Crown Prosecution Service: internal fraud controls
Preventing and detecting fraud are key to ensuring proper use of public funds, retaining reputational value and reducing loss.
In February 2017, the Cabinet Office launched its Counter Fraud Framework and its Functional Standards came into force in April. The Crown Prosecution Service (CPS), like other departments that have a budget over £100m, has to align and report against these Standards. Our report takes account of the CPS’s current position with regard to the Standards.
In line with the Standards, the CPS has already made good headway with clear roles and responsibilities at both strategic and operation levels. It has delegated responsibilities for reducing and detecting fraud to the Accounting Officer and others and has implemented a number of policies to address the issue.
HMCPSI identified good practice and systems in place. The CPS has a zero tolerance policy on fraud and there is a strategic level commitment to minimising it. There is a review of controls and assurance at the highest level to identify key risks.
The risk of fraud was assessed by the CPS to be low, due to established management practices and continuous testing of procedures. Overall the Areas had a good standard of checks, although often the emphasis was on checking for errors and reviewing quality and value for money. The majority of checks used random sampling, which inspectors judged to be a strength.
But there is further work required, in particular:
- ensuring a system to identify activity and action taken to provide assurance and report against the Standards
- raising awareness on the importance of detecting and reporting suspicious activity
- ensuring training on fraud across the organisation meets minimum requirements.
Inspectors noted that although the national policy was easily accessible on the CPS intranet, many staff were unclear where to find the relevant policy. At the time of our inspection (August/September 2017) the fraud policy had not been updated since 2010.
When staff were asked about the whistleblowing policy results were disappointing, with 35.4% of non-lawyers and 34.4% of lawyers not knowing where to find it. Centrally held information indicates there have been only three cases of whistleblowing, two in 2005 and one in 2012, and inspectors were particularly troubled that nine people surveyed said they would not report suspicious behaviour if they came across it.
Inspectors recommended that the CPS should ensure fraud awareness forms part of induction training for all staff and managers and should further ensure its training meets the requirements of the Cabinet Office Standards. In particular, there should be a comprehensive induction programme for all Area Finance Managers, including what to check and how to identify potentially fraudulent or suspicious behaviour.
An overwhelming number (83.1%) of staff said they were unaware of lessons learned from an incident of fraud. In consequence, it was suggested that the CPS should ensure a mechanism is in place and utilised for sharing good practice.
Inspectors reviewed performance against an inspection framework by interviewing stakeholders and key staff in Areas and Headquarters; conducting surveys; and reviewing audits, online policies, guidance documents and other material provided by the CPS covering risk, assurance and checking mechanisms.
In general terms, fraud is the deliberate use of deception or dishonesty to disadvantage or cause loss to another person or organisation. Criminal fraud is dealt with under the Fraud Act 2006, which includes the following offences: fraud by false representation; by failing to disclose information; and by abuse of position.
A number of reviews and surveys have already been carried out to determine the scale of fraud in the public sector. These have found that reporting of fraud is generally low and the quality of fraud data is variable, resulting in an inability to ascertain the full scale of the problem.