Fraud is a deliberate and illegal act which results in funds or assets being diverted from their intended purpose. The Cabinet Office estimates that for every £100 of UK public spending, between 50p and £5 is lost to fraud and error. However, most government departments report less than 5p in every £100 as detected fraud – and most of this is recovered, with less than 1p in every £100 lost to fraud after recovery.
This rapid review assesses the extent to which the UK government takes a robust approach to tackling fraud in its aid expenditure. It explores how the five biggest aid-spending departments tackle fraud in their aid delivery chains, and how they decide on how to balance and manage fraud risk within portfolios, programmes and projects.
The review addresses external fraud involving individuals or organisations outside UK government departments, or involving both internal and external parties (such as fraud relating to outsourcing), and not internal fraud by UK government employees. Our aim was to assess the effectiveness of fraud risk management across aid-spending government departments; we did not seek to identify or investigate specific instances of fraud or to test fraud risk management beyond aid. We also excluded central funding to multilateral organisations, but ICAI is planning a supplementary review looking at fraud prevention measures within multilateral contributions.
As a rapid review, it is not scored, but it makes four recommendations to the government.