CIPFA Better Governance Forum

Fraud Risk Evaluation Diagnostic 1 (FRED1)

Download FRED1 Risk Management Tool

1 Why use FRED1?

1.1 Taking a risk based approach to counter fraud work is important on many levels and helps ensure that the arrangements are bespoke for the organisation being served. A risk based approach demonstrates why the work is required and by doing so demonstrates its importance. This is a significant factor when demonstrating value for money and fitness for purpose.

1.2 This assessment tool can be used to assist counter fraud professionals to evaluate the counter fraud arrangements in place at their organisation; a candid assessment of arrangements will enable strengths and weaknesses to be identified. Consider weaknesses as possible risks and ensure action is taken to manage these risks. By managing identified weaknesses, the organisation will be able to demonstrate its robust counter fraud arrangements across the counter fraud actions. Furthermore, use the information to formulate fraud awareness initiatives, take preventative action and undertake proactive detection work. This work will assist effective work planning by addressing risk areas.

1.3 This document outlines how to carry out a risk assessment on the arrangements in place (macro level) rather than provide a detailed assessment of fraud related risk in a particular area, process or department (micro level).

2 When to use FRED1

Consider the following opportunities this tool presents and times when it might be used:

(i) In January to:
a) identify areas of risk for immediate action prior to the year end/SIC/AGS/Annual Report/External Audit Assessment; and
b) inform the work plan for the next year and ensure it is tailored to meet the identified risks of each individual organisation.'

(ii) Half way through the year – to review progress to date and forward plan for the remaining months.

(iii) Regularly throughout the year – to ensure evidence is logged in preparation for a)

3 Development of FRED1 & the quality assurance process

3.1 The framework for the risk assessment tool has been taken from the CIPFA Better Governance Forum Managing the Risk of Fraud Red Book 2. This latest version expands upon the first CIPFA Red Book by providing further definitions, explanations and examples of the action needed for organisations to be effective in tackling fraud and corruption.

3.2 This risk tool was originally developed by the NHS Counter Fraud and Security Management Service in consultation with a working group of Local Counter Fraud Specialists, was successfully piloted, is being operated nationally and has been finalised by the CIPFA Better Governance Forum Fraud Advisory Panel.

Download FRED1 Risk Management Tool

Acknowledgements

NHS Counter Fraud and Security Management Services, particularly Paul Tiffen, Alex Mair, Bree McWilliam,
Alan Bryce, Audit Commission
Rachael Tiffen, National Fraud Authority
Greg Marks, CIPFA

Version 7