PUBLIC sector chiefs have been warned Northern Ireland is facing the `perfect storm' for fraudsters, with circumstances "ideal" for those planning to rob the taxpayer.
The Northern Ireland Audit Office has warned that with three pence in every pound estimated to be stolen within the public sector, £600 million could potentially be lost to fraud every year.
"This is money that cannot be spent on front line services," it has warned public bodies.
"At a time of austerity, fraud is a key risk and it is essential that losses to fraud are minimised as far as possible.
"It is also widely recognised that in times of financial constraint, people are more likely to commit fraud."
The key factors which generally coincide when fraud occurs are Pressure, Opportunity and Rationalisation, commonly known as the Fraud Triangle - a concept developed in the 1950s by criminologist Dr Donald Cressey following a study of 200 convicted fraudsters and their motivation for committing the crime.
"Many writers refer to the `perfect storm' when the three elements leading to fraud coincide," auditors said.
"The unprecedented changes across the NI public sector provide ideal conditions for this `perfect storm' and underline the need for awareness of an increased fraud risk in a dynamic environment, and a clear strategy for dealing with the increased risk."
Changes identified include:
* From 1 April 2015, the number of local councils reduced from 26 to 11 under local government reform.
* From 1 April 2015, a single Education Authority replaced the five education and library boards and the Staff Commission for such boards.
* During 2016, the number of Northern Ireland government departments is planned to reduce from 12 to 9, with significant reallocation of responsibilities - described as the most extensive reorganisation of departments since 1999, with changes being made within a "pressing time-scale".
* Continuing budgetary pressures bring significant staff reductions across the public sector through the voluntary exit scheme, described by the finance minister as of a scope and speed "unprecedented in the history of the NI civil service".
Auditors warn than as new public sector organisations are created, or formed through a process of merger, a number of key
fraud risks may emerge.
They say this can be as a result of new roles and responsibilities being "unclear or inadequately defined", `governance arrangements' becoming ineffective during the transitional periods and affected by staff reductions.
Meanwhile, staff losses "on a significant scale" may mean that key skills are lost and supervisory checks may be overlooked.
Auditors have published a new guide, which it described as a "high-level aide-memoire for new and merged organisations dealing with fraud risk in a changing environment".
It also contains detailed self-assessment check-list to help organisations measure how well they are preventing, detecting and
responding to fraud.
