Appendix A:
BFI methodology

In this appendix we summarise the methodology used during the BFI inspection of Stoke.

Section 139A(1) of the Social Security Administration Act 1992 (as amended by the Social Security Administration (Fraud) Act 1997) sets out the legislative framework for BFI, namely:

…to report… on the administration by authorities of housing benefit and council tax benefit and, in particular, their performance in the prevention and detection of fraud relating to those benefits.

In order to undertake this work, BFI analyses processes to identify best practices as well as areas where the inspected body could work more effectively and efficiently. The 2 main areas considered during an inspection are:

• benefit administration
• counter fraud.

The inspection process is divided into 3 stages:

• set-up
• inspection
• reporting.

Set-up

We met with Stoke officials to outline proposals for the inspection. Presentations were given by BFI on the inspection process and by Stoke on its organisation of HB and CTB administration and counter fraud work. Provisional dates were agreed for the:

• on-site inspection
• presentation of emerging findings
• drafting and clearance of the report.

Inspection

The inspection process began with an analysis of the data provided by Stoke and that collected centrally by DSS. A pen picture emerged, identifying perceived strengths and weaknesses of the LA in both benefit administration and counter fraud work. This pen picture enabled us to identify where to concentrate efforts, in terms of interviewing, data analysis and sampling, during the on-site phase of the inspection.

The inspection covered 8 areas which are essential to administer benefits effectively and securely. The areas fall under the 2 headings of:

• benefit administration
• counter fraud.

In addition the inspection looked at the interface between Stoke and both the BA and ES.

Benefit administration

Claim initiation

Claim initiation is the planned programme of activities which includes:

• claim form design
• handling of enquiries from claimants and potential claimants
• receipt and timely handling of new claims
• gathering sufficient information to correctly determine entitlement to benefits.

In order to promote and receive legitimate new benefit claims, a well administered LA would have:

• a clearly communicated policy to maximise the take-up of benefit
• a well designed and effective claim form
• help available for claimants, in particular for completing claim forms and dealing with queries by both interview and telephone
• a process to respond to customer complaints and to deal with enquiries from MPs and members
• a tightly controlled process for receiving claims and entitlement notices from third parties
• a process to monitor the cost-effectiveness of the service it delivers.

Assessment and determination

This area includes:

• claim form processing
• quality of verification obtained before determination
• management of workflow
• control of backlogs
• level of accuracy
• right of appeal
• monitoring performance.

To assess and determine claims to benefit, a well administered LA would have:

• clearly documented processes to ensure sufficient evidence is gathered to verify a claim
• management processes to monitor the speed of throughput and to ensure that claims are cleared within target
• management processes to monitor the quality and accuracy of decisions to inform how and where the LA may identify, learn from and remedy weaknesses
• processes to ensure claimants’ right to review and appeal are recognised, communicated and properly managed when exercised
• a clear training strategy to ensure staff are equipped to deliver a timely quality service.

Payment and accounting

These processes should:

• deliver automatic or manual payment correctly
• be able to identify incorrect payments
• maximise overpayment recovery.

To pay and account for benefit, a well-administered LA would have:

• systems to pay benefit promptly and correctly
• processes to identify and classify overpayments
• processes to recognise and learn from trends
• processes to recover benefit overpaid
• secure arrangements to receive and dispatch post and valuables
• processes to ensure the reconciliation of payments issued and cashed.

Change and repeat claims

This area covers the receipt and processing of changes of circumstances reported directly by the claimant or via BA.

To manage changes of circumstances and renewal claims, a well administered LA would have:

• clear notification to benefit recipients of their obligation to report changes in circumstances
• arrangements for receiving and processing changes of circumstances notified directly by the public or via BA
• processes for monitoring the speed of throughput and for treating as a priority changes which will result in cessation of benefit
• a clearly communicated policy on repeat claims
• arrangements to investigate the non-return of repeat claim forms.

Counter fraud

Deterrence

Deterrence covers activities designed to deter potential claimants from submitting a fraudulent claim to benefit.

An LA intending to deter claimants from making fraudulent applications would have:

• a clearly communicated policy on prosecutions
• effective arrangements to identify and recover fraudulent overpayments in a timely manner
• a benefit fraud hotline
• a publicity programme to deter the potential fraudster
• clear guidance to staff on what to refer and what to do if they suspect internal fraud
• a means of identifying high-risk groups so that it can develop and implement a programme of visits to these claimants to reinforce its other deterrence related work.

Prevention

Prevention is minimising the opportunity for someone to commit internal or external fraud.

An LA that intends to maximise efforts in preventing fraud would carry out activities such as:

• increasing fraud awareness amongst front-line staff
• extending the programme of pre-award visits to cover rent rebate claimants and developing a joint programme of visits with the BA
• expanding the work of IA to provide assurance on the effectiveness of controls to prevent internal and external fraud
• implementing effective recruitment and vetting arrangements to ensure the integrity of new staff within Benefit sections.

Detection

Detection covers the LA’s arrangements for detecting benefit related fraud, including processes in place to identify claims suspected to be fraudulent.

An LA seeking to maximise the number of suspect claims it detects would have:

• issued clear referral criteria to staff on which claims to refer to Designated Fraud Officers (DFOs) for investigation
• arrangements in place to provide feedback to front-line staff on the outcome of referrals
• effective arrangements in place to exploit existing data in the detection of suspect benefit claims
• adopted a programme of data matching using externally available information, to assist in the detection of potentially fraudulent benefit claims
• a close working relationship with BA to share information leading to the detection of potentially fraudulent benefit claims
• management information on WBS available to assess performance against threshold.

Investigation

Investigation is the working methods an LA uses to establish whether there is fraud or irregularity in the cases referred for investigation by the DFOs.

An LA trying to maximise the effectiveness of its fraud investigations would have:

• effective policies and procedures for prioritising which referrals should be dealt with first
• robust case management systems enabling management to monitor the workload of case officers to a successful conclusion
• effective arrangements to maximise value for money from the use of investigative resources
• clear and consistent working methods and standards for investigating and documenting the results of investigations
• effective liaison arrangements with BA’s BFIS
• a regular training programme, so that fraud investigators maintain their ability to undertake investigations to the highest standards.

Inspection methodology

The main elements of the inspection methodology were:

• a walkthrough of the life of a benefit claim, given by Stoke staff
• interviewing staff from Stoke, BA, ES and the ROS
• seeking expert advice
• observing Stoke’s working practices
• inspecting individual benefit claims and claims for WBS and cross-checking information in these claims across BA and ES
• analysing referrals to the Visits and Investigation team
• examining documents relating to reviews, overpayments and missing instruments of payment (IOPs).

Reporting

We presented emerging findings to Stoke’s senior management during the course of the inspection.

We gave a formal presentation of emerging findings to the Chief Executive and senior officials on 17 December 1998.

We drafted the inspection report around the areas outlined above and findings from fieldwork, to draw conclusions and recommendations in each of the 8 areas of benefit administration and counter fraud activity.