Scottish councils face a wake-up call following the discovery of a £1.1 million fraud at Aberdeen City Council.
Over 17 years, an employee siphoned 655 council tax refund payments into their own bank account, exploiting weak internal controls.
The fraud, which occurred between 2006 and 2023, remained undetected until another staff member raised suspicions in September 2023.
Senior colleagues acted quickly, and the council anticipates recovering the full amount with no loss to the taxpayers affected.
However, the Accounts Commission has criticised the council for failing to adhere to its own financial controls, allowing the fraud to continue for nearly two decades.
Despite having procedures in place, the lack of scrutiny and enforcement created an environment where fraudulent activity could flourish unchecked.
In response, the council has implemented immediate measures and identified further improvement actions to strengthen its systems.
Yet, a year after the fraudster was charged, the Accounts Commission is urging the council to accelerate its progress in addressing outstanding vulnerabilities.
The Commission’s latest report stresses the responsibility of officers and councillors across Scotland to safeguard public funds.
This involves not only establishing robust financial systems but also ensuring these are routinely tested, monitored, and improved upon based on audit recommendations.
Deputy Chair of the Accounts Commission, Andrew Burns, warned that this case serves as a stark reminder of the risks posed by complacency.
“This is a cautionary tale,” Burns said.
“All councils in Scotland need to learn from this prolonged and significant fraud.
“It isn’t enough to have controls to counter fraud; checks need to be followed, weaknesses identified, and routine testing of systems carried out.”
Burns also praised the staff member whose vigilance brought the fraud to light, highlighting the importance of robust whistleblowing policies.
“The member of staff who identified and spoke out must be praised,” he added.
“It shows the value and importance of whistleblowing policies and procedures.
“These are critical to ensure staff across the public sector have the confidence to quickly escalate concerns if they suspect fraud.”
This case underscores the urgent need for councils to prioritise fraud prevention and implement effective safeguards to protect public money.
