Corporate report

FCDO response to the Independent Commission for Aid Impact recommendations on 'Tackling Fraud in UK Aid: Country Case Studies', March 2024

Published 7 May 2024

FCDO welcomes this report and thanks ICAI for the findings it has shared and the recommendations it has made. Tackling fraud is an important issue for FCDO and the actions we commit to implementing via these responses will help FCDO to counter fraud in UK Aid.

Recommendation 1

FCDO should take a substantially more robust and proactive approach to anticipating and finding fraud in aid delivery.

Partially accept

ICAI has helpfully acknowledged the extensive good practices which the FCDO adopts around counter-fraud, and the zero-tolerance approach FCDO takes. 

These practices of finding, preventing and recovering fraud includes a due diligence process for all programme spend; investigations into allegations of fraud; careful monitoring and recovery of identified fraud and error; and ensuring training and guidance remains available to all staff and partners involved in spend. 

FCDO is committed to preventing fraud from happening in the first place and that is where it invests most of its energy; taking advice from the Public Sector Fraud Authority in drafting and enacting our Counter Fraud Action Plan; stamping out fraud and making sure that every penny of development spending is achieving value for money; and where FCDO might anticipate or find fraud in any aspect of aid delivery, FCDO will pursue recovery within the full extent of its powers.

The FCDO has also acted on ICAI’s recommendations from previous reviews. Examples of progress include:

• FCDO has updated whistleblowing procedures and reinforced the terms of our funding agreements. Our due diligence assessments of FCDO partners include ensuring that they have robust fraud policies in place, and the ability to effectively manage downstream partners

• the FCDO is also actively exploring the possibility and cost effectiveness of creating a FCDO Fraud Intelligence Unit as well as opportunities to work closer with the Government Internal Audit Agency (GIAA) on data analysis. This could add to the FCDO’s ability to detect, understand and mitigate fraud – alongside the FCDO’s existing counter fraud capabilities

• the FCDO is also undertaking an expansion of its Fraud Liaison Officers’ Network, to ensure that all Posts have counter-fraud expertise and oversight of expenditure

Fraud is a key and ongoing challenge for all governments, and the FCDO is committed to considering all avenues to strengthen its counter-fraud capabilities.

Recommendation 2

FCDO should strengthen its second line of defence in the top 20 ODA recipient countries, allocating dedicated, well-trained and sufficiently senior resources to manage fraud risks.

Partially accept

The FCDO has dedicated teams working on counter-fraud policy, fraud investigations; and rigorous fraud detection, prevention, investigation, and recovery measures, including senior resources to manage fraud risks. 

FCDO will strengthen the mandatory annual assurance assessment across all of its controls and risk areas with an enhanced focus on counter-fraud practices, informed by the Civil Service Counter Fraud Framework and other best practice.

The FCDO’s Internal Audit and Investigations Directorate will continue to provide a targeted investigative response across the whole of the FCDO network – with experienced, professionally qualified fraud investigators. 

The FCDO will expand its Fraud Liaison Officer’s network across the global network. This will help strengthen our counter-fraud capabilities in-country, including in the top 20 ODA recipient countries. It is important that FCDO targets its counter-fraud resources to where it may be needed most, not just in the highest spending countries.

FCDO ensures that all staff have access to the right guidance and training across the full range of Civil Service and FCDO L&D platforms – including our Counter-Fraud Knowledge Hub and our new Hera Learn L&D platform. All partners FCDO works with are subject to extra measures to safeguard funds should these deemed to be necessary and to ensure that partners remain accountable for all funding provided.

Recommendation 3

FCDO should develop specific guidance on capital investments within its Programme Operating Framework.

Accept

The FCDO’s Programme Operating Framework Rules are regularly reviewed and updated to ensure that all FCDO members of staff operate with effective and up-to-date guidance. 

However, fraud risks are ever evolving, and FCDO is grateful to ICAI for identifying the need for more guidance on managing fraud risks for capital investments within our Programme Operating Framework. FCDO will consider ways to achieve this, taking advice from the Public Sector Fraud Authority.

The FCDO will also consider whether and how engagement with investees on tackling fraud beyond regulatory requirements can be improved.

Recommendation 4

FCDO should increase Head of Mission oversight of and accountability for fraud risks relating to centrally managed programmes and other government department programmes that operate in their country.

Accept

Whilst fraud oversight and accountability for non-FCDO programmes are the responsibility of those departments and ultimately their Accounting Officer, not the Head of Mission, FCDO will continue efforts to strengthen and support UK aid delivery and related fraud risk management.

All Heads of Mission, and their deputies, understand their fiduciary responsibilities including around counter-fraud and ensuring that all ODA spend follows robust management oversight, fraud prevention and due diligence best practice. This is supported by a policy framework and guidance for senior budget holders on financial and fiduciary risks, including fraud risks.

Heads of Mission and their deputies are also provided with training to improve their understanding of fraud risks, and how to counter them. However, the FCDO intends to refresh and expand this support – this will include offering new training for Fraud Liaison Officers and considering what additional guidance and support can be provided to Heads of Missions in the fight against fraud.