Audit Wales criticises councils that only review handful of National Fraud Initiative matches they receive

Although most Welsh participants in the National Fraud Initiative (NFI) display a strong commitment to counter fraud and to investigating NFI matches, some local authorities reviewed very few of the matches they received, and as a consequence did not do sufficient work to address potential frauds, Audit Wales has said.

NFI is a biennial exercise which matches data within and across organisations, systems, and national borders to help public bodies identify potential fraud or error in claims and transactions.

In a report issued last week, Audit Wales said the 2020-21 NFI exercise helped Welsh public bodies identify £6.5m of fraud and overpayments.

The NFI in Wales also helped organisations in other parts of the UK identify 153 cases of fraud and error amounting to £183,045.

The value of Welsh outcomes in NFI 2020-21 reduced by £1.5m from the previous NFI exercise.

This decrease was because the number of fraudulent or erroneous claims for Council Tax Single Persons Discount and Housing benefit identified through NFI fell, Audit Wales said. “The reduction in outcomes in these areas was partly offset by an increase in the detection of ineligible applications for social housing and claims for COVID-19 business support grants.”

Audit Wales said: “While overall outcomes have fallen, this is partly due to a timing issue. Many NFI participants started review of NFI matches later than normal due to work pressures arising from the COVID-19 pandemic. Late savings arising from the 2020-21 NFI exercise will therefore be reported as part of the NFI 2022-23 exercise.”

Seven main areas generated almost 98% of the outcomes. These areas were; housing benefit, creditor payments, council tax discount, blue badges, COVID-19 business support grants, council tax reduction scheme and waiting lists.

Adrian Crompton, Auditor General, said: “Identifying £6.5m in this latest NFI exercise is an important contribution to public service funding across Wales. It is more important than ever that organisations have sound governance and controls in place to help protect vital services from the risk of fraud.

“The success of the NFI depends on the proactivity and effectiveness of participant bodies in investigating the data matches, and it is disappointing that some Welsh bodies did not adequately engage in NFI 2020-21.

“However, I recognise that the public bodies faced considerable pressures due to the COVID-19 pandemic. We recommend that all bodies use our checklist to self-appraise their involvement in the NFI before and during the 2022-23 NFI exercise.”