DfE publishes indicators for potential fraud in education providers

Working “unusual” hours and claims in excess of actual expenses have been listed as indicators for training providers that staff may be committing fraud in new government guidance.

The document from the Department for Education, published today, also warns that signs that employees are potentially committing fraud include aggressive responses to questions and “too much forgetfulness”.

The list is split into several areas: personal motives for fraud; organisational motives for fraud; weaknesses in internal controls; transactional indicators; possible methods used to commit and/or conceal fraud; record keeping/banking/other.

Personal motives include where staff believe they get inadequate rewards, have an expensive lifestyle, or personal problems such as gambling or an alcohol addiction.

The guidance also warns another indicator among organisations are where they are dominated by one person, have a for-profit component or face pressure to use or lose funds to sustain future funding levels.

The FE sector has been subject to potential fraud in recent times: Aspire Achieve Advance (also known as 3aaa) was referred to Action Fraud by the Department for Education in October following an investigation into alleged success rate “overclaims” at the provider.

3aaa received over £31 million in government funding in 2017 and had the largest allocation for non-levy apprenticeships – standing at nearly £22 million.

Three senior staff at Team Wearside were jailed in March for defrauding Sunderland College and training provider Springboard of a total of £460,000 through the use of false data on registered learners.

Four people were found guilty on fraud charges after it was found provider Luis Michael Training used the personal information of real people to claim apprenticeship funding, without their knowledge.

Additionally, over 3,000 learners, all aged 16 to 19 and were either vulnerable or not in education, employment or training, were enrolled on coaching courses, but were instead made to hand out match-day programmes and sweep floors at Premier League football clubs.

In its first review of apprenticeships in 2016, the National Audit Office warned the government’s apprenticeship reforms could lead to “market abuse” in the FE industry, of the sort which took place under the Individual Learning Accounts system, which was scrapped in 2001 after abuse by unscrupulous providers led to a reported £67 million fraud.

To see the list, click here.