We found that the government’s approach to managing fraud in the aid programme is broadly relevant and effective – but more can be done to find fraud cases by improving oversight and intelligence sharing across aid-spending departments, and streamlining and enhancing whistleblowing systems. We made four recommendations to the government.
Relevance: To what extent do departments have systems, processes, governance structures, resources and incentives in place to manage risks to their UK aid expenditure from fraud?
- The Cabinet Office Counter Fraud Function has strengthened counter-fraud capability but acts only in an advisory capacity and does not have an Official Development Assistance (ODA) specialism
- The main ODA-spending departments have adequate systems, processes and structures in place to manage ODA fraud risk albeit with differences and weaknesses
- Some departments’ approaches to fraud risk management in ODA are less developed than others
- All departments have a ‘zero tolerance to fraud’ but differ in their understanding of what this means in practice
- There are multiple whistleblowing and complaints mechanisms that vary in accessibility
- Outsourcing-related ODA fraud risks lack systematic scrutiny by third-line counter-fraud specialists
- Some fraud risk in contracts and contract management could be better managed
Effectiveness: How effectively do departments prevent, detect and investigate fraud at portfolio, individual programme delivery and partner levels?
- We observed measures to prevent and investigate alleged fraud to be operating as designed but detection levels are low
- Most stakeholders believe more fraud is taking place but that people are disincentivised from reporting it
- There is increased focus on risks down the delivery chain but poor intelligence sharing at the first-tier partner level
- Disincentives to look for and report fraud mean even some known frauds are not being reported
Learning: How effectively do departments capture and apply learning in the development of their systems and processes for fraud risk management in their aid programmes?
- Learning takes place through the fraud investigation process
- There is a good spirit of learning between departments, but it is mostly informal
- There are good examples of departments working with individual suppliers to address weaknesses but limited widespread learning efforts down the delivery chain
- Consideration should be given to establishing a centralised ODA counter-fraud function to ensure good practice and consistency of the ODA counter-fraud response and share intelligence across all ODA spend.
- ODA-spending departments should review and streamline external whistleblowing and complaints reporting systems and procedures, and provide more training to delivery partners down the delivery chain on how to report safely.
- Counter-fraud specialists should increase independent oversight of ODA outsourcing, including systematically reviewing failed or altered procurements, and advising on changes to strengthen the actual and perceived integrity of ODA procurement.
- To aid understanding and learning, ODA counter-fraud specialists should invest in collecting and analysing more data, including on who bears the cost of fraud, and trends in whistleblowing and procurement.
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