meant internal audit doing more work with less staff. Read the rest of this entry →

"Security", Anonymous, Flickr

2009 saw an increase in white-collar fraud according to accountancy firm BDO. They report the steepest increase in seven years ago, much of this related to fraudulent borrowing.

Key findings in the report for 2009 compared to 2008 were -

• average value of fraud over £5m
• most fraudsters were aged 20-39
• management fraud up 48%
• losses to larger fraud up 76%
• financial sector fraud up 70%
• 90% of large frauds unreported
• most fraud took place in London and the South East

BDO anticipated further increases for a couple of years after businesses start to come out of the recession and organisations clamp down on costs. Read the rest of this entry →

It may be credible to suggest public sector organisations are carrying out unnecessary activities. We yearn for the past, when common-sense applied, government was smaller, law simpler and we spent less time suing each other.

When things go wrong however, people (corralled by politicians and the media) clamour for tighter controls. These demands create pressure for scapegoats and better standards. Heads roll, controls are introduced …. and new monitoring work commences.

We want to have our cake and eat it!

In an increasingly risk-averse society, this struggle between “common sense” and control impacts operations in the workplace too. Many corporate teams exist to facilitate business effectiveness and create effective frameworks for risk management. This applies to human resources and payroll, finance, health and safety, information governance and information technology functions. Read the rest of this entry →

A London teaching hospital had received a critical audit report which identified problems with payment outcomes. The level of overpayments was considered unacceptable and major changes to data management and payment control within the organisation had been recommended. Attractor was asked by the Deputy Director of Human Resources to -

• provide an independent review of business structures
• consider working arrangements and processes
• identifyoptions for delivering the required changes
• highlight key issues for change implementation

Read the rest of this entry →