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Auditors army on scent of fraud

The LSC is creating a crack squad to protect college funds. Ian Nash reports.

AN army of investigators trained to root out fraud in colleges is being created by the Learning and Skills Council.

The decision to step up investigations comes after "alleged fraud and other irregularities" among colleges and other providers running into millions of pounds was uncovered.

Every local LSC will have a special investigator in place after Easter to probe allegations which, according to the council, focus mainly on excessive claims for funds and falsification of student recruitment numbers. A campaign to raise awareness in colleges of the pitfalls will also be launched.

A special investigation unit - set up by the LSC when it took over from the Further Education Funding Council - is looking into 33 cases, with new allegations coming in at the rate of four a month.

The special unit, which has been working for seven months, went public on the extent of its investigations for the first time this week.

Around half of the alleged frauds investigated by the LSC have been reported by whistleblowers, four in 10 have come from outside parties, and one in six has been uncovered by the council.

Geoff Snell, head of the unit, said: "Several million pounds is at risk in the 33 cases we are investigating at the moment, although it is impossible to give any firm figure at this stage.

"Where we suspect criminal activity, we refer cases to the police or the Serious Fraud Office, depending on size, costs and complexity. Where the council can retrieve funds paid to a provider, we will endeavour to do so."

Three cases, including two inherited from the FEFC, have been referred - one to the police, two to the Serious Fraud Office. The council says it is currently attempting to recoup pound;500,000 as a result of earlier inquiries.

Half the cases being handled involve funding over-claims, a quarter involve the falsifying of student records, and one in 10 involves breaches of funding regulations. Other allegations include breach of corporate governance.

By the end of the month all 47 local LSC offices in England will have a trained investigator in place. In addition, the council will work with colleges and training providers to raise awareness.

Cases may begin as simple mistakes but escalate as people try to cover them up, said Mr Snell. A series of seminars will be run to alert managers to the dangers.

Mr Snell said: "It is extremely important that we work closely with colleges and other providers so that they are aware of the issues, are able to spot potential breaches and act quickly to nip them in the bud.

"It is in everyone's interest that we clamp down on fraud and irregularities."

Seven out of 10 investigations underway involve colleges and the rest are other training providers. None involves individual learning accounts, a council spokesman stressed.

Mr Snell said: "We aim to run the awareness seminars later this year and we are confident that they will be supported by the sector and will, in the long term, result in a reduction in the number of cases we are called in to investigate."

Allegations of fraud and other irregularities are co-ordinated and monitored centrally by the special unit in Coventry, but more detailed work on the ground will be done by local councils.

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