Councils warned over fraud risk
Councils in Northern Ireland must be vigilant for an increased risk of fraud during the restructuring of local government, a senior auditor has warned.
Local Government Auditor Louise Mason raised concerns as she highlighted three significant incidents of fraud and theft in a report on the effectiveness of audit work within councils.
Mrs Mason cited almost £300,000 conned out of Belfast City Council last year by a fraudster who secured a payment that should have gone to a legitimate contractor, the theft of £20,000 by an employee of Fermanagh District Council and a racket at a recycling centre run by Craigavon Borough Council that saw employees demanding payment for free services.
In the latter two cases, council employees were sacked.
Belfast and Fermanagh councils recouped most of their losses through insurers.
The auditor said another fraud attempt was made against another local government body in May this year.
Mrs Mason said the on-going transition from the 26 to 11 council model increased the potential for fraudsters to succeed.
"It is widely accepted that the risk of fraud increases significantly during times of organisational change and the auditor points out the importance of controls being appropriate and operating effectively in light of the extensive changes associated with the reform of local government," the report stated.
Mrs Mason's report examined a range of issues arising from audit work in local government bodies. Councils in Northern Ireland spend over £800 million per annum, employ 9,700 staff and utilise assets worth more than £2 billion.
The auditor also raised concern about the impact restructuring was potentially having on absentee rates in councils.
She noted that absenteeism rates, which had been gradually decreasing in recent years, experienced an upward spike again last year, when rates increased by 15%.
They rose to an average of 11.77 days per employee, with the highest absence rate in Carrickfergus Borough Council of 17.2 days to the lowest of 6.64 days in Cookstown District Council.
The auditor also assessed whether councils had proper arrangements in place to ensure economy, efficiency and effectiveness in the use of resources.
She said she was satisfied that 24 councils had proper arrangements in place but concluded that two did not. In the case of Larne Borough Council, Mrs Mason raised concern about financial planning, financial reporting, procurement, risk and workforce management.
In the case of Carrickfergus Borough Council, her concern related to procurement, risk and workforce management but she noted the council had already taken steps to address the concerns.
In regard to the fraud committed against Belfast City Council, a council spokeswoman said it had reviewed its procedures and additional controls had been put in place.
She added that "£260,000 was recovered through an insurance claim".