Supplier Overpayments – Fraud and Error – Just the ‘Tip of the Iceberg’

Fraud and error in the public sector is a complex issue which the Government is trying to tackle; Andrew Cushion, Managing Director of Twice2Much discusses

Twice2much recently presented at the 2019 Counter Fraud Conference on Supplier Spend Health Checks (Supplier Spend reviews) and it was clear that there are considerable efforts underway in Government to tackle the ongoing and ever more complex problem of Fraud and Error in the Public Sector.

The Cabinet Office has recently published the Cross-Government Fraud Landscape Annual Report 2018 which discusses the scale of the challenge. (see extract from report below)

Government introduced the concept of the Fraud and error loss ‘Iceberg’ to depict the scale of loss in Central Government.

The Iceberg breaks the challenge down to 3 main parts:

  1. ‘Detected’ Fraud and Error

  • Considered ‘the tip of the ICEBERG’
  • Represents what has been specifically identified
  • In 2016-17 this amounted to £191m, with only a small fraction relating to procurement activity

 

  1. ‘Estimated’ Fraud and Error

  • Considered ‘sitting below the waterline’
  • Reflects what Government knows exists because of estimates, but has not been fully detected
  • In 2016-17 this amounted to £521m.

 

  1. ‘Unknown’ Fraud and Error

  • Considered ‘deep below the waterline’
  • For unknown loss the Cabinet Office, alongside the Oversight Board use their professional judgement to assess the potential range of loss across all government spend that does not have an estimate.
  • The Oversight Board has estimated the upper and lower range for likely losses in unmeasured areas of government spend at between 0.5% and 5% of expenditure, representing a potential staggering £19.6bn.

Twice2much met with attendees from many Government Departments, Councils, Trusts and other Public Sector bodies at the 2019 Counter Fraud Conference and were able to share experiences to date in exploring ways to identify errors being made resulting in overpayments to Suppliers.

There was clearly a willingness to challenge ways of working in order to try and find more and look at harnessing technology and resources to help.

To date, most efforts have centered around the NFI reports run on a 2 year cycle.

However, the recently released NFI Report for 2016-2018 periods showing ONLY £3.5m in detected Trade Creditor Errors can only reflect the size of the Challenge.

Considering the tens of Billions of pounds spent by the Public Sector with Trade Creditors annually, if the Fraud and Error ‘iceberg’ concept was applied, with the ‘known’ element being £3.5m what is the potential value of the ‘Unknown’.

Twice2much conducts Accounts Payable (Spend Recovery) reviews for the Private Sector as well identifying and recovering in excess of £100m on behalf of Clients.

Is the Public Sector that much more efficient in it’s payments to Suppliers or is it time to find the best way to explore what lies beneath?

At the conference, we discussed ways in which Twice2much could work ‘in partnership’ with Public Sector organisations (‘Fraud’, Audit’, and ‘Finance’ departments), to utilise our experience, technology and resources to complement the work that they are doing to tackle this challenge.

We believe it is partnerships such as these that will provide the most effective platform for Organisations to further enhance their own internal resources to provide the most efficient solution to the challenge of identifying the ‘unknown’ in both the short and medium term.

Twice2much would welcome those that were unable to attend to contact us to explore these opportunities further to discover what lies beneath…

 

Andrew Cushion

Managing Director, Twice2much

+44 (0) 344 225 2090

andrew.cushion@twice2much.com 

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