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Forensic Audits For Private Security Firms – 12 August 2013

Member: Nifa

News that private security company G4S has this week withdrawn its bid for a £150m electronic tagging contract with the Government will come as little surprise, as the firm has been accused of overcharging on a previous contract by tens of millions of pounds.  Justice Minister Chris Grayling decided to instigate a forensic audit of the organisation last month after G4S refused to co-operate with a voluntary forensic audit of its billing practices.

However, the results from a previous forensic investigation implied that the firm had been charging for tagging offenders who were either safely in jail, abroad or were actually dead.  The Justice Minister welcomed the news of G4S’s withdrawal, saying that he had made it clear that he wanted them to and was angry that they had refused to do so at the time.

Mr Grayling also said last month that he had launched a disciplinary investigation into the way the contracts had been managed inside the Ministry of Justice after uncovering evidence that officials knew in 2008 there were problems with billing.  A forensic audit is the application of accounting methods to the tracking and collection of forensic evidence, usually for the investigation and prosecution of criminal acts, such as embezzlement, fraud or false accounting.

In this case, the Serious Fraud Office’s investigation, prompted by a prior forensic audit by one of the big four accountancy firms, will collect evidence of billing by the firm, which is alleged to have charged for 18,000 offenders a day, when only 15,000 were actually being monitored. The new team of accountants will go through the audit process scrutinising records to at least 2005, and possibly even as far back as 1999.  Meanwhile, rival security firm, Serco, has agreed to fully co-operate with a forensic audit to establish whether any dishonesty took place on its part and has agreed to call in the authorities if the forensic accountants turn up anything untoward.

Author: Roger Isaacs, 12 August 2013

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