Scottish councils overpaid staff by £812,000 amid fraud fears

Fears over “recurring weaknesses” in financial controls at Scotland’s councils have been raised after recent years saw a £1.1 million fraud, cash “diverted” from school funds and staff overpaid to the tune of £812,000.

Town Halls are dealing with annual fraud of £11.9 million but face growing “strain” in their system of internal checks, a report for the Accounts Commission today warns.

Shortcomings in information processing, reviews, and the separation of council employees’ duties to prevent fraud are among the issues raised in the report entitled Safeguarding public money: are you getting it right?

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Town Halls are dealing with annual fraud of millions but face growing strain in their system of internal checks

It warns that “significant amounts of public money” stand to be lost with councils spending a combined £12.4 billion in 2017/18.

“Recurring weaknesses are becoming apparent with certain types of controls,” the report warns.

One council made over 800 salary overpayments totalling £812,000 over a three period from April 2015 to February 2018, the report reveals. This included may ex-staff who continued to be paid after leaving the council - with the highest of £15,500.

Just £351,000 has so far been overpaid, with £21,000 written off.

Cosla president Alison Evison

A £1.1 million fraud spanning five years was also uncovered when one council worker was found to have been submitting fake invoices and suppliers’ details. The employee was jailed for over five years.

Another council employee was able to fraudulently divert £6,000 of school fund income, the report adds, because of a lack of check on accounts and bank balances.

Graham Sharp, Chair of the Accounts Commission, said: “Robust management and scrutiny of the finances at Scotland’s councils is more important now than ever before.

“There are many examples that the systems for managing finances in Scotland’s councils are working effectively. However, councillors are ultimately responsible for scrutinising a council’s use of public money, and they should seek assurances from council officers that rigorous systems and processes are in place to safeguard finances.”

Alison Evison, president of local council body COSLA said councils are facing increasing demands and reducing resources.

She said: “Scotland’s councillors appreciate their role and duty in safeguarding public money and take it seriously.

“Our colleagues at the Improvement Service support councils with this through the Continuous Professional Development Framework for Elected Members and bespoke support to develop councillors’ scrutiny skills.

“COSLA and our colleagues in the Improvement Service will continue to support our member Councils look at ways to strengthen our joint work in this vital area even further.”