The furlough scheme recently introduced by the Government, and now extended to the end of June 2020, allows employers to claim for a government grant of 80 per cent of an employee’s wage up to a maximum of £2,500 per calendar month. Find out more on the scheme here.
Some concerns have been raised by the HMRC given the high profile and large sums of amounts involved. There is certainly a high risk of fraud and abuse of the scheme. Such acts of abuse or misuse may lead to actions being taken by HMRC including criminal prosecution.
Current remote working arrangements combined with staff absences due to sickness and self isolation alongside the new arrangements and operations that will be required to manage the furlough scheme, could well mean controls and procedures may fall short in detecting and preventing fraud, intentional or unintentional abuse or other elements of non-compliance with the furlough scheme.
More generally any organisation applying for the furlough scheme needs be striving for, and gaining, continuous assurance over its’ detective and preventative controls to address the furlough scheme risks.
Organisations need to be asking themselves how they can achieve this in such a challenging and remote environment. Steps could include:
|①||A data ‘assurance’/’audit’ review of systems and underlying data|
Using assurance procedures and data analytics, organisations should be able to continuously assess compliance with the published scheme conditions and rule sets by leveraging underlying systems’ data. This could include using analytics to:
- consider the activities of furloughed employees by reviewing system access logs and application transactions logs;
- check to ensure people who have been claimed for have not been recalled from furlough before the three week minimum. and
- discover, profile and assess the quality of the data required for the furlough scheme.
|②||Policies, procedures and controls review of the approach taken to furlough staff|
Reviewing how the organisation has planned and delivered its furlough arrangements, with key areas of consideration being:
- the transparency and timeliness of documentation / communications provided to staff being furloughed and the quality of record keeping in respect of the start and end dates of furlough, the furlough period applied and the return to work notice period;
- payroll and HR processes, controls and authorisations introduced to manage furlough pay amounts and changes to payroll;
- the processes put in place to regularly monitor and respond to social media, to limit any potential reputational damage;
- checks on governance procedures, for example the existence of documented and supportable board decisions on use of the furlough scheme; and
- checks to ensure that appropriate whistleblowing arrangements have been put in place.
|③||Perform ongoing periodical reviews (e.g. daily, weekly or monthly) of the underlying data|
Report discrepancies identified from system transaction data through applying pre-determined furlough risk scenarios.
These are confusing times and which are changing almost daily. To find out more information on the tools and processes RSM have developed specifically to deal with the current policies introduced by the Government, please contact