GOVERNMENT FRAUD & TAX COMPLIANCE

According to the Association of Certified Fraud Examiners (ACFE), 84% of occupational fraud cases in government involve asset misappropriation, 51% involve corruption, and 7% involve financial statement fraud.

By allowing fraud to continue, governments are inadvertently bankrolling the very same criminal organisations that their law enforcement agencies are trying to dismantle. Recent trends indicate a growing proportion of larger scale, much more complex frauds perpetrated by international criminal networks.

With annual losses in the billions or tens of billions, governments cannot afford to let the current situation continue, particularly as they must now work together to rebuild the global economy post-pandemic.

Annual Fraud Indicator estimate that procurement errors, waste and abuse can cost central government up to 4.7% of procurement spend.

Governments spend billions each year, especially in areas such as payroll, defence, transport, and public infrastructure. With thousands of employees and suppliers to manage and millions of payments to process, it is easy for fraudulent invoices and other irregularities to slip through the system unchallenged.

The post COVID-19 efficiency drive has only increased the pressure to prevent losses in the public sector. To protect public funds and safeguard taxpayers’ money, this challenge must be addressed.

While the DWP continue to work hard to keep fraud and error under control they estimate that £8,4 billion was reported in overpayments and £2.5 billion in underpayments for the FYE 2021. 

The Office for Budget Responsibility forecasts that tax receipts for 2020/21 could fall by 5.1% (£41.8 billion) due to the impact of the COVID pandemic. Therefore, tax compliance is more important than ever.

There is a thin line between legitimate tax avoidance and illegal tax evasion, which makes tax fraud a particularly complex problem. With limited investigation resources available, it’s vital to prioritise cases where the government can recoup significant amounts of tax from the most serious offenders.

While many frauds are opportunistic and committed by individuals working alone, recent trends indicate a growing proportion of larger scale, much more complex frauds perpetrated by international criminal networks. Agencies tasked with combatting serious and organised crime must work together with other government departments to detect and investigate such cases.

Fraud often originates externally, when cybercriminals hack into networks, suppliers exploit weaknesses in financial controls, or companies and citizens make fraudulent tax returns or benefit claims.

Fraud has more than just financial implications. Public trust in the value and honesty of government and public sector can be irreparably damaged if taxpayers come to believe that their money is being wasted, stolen, or misused through fraud, bribery, or corruption.

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