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Community Fund Financial Statements 2004-05 – discovery of irregular grant applications

Sir John Bourn, head of the National Audit Office, reported to Parliament today that he has qualified his audit opinion on the accounts of the Community Fund for 2004-05.

The Community Fund (now operating as the Big Lottery Fund together with the New Opportunities Fund) have reported that, in September 2004 they identified a number of grant applications which contained irregularities (for example, the improper use of false names and addresses) and which may be fraudulent. The Fund’s best estimate of the total grants now “at risk” in this respect across their activities since 1999 is £4.5 million (of which some £770,000 relates to 2004-05). Total grants paid during the same period were some £2,405 million. A further £1.6 million of potential losses have been recorded in other lottery distributors’ financial statements.

The suspected frauds were not detected earlier because the Fund’s systems did not include adequate checks to identify instances where more than one application was being received from the same applicant. Once suspicions had been raised by a member of staff, the Fund involved the police and the Charity Commission and their investigations continue. The Fund has put in place additional controls to combat the risk of fraud from those submitting multiple applications.

The full lessons to be learnt will have to wait for the police and legal processes to be completed but, in his report, Sir John makes interim recommendations for improving control for the future. Recommendations include the need for more explicit consideration to the risks of fraud that may exist within “easy access” programmes.

"The Community Fund have uncovered significant levels of grant payments made on the basis of applications which contained irregularities and which may be fraudulent. Amongst a number of actions they need to take is to give more explicit consideration to the risks of fraud that may exist within grant programmes intended to be easy to access and the extent to which controls should be put in place to combat these."

Sir John Bourn

Notes for Editors

  1. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office
    on 0845 702 3474.
  2. The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office which employs some 800 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

PN: 69/05