Grant misspending pinpointed as top fraud risk

9 Nov 17

Accountants from across the globe consider grant misspending to be the top public sector fraud risk, according to research co-released by CIPFA today.

Nearly half (48%) of 150 private and public accountancy partners across 37 countries surveyed said grant fraud posed a ‘high or very high risk’, in a report prepared in conjunction with accountancy firm Moore Stephens.

Money laundering (at 42%) was considered the next biggest fraud risk followed by payroll fraud (41%), with cyber crime seventh on the list (38%).

“It may seem surprising to find government grants eclipsing more ‘fashionable’ areas like cyber-crime when it comes to fraud risk," explained John Baker, director at Moore Stephens.

“That said, it may be the case that areas such as cyber and bribery (40%) have been addressed more recently due to the high profiles, leaving more traditional areas unattended.”

Individuals, businesses or charities commit grant fraud when they receive money they are not eligible for or spend monies on activities that were not included in the conditions of the grant.

Grant funding can include EU or UN funding.

“Fraud is always evolving and, with the rise in the number of high profile cyber fraud cases, is getting more sophisticated,” Peter Wilson, director of counter fraud at CIPFA, warned.

“But it is important we do not overlook the more traditional types of fraud, such as grant fraud, which can sometimes be the most prevalent.”

The Global Fraud Risk Register helps indicate where public sector fraud teams should be focusing their efforts, he added.

In the UK specifically, grant fraud and payroll fraud were found to be the top two risks, with 44% and 41% of respondents rating it as ‘high or very high risk’ respectively.

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