Government Functional Standard 013 for counter fraud

14 September 2023

Risk-based approach

The Counter Fraud Functional Standard was introduced in October 2018 and is applicable to all government departments and their associated arm’s length bodies. Organisations will be taking different approaches and be at varying stages of implementing and embedding these requirements.

Fraud is now the most reported crime in the UK, representing more than 40% of offences reported to police. This year, the government has set out an agenda focusing on fighting fraud, with the progression of the Economic Crime and Corporate Transparency Bill and a National Fraud Strategy; the goal being to reduce fraud by 10% on 2019 levels, by December 2024.

With the increased threat of fraud across all organisations, exacerbated by the increased cost of living, it’s imperative that anti-fraud controls are robust enough to prevent and identify fraud. Where fraud is detected, having swift and efficient mechanisms in place to investigate concerns appropriately is essential in mitigating losses and holding perpetrators accountable.

Risk-based approach

The Counter Fraud Functional Standard consists of mandatory elements and recommended best practices to guide organisations in their approach. But how do we practically create a roadmap to achieve best practices? The solution lies in a risk-based approach. Before developing a strong counter fraud framework, it’s essential to understand the existing risks within your organisation. Government organisations in particular face resource limitations, making it crucial to focus efforts on areas of the highest risk. To start the journey towards best practice, it’s vital to map out your core business areas, processes, and associated fraud risks. This can be achieved through the use of a fraud and bribery risk assessment process. The resulting product is a fraud and bribery risk register, where risks can be actively managed in line with your risk management policy. This enables you to target counter fraud activities towards the areas with the highest scores.

Addressing incidents appropriately

It’s crucial that a thorough exploration is performed to identify the presence of any obstacles that may hinder the reporting of incidents, as well as to assess the adequacy of internal resources for effectively addressing such challenges. Educating and empowering both staff and third parties to recognise issues and encourage them to voice their concerns is imperative. This proactive approach fosters a favourable counter-fraud culture that firmly rejects any form of fraudulent activity. In support of this culture, expeditious handling of investigations in the most suitable manner becomes paramount, as it minimises sustained financial losses and safeguards your organisation's reputation.

Requirements

The Government Functional Standard, GovS 013: Counter Fraud seeks to promote a consistent approach across organisations to manage and mitigate fraud, bribery and corruption risks. This standard governs the comprehensive planning, efficient delivery and effective management of measures aimed at combating fraud, bribery and corruption within government departments and their associated arm’s length bodies.

The table below flags key points to consider when addressing GovS 013 standards and also covers some of the gaps we often see when assisting our clients.

	Done well	Gaps identified
Responsibilities Are directors, the accountable officer and the chief financial officer (or equivalent) aware of the risk of fraud and their responsibilities?	General roles and responsibilities understood.	Limited awareness of fraud risks so unable to discharge their responsibilities.
Awareness and training Does the organisation engender an anti-fraud culture throughout the organisation, for example: a clear statement of commitment to ethical behaviour; counter-fraud champion; focus on prevention; recruitment; disciplinary procedures; screening; training; and induction? Is there an effective programme of education and training to raise awareness of fraud, bribery and corruption risks to the organisation? Is this evaluated periodically?	Many promote an anti-fraud culture through endorsement of a clear statement of commitment to countering fraud and bribery.	Limited programmes of long-term training and awareness beyond fraud and bribery matters. Limited investment in fraud risk identification and heightening of fraud related risks beyond legislation refresher training.
Counter fraud policies and procedures Is there a regularly reviewed counter fraud policy, strategy, fraud risk assessment process and a fraud response plan? Is an appropriate, and regularly reviewed counter fraud, bribery and corruption policy and strategy in place? Is this supported by other policies and training programmes covering conflicts of interest and gifts and hospitality?	Tailored fraud and bribery policies are in place.	Many fail to adopt a counter fraud strategy and rely on the anti-fraud and anti-bribery policies to illustrate compliance. Limited training programme to support areas wider than fraud and bribery awareness ie conflicts of interest training.
Proactive testing and reporting Is there an annual work programme / action plan to mitigate the risks posed by proactive testing and review? Is there reporting on outcome-based metrics from these activities?	Internal audit or internal assurance programmes of review will be directed to some areas of known fraud related risks.	The annual work programmes are often lacking in detail and do not reflect the risk environment. Fraud and bribery risk assessments are often not undertaken to identify risk areas to proactively test.
Investigations Are there trained investigators in place meeting the public sector skill standard as a minimum?	Investigations are reported appropriately.	Investigations are often lacking due to limited internal capacity and skill, therefore there is a reliance on law enforcement agencies. The success rate of investigations resulting in sanctions and redress are limited.

How can RSM help?

RSM UK has a large national team of counter fraud specialists to provide support in helping achieve compliance with the Counter Fraud Functional Standard. We can help you across a number of challenges, whether that be undertaking elements of counter fraud work as an outsourced provider, bespoke to your organisation but aligned with the standard; upskilling your own teams; or providing that critical friend perspective to identify areas of improvement. Our team are also experienced in the swift and successful investigation of fraud or bribery concerns to a criminal standard.

Reach out to us to explore more about how we can help with: