Petty cash fraud at Highland Council highlights staff failing to follow procedures

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Highland Council social work managers will undergo online training around regulations in petty cash handling after a member of staff allegedly falsified documentation and stole around £250.

Members of the audit and scrutiny committee yesterday heard that the staff member had now left, with the case in the hands of the Crown Office.

A report by internal auditors found the minimum value of alleged fraudulent transactions was £256.45, and highlighted instances where the council’s financial regulations had been breached.

The auditors said transactions totalling £2,331 were not supported by receipts or financial assistance forms and could not therefore be assured that they were legitimate.

They said checks were not carried out at an early stage which would have minimised the fraud, nor were there adequate controls in the petty cash account in terms of recording, substantiating or scrutinising transactions.

They added that three other investigations are ongoing, but as they are subject to internal disciplinary investigations no further information is available.

Councillor Angela Maclean said: “Sometimes when people see petty cash they think it’s not important. It’s vital that we complete receipts and everything is recorded correctly.”

Councillor Derek Louden said: “Sometimes we concentrate on the really big things at the expense of little things, but getting the system right is equally important.”

Councillor Peter Saggers said he wanted assurance that the systems in place were being followed.

Meanwhile councillors were updated with progress on a bank mandate fraud perpetrated on the council.

Fraudsters managed to ‘hack’ the email account of one of the council’s suppliers using malware.

They managed to divert a payment of £4,000 before the fraud was discovered.

Audit and risk manager Donna Sutherland told councillors that the council had discussed improvements and controls with the police and was reviewing its arrangements to detect fraud and provide good guidance for staff.