[ad_1]
Accountability and transparency are essential for public sector audits. The public sector is under a watchful eye to ensure finances are being managed ethically and appropriately, whilst also being responsible for providing early warnings of financial pressures or failures. Due to COVID measures, there is currently a huge volume of funds being distributed to individuals or companies from the public ‘purse’, placing increased pressure on audits to ensure the funds are being used for their intended purpose.
Using AI, public sector organisations can both identify and rectify potential issues before they become a problem, saving valuable money in the process and ensuring these precious public funds are being administered and used effectively.
Introducing technology
The latest warnings from the National Crime Agency suggested that coronavirus-related fraud could end up costing the taxpayer £4bn as a result of criminals seeking to capitalise on the COVID crisis. Fraudulent activities are ranging from an increase in company registrations to benefit from the Bounce Back loan, to misuse of the job retention (furlough) scheme; but how can government departments not only identify fraud and error, but also recoup the lost funds?
There was a need for these schemes to be deployed extremely quickly, and the government succeeded in that. But the speed at which the funds became available also created numerous opportunities for both systematic error and fraud. The peak of the financial crisis might be behind us, but businesses and individuals are still in need of ongoing financial support, so it is now essential for the public sector to learn valuable lessons to target fraudulent activity and minimise the potential loss of public funds in the future.
Government now has an opportunity to strengthen internal controls and make sure the use of public funds is appropriate and technology has a key role to play here in detecting and preventing future fraud and error.
AI in audit
In order to remove the current levels of fraudulent activity and gain valuable insight into the primary areas to address, the public sector must use an intelligent, data-led approach. By using Artificial Intelligence (AI) within public sector IT systems, errors can be detected, fraud or mismanagement of funds can be spotted and the entire process can be streamlined to prevent further problems.
Great work is currently being undertaken by HMRC, which has used its extensive experience in identifying and tackling tax fraud to address the misuse of the furlough scheme. If public money is to be safeguarded in the future, it is likely that a central government initiative will be required; other public sector bodies, especially smaller local authorities, are less likely to have the resources or skills in place to undertake the analysis required.
The use of data resources is key here as the government holds a vast amount of data; although, it is possible that the delivery speed of COVID-19 financial and funding responses will have created gaps in data collection which will need a rapid resolution. The priority must be to identify these gaps in existing data and simultaneously use Machine Learning (ML) to reveal anomalies that could be as a result of either systematic error or fraud.
Additionally, this insight from ML can also provide public sector bodies with a chance to move towards the use of predictive analytics to improve control and move away from a retrospective review. By developing an understanding of the key indicators of fraud, the application process can automatically raise an alert when a claim looks unusual, minimising the risk of such claims being processed and therefore drastically reducing the risk of fraud.
Invaluable insight
It might seem daunting for many public sector bodies, but it is essential to take these steps quickly. Even at a time of crisis, good processes are important – failing to learn from the mistakes of the past few months will simply compound the problem and lead to greater misuse of public funds. The public sector, businesses, and individuals need to learn how to operate in this environment, and that requires the right people to spend time looking at the data, identifying problems and putting new controls in place. With an AI-led approach, these individuals will learn lessons about what worked and what didn’t work in this unprecedented release of public funds. And they will gain invaluable insight into the identification of fraud – something that will provide on-going benefit for all public sector bodies.
(Photo by Allef Vinicius on Unsplash)
[ad_2]
Source link