5 steps to detect and prevent fraud in the public sector

Where there is money, there is the potential for misappropriation or misuse – intentional or otherwise. Nowhere is this more apparent than in governments where funds are held accountable to a cynical taxpaying public. As such, it’s no surprise that millions of pounds can be siphoned away from worthy programs due to problems with process, lack of transparency or outright fraud.

The National Fraud Authority (NFA) recently identified that around £25 billion of taxpayers’ money is wasted every year through fraud and error in the public sector. With figures like these, it is easy to see that the UK government faces enormous challenges in attempting to prevent improper payments caused by fraud and error. But are such misuses of government funds controllable at lower levels, or avoidable altogether?

The answer is yes – with the right tools. A significant portion of government-funded fraud and error can not only be identified and more effectively recovered; it can be prevented – simply by gaining deeper insights into existing records of program activities and financial data.

However, these insights cannot be achieved without the right plan and tools in place. To effectively manage the risks associated with fraud and improper payments, there are five steps that government departments should take to ensure the taxpayer funds are making their way into the right pockets.

Step 1: Gain a cohesive, agency-wide view of program activity
The most pressing challenge that government organizations face is that data systems containing information relevant to fraud and error cannot share information with one another. This lack of cohesion is causing errors or fraudulent actions to slip through the cracks.

By integrating technologies that support program, recipient and financial data, government agencies can break down internal data silos to bring vital information into a single, unified frame.

Step 2: Apply analytics that detect potentially fraudulent activity
Government departments have as much (in some cases more) data as any organization in the country. However, most have no way to sift through all of this data to detect indicators of fraud. With the right analytical techniques, an agency can identify fraudulent claims before they are paid, and prioritize for investigation those payments that appear to be improper.

By deploying advanced analytics and analytical techniques to deliver insights applicable to a number of issues, agencies can rapidly detect existing and emerging fraud schemes and patterns before they cause serious problems.

Step 3: Translate insights into actionable intelligence
Now that data silos have been erased and analytics are in place to detect indicators, it’s time to turn that access into action. With a business intelligence component built on an integrated enterprise intelligence platform, government employees have access to the insights they need to perform their functions more effectively – without having to become statisticians themselves.

A business analytics platform will deliver those key insights to the right people, at the right time and in the right form to support an effective early warning system.

Step 4: Achieve greater financial transparency
It goes without saying the British public wants wasteful spending to stop. Who can blame them? Lack of financial transparency leaves the government vulnerable to activities that divert funds from worthy recipients and initiatives.

With a financial management solution in place, government departments can establish consistency across the financial spectrum, enhancing the reporting and control environment of the organisation. This allows them to gain a clearer picture of exactly how funds flow through the organisation. Where it is possible, it also illustrates where weaknesses or process gaps exist, and who might be affected.

Early intervention, made possible by an increased ability to see how funds are being moved, ultimately will reduce the risk of funds being misappropriated.

Step 5: Improve performance while monitoring fraud
Government organizations should not only be concerned with detecting and deterring fraud – they should also be focused on ensuring their processes are effective and meeting their objectives. The right decision at the ground level may not always be the best way forward from a senior management perspective, which is why it is so important to make sure every decision is an informed decision.

Informed decisions require coordinated intelligence from every level of the organization. By deploying a multi-level solution that can assess performance from the front lines to the executive leaders, agencies can monitor key performance metrics that previously went uncaptured. These key performance metrics can then be used to create an environment that proactively monitors activities and threats, helping to curtail fraud and identify improper payments before they happen.

Changing needs call for changing strategies
It is important to remember that every government department has a unique culture and business process. For an anti-fraud strategy to be successful both today and tomorrow, it must be flexible enough to adapt to a variety of internal businesses processes and the ever-changing ways in which fraudsters try to exploit those processes.

By combining business and financial intelligence with performance management, government departments can tie together all of the essential areas of fraud and organizational management and achieve one cohesive strategy. And with this cohesive strategy, the Government will be armed with the necessary means and tools to ensure that the taxpayer’s hard-earned pounds aren’t making their way into the wrong hands.