The National Fraud Initiative (NFI): Northern Ireland

26 June 2012

The National Fraud Initiative: Northern Ireland

Mr Kieran Donnelly, Comptroller and Auditor General (C&AG), today issued a report on the latest outcomes from the National Fraud Initiative (NFI).

Background

In the current economic climate with unprecedented budgetary pressures on public services, it is essential that public bodies use every means at their disposal to prevent and detect fraud and error. The NFI, which is run every two years, is a highly effective tool which helps public bodies identify potentially fraudulent and duplicate transactions using sophisticated computer based data matching techniques The Serious Crime Act 2007 inserted provisions dealing with data matching exercises into the Audit and Accountability (Northern Ireland) Order 2003.. This is the second report since Northern Ireland began taking part in the NFI.

Data matching compares sets of data, such as the payroll, pensions and trade creditors’ records of a body, against other records held by the same or another body. Where a match is found, it indicates an inconsistency that may require further investigation. The NFI is administered by the Audit Commission on behalf of the main public audit authorities in England, Scotland, Wales and Northern Ireland. This allows data matching on a cross-jurisdictional basis.

Over 100 public bodies took part in this second running of the exercise in Northern Ireland, including government departments, agencies, non-departmental public bodies, councils and health sector bodies. The C&AG said “the NFI is a powerful precision tool for preventing and detecting many different types of fraud.” To date the NFI has identified fraud and error in Northern Ireland amounting to £24 million. The C&AG also paid tribute to all public bodies that participated in the NFI and praised “the significant efforts of all public servants who have been involved in the review and investigation of data matches.”

Key issues

The report identified a number of key issues:

  • between April 2010 and March 2012, housing benefit fraud and overpayments amounted to just over £5 million and a number of high-value successful prosecutions were secured. Some of these are included as case examples in the report;
  • for the same period, over £13 million of rates evasion and error were identified in domestic rates.  Almost 500 cases of rates evasion were identified in the second round of data matching alone;
  • suspected fraud, error and overpayment in relation to pension payments amounted to over £2 million;
  • the matching of blue badge holder records to death records resulted in over 7,000 matches;
  • there were over 15,000 matches between concessionary travel pass holder records and death records.  More than 14,000 of these passes had been cancelled by 31 March 2012;
  • £387,000 was overpaid to suppliers; and
  • around 70 per cent of fraud and error identified by the NFI in Northern Ireland is being recovered.

Getting more out of NFI

This second NFI exercise in Northern Ireland yet again provides strong evidence of the benefits of data matching for the prevention and detection of fraud and error. For most of the participating bodies, this has been their second experience of NFI and they have a better understanding of how NFI works and the benefits it can bring. There are still ways in which the impact of NFI can be improved:

a number of bodies still need to embed NFI into their core business practices and counter fraud strategies;
bodies should prioritise matches for investigation on the basis of a robust risk analysis, so that investigation resources are used to best effect; and
bodies should publicise successful prosecutions, both internally and externally, as a deterrent to other potential fraudsters.

Developing NFI further

The Northern Ireland Audit Office will continue to seek ways of developing NFI further by:

  • extending the scope of the NFI to include other bodies;
  • working with any public or private sector bodies who are keen to use data matching to tackle fraud and error; and

working with the Audit Commission as it seeks to extend the use of NFI, for example into real time data matching Real time data matching aims to prevent fraud by matching key data sets at the time of application, for example, when housing benefit is first claimed..L

NOTES FOR EDITORS

The Comptroller and Auditor General (C&AG) is Head of the Northern Ireland Audit Office (the Audit Office). He, and the NIAO, are totally independent of Government. He certifies the accounts of Government Departments and a range of other public sector bodies. He has statutory authority to report to the Assembly on the economy, efficiency and effectiveness with which departments and public bodies use their resources. These reports are published as Assembly papers. Additionally, in 2008, the C&AG obtained statutory powers to conduct data matching exercises and to report publicly on his data matching activities.  Upon receiving his new powers, the C&AG made arrangements to participate in the Audit Commission’s National Fraud Initiative 2008-09 exercise.  The Audit Commission processed the data using a secure web based system.