Fraud failings “could cost £1bn a year”

Silly season stuff?

Times Higher carries a story suggesting universities’ counter-fraud failings could cost £1bn a year:

Higher education is the worst at protecting against fraud of all publicly funded sectors, with the annual cost potentially exceeding £1 billion, a new report suggests.

The study, by the University of Portsmouth and accountancy firm PKF, found that the sector performed less well than NHS bodies, local councils and central government.

According to the report, The Resilience to Fraud of the UK Higher Education Sector, which surveyed the strategies of 28 institutions, less than 10 per cent of universities accurately estimate the costs of fraud.

It also says that in more than 60 per cent of institutions, specialist counter-fraud staff do not receive professional training, while less than half of universities put those applying for sensitive posts through full “propriety” checks.

Jim Gee, director of counter-fraud services at PKF, said: “This needs to be addressed as a top priority because loss estimates are important in developing a proportionate, properly resourced counter-fraud strategy.”

Really? This doesn’t stand up to much scrutiny. £1 billion is about 5% of total spend on HE in the UK and it is just absurd to suggest this much public money is at risk. The analysis is based on a questionnaire to which around 20% of HEIs responded. The scoring system and identified failings also seem to be based on a somewhat extreme view of the risks and mitigations required to prevent fraud in universities. And the accountancy firm who are co-partners in the report look like they have more than a passing interest in the provision of counter-fraud services and training (which is where it is suggested our biggest weaknesses lie).

Fraud is a serious business and universities do need to protect themselves. But this kind of report really doesn’t help.

1 thought on “Fraud failings “could cost £1bn a year”

  1. Well, fraud at London Met amounted to much more than 5% of total expenditure, and fraud in student loans is hardly a minor matter either. Perhaps I am over-influenced by my personal experience, but I find the broad thrust of the report (which doesn’t include the £1 billion figure) quite believable.

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