The amount of fraud or errors in housing benefit calculations for rates assessments in Northern Ireland has increased to £4.2 million, the audit office has said.
Poor reporting from customers and gaps in the skills of staff were blamed for the increase, according to the report.
The Land and Property Services (LPS) agency responsible for collecting rates has increased the amount of revenue recovered to more than £1 billion but faces pressure to reduce the sums owed by ratepayers.
Comptroller and auditor general Kieran Donnelly said: "I am concerned that there has been an increase in total error from £2.25 million in 2009 to £3.4 million in 2010 and that there has also been an increase in fraud from £0.5 million to £0.8 million in the same period."
The level of fraud and error is equivalent to 11% of benefit paid. This compares to an estimated rate of 3% incurred by the Housing Executive on housing benefit, which it administers.
The report said the LPS linked the increase to gaps in housing benefit skills and experience among staff, increased sample sizes from which the total estimates for fraud and error were drawn, and the fact that housing benefit for rates is not perceived as a benefit by customers who do not think that they have to report changes in the same way.
LPS has worked with the Department for Social Development to address the skills gaps, including the development of the LPS Fraud and Error Action Plan.
LPS has also undertaken initiatives to increase customer awareness such as targeted reviews, participation in the National Fraud Initiative (NFI) and a complete redesign of housing benefit literature.
Total ratepayer debt at March 31 2011 was £156 million, a reduction of £1 million on the previous year. Delays in recovery of rates debt increases the risk of a significant loss of public funds, according to the audit office. Some £15.2 million of debt was written off as irrecoverable during 2010-11 compared with £10.2 million in the previous financial year, an increase of 49%.
Mr Donnelly said: "I welcome that during a difficult economic climate the agency (LPS) has increased the amount of revenue collected to over £1 billion as this money is a critical source of funds in paying for central and local government services."