Raising fraud awareness in the MPA and MPS

Report: 12
Date: 7 December 2007
By: MPA Chief Executive and the MPS Director of Strategic Finance on behalf of the Commissioner

Summary

This joint paper by the MPA and MPS makes proposals to raise the level of fraud and corruption awareness in those responsible for conducting MPA/MPS business. The aim is to strengthen further internal control within the Authority – an issue identified by the Audit Commission in their 2006/07 Annual Governance Report to the Authority.

A. Recommendation

That members endorse the proposed direction of travel to raise the level of internal fraud awareness within the MPA and MPS, including the use of the Audit Commission’s Changing Organisational Cultures Toolkit.

B. Supporting information

1. The Audit Commission in their 2006/07 Annual Governance Report to the MPA provide a qualified conclusion relating to the use of resources in respect of the MPS putting into place adequate arrangements to maintain a sound system of control. One of the Audit Commission’s key lines of enquiry in reaching their conclusion on the internal control environment reviews the arrangements in place within the Authority (and the MPS) to manage its significant business risks in order to promote and ensure probity and propriety in the conduct of business.

2. The Audit Commission assess key lines of enquiry using criteria to judge the standards achieved by the Authority. The final judgement is reflected in a score of 1 to 4, where 1 is below minimum, 2 is adequate, 3 above and 4 is excellent. At Level 2, the Authority needs to have in place the appropriate codes of conduct and policies and to ensure compliance with them is monitored. In respect of fraud and corruption the Audit Commission, expect to see in place a counter fraud and corruption policy applying to all aspects of the Authority’s business, which has been communicated throughout the MPA and MPS. The MPA has maintained in place throughout the life of the Authority a counter fraud and corruption policy; and the Authority approved an updated version of the policy, entitled the Good Conduct and Anti-Fraud Policy, at the Full Authority meeting in July 2007.

3. At Level 3 the Audit Commission are looking for evidence that the Authority’s arrangements to prevent and detect fraud and corruption are effective. In order to form an opinion at this level they judge the Authority against criteria including: -

• Members and staff are aware of the need to make appropriate disclosures of gifts, hospitality and pecuniary interests. There is evidence that members and staff are making appropriate disclosures in the registers and that they are regularly reviewed.
• The whistle blowing policy is publicised and demonstrates the Authority’s commitment to providing support to whistleblowers.
• The Authority undertakes proactive counter fraud and corruption work, which is determined by formal risk assessment.
• The Authority can demonstrate fraud and corruption work is adequately resourced.
• Investigations into allegations of fraud and corruption are conducted in accordance with statutory requirements, e.g. Police and Criminal Evidence Act, Regulation of Investigatory Powers Act, Data Protection Act, by appropriately trained staff.
• The Authority has made effective use of the NFI application functionality to identify data matches for review. These were investigated promptly to prevent prolonged exposure.
• The Authority works with other bodies such as DWP when following-up data matches from NFI. Details of proven frauds relating to public sector employees are shared with other bodies as per the NFI Information Exchange Protocol.
• Weaknesses revealed by instances of proven fraud and corruption, including NFI data matches or data quality issues (due to capture or extraction) are reviewed to ensure that appropriate action is taken to strengthen internal control arrangements.

4. At level 4 the criteria used by the Audit Commission is looking for evidence that the Authority can demonstrate that the arrangements are embedded, widely known and understood and effectively in operation. The criteria used to judge the Authority’s achievement include: -

• The Authority can demonstrate that its members and staff exhibit high standards of personal conduct.
• The Authority can demonstrate a strong counter fraud culture across all departments. Staff have clearly acknowledged and accepted their responsibility to prevent and detect fraud and corruption.
• The risk of fraud and corruption is specifically considered in the Authority’s overall risk management process.
• Successful cases of proven fraud/corruption are routinely publicised to raise awareness.
• There are effective arrangements for receiving and acting upon fraud and corruption concerns and disclosures from members of the public.
• The Authority can demonstrate its staff, and staff within contracting organisations, have confidence in the whistle blowing arrangements and feel safe to make a disclosure.

5. The Audit Commission use the term ‘whistle blowing’ to describe arrangements for staff reporting wrongdoing by colleagues and others. The MPA/MPS use the wider and less emotive term ‘reporting wrongdoing’. In this report, the terms are interchangeable.

6. The objective of adopting this proposal is to protect as far as possible the funds and assets of the MPA from loss by theft, fraud and corruption and ensuring as much resource as possible is available for the policing of London. In doing so, the Authority should be moving strongly in the direction of Level 4. A further benefit will be the introduction of effective arrangements for reporting of financial irregularities within the MPA/MPS.

7. A number of options of how to achieve this have been considered. The Audit Commission and a number of private sector suppliers have been consulted and some excellent broadly similar products have been reviewed. However, an Audit Commission product, the Changing Organisational Culture Toolkit, has the best “fit” for this organisation being public sector based and also the most cost effective. A business case has been accepted by the MPA senior management team for this proposal.

8. The Changing Organisational Culture Toolkit comprises a pre-event web-based questionnaire completed by attendees prior to the event, attendance at a workshop given jointly by the Audit Commission/MPA/MPS and post-event web-based questionnaires. The pre-event questionnaire is intended to capture the attendees’ level of fraud awareness prior to the event and the post-event questionnaire the level after the event – the differences being measurable. Part of the service provided by the Audit Commission will be to tailor both the workshop and the questionnaires to the requirements of the MPA/MPS.

9. This is planned as a joint initiative between the MPA and MPS and in order to maintain and continue the benefits it is intended that this event will be included in the range of products in the MPS leadership programme module “Running your Business” which is run by Finance Services in consultation with HR training. The flexible style of the event enables the delivery to be matched to the needs for the event and availability of resources.

10. The target population for the event includes finance staff and those in middle/senior positions responsible for making and monitoring expenditure. The aim is to initially target the key five hundred people with a place at a workshop during 2008. The programme is capable of being expanded if the measured results from the initial series of workshops are positive and the resources are available.

11. Running alongside the workshops it is planned to re-launch guidance within the MPA and MPS within a revised Corporate Governance Framework to reinforce the messages from the workshops and refresh procedures to ensure that the Audit Commission key lines of enquiry (KLOE) as set out in paragraphs 3 and 4 above are in effective operation.

12. The MPS Directorate of Professional Standards will also have an involvement in what is proposed and this proposal will be complementary to the work of that directorate.

13. The proposed direction of travel is intended to build on the approval of the updated contract and financial regulations (including a revised good conduct and anti-fraud policy) approved by the Full Authority in July. When taken together with the range of policies and procedures in place within the MPS (such as reporting wrongdoing, gifts and hospitality etc) this should provide a robust base for the MPA and MPS to demonstrate compliance with the standards expected by the Audit Commission and sound control of MPA/MPS funds.

C. Race and equality impact

1. This event is targeted at staff in specific roles and will be available to all holding such a role. In due course, it would be desirable for all staff to attend such a workshop.

2. Otherwise, there are no implications.

D. Financial implications

1. The Audit Commission will make a charge to the Authority for tailoring the workshop and the questionnaire to MPA/MPS requirements, providing the web access for the pre and post workshop questionnaires and providing a facilitator for each workshop. The workshops will take place on MPA/MPS premises. It is estimated that the preparation for the events and an initial series of workshops can be provided for £30,000. The funding for this will be shared between the MPA and MPS:
MPA - £10,000 from an earmarked reserve
MPS - £20,000 from the Director of Strategic Finance’s consultancy budget

2. In addition, there will be the opportunity cost of attendees completing the questionnaires and attending the half-day workshops.

E. Background papers

•  MPS Notices 22 of 2007 Item 2.

F. Contact details

Report authors: Peter Tickner, MPA Director of Internal Audit, and Paul Stock, MPS Director, Strategic Finance.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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