£1 million council fraud ‘sends a warning across local government’

the fraud was identified by the council in September 2023. Paterson was charged by Police Scotland in December that year and dismissed by the council. He received a four-year prison sentence at the High Court in Edinburgh in July 2024.

The council said it expects to be able to recover the lost funds, with no loss to the taxpayers whose accounts were affected.

However, in a new report published on Thursday, the Accounts Commission said it is concerned that whilst the council had a system of controls in place, “these were not adhered to and lacked scrutiny”.

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“This enabled the perpetrator’s actions to go unnoticed for nearly two decades”, the public spending watchdog noted.

“The council acted quickly to identify improvement actions and take immediate steps. But with a year since the perpetrator was charged, the council needs to increase momentum to complete improvement actions that remain outstanding”.

More widely, the Account Commission’s report said that officers and councillors across all of Scotland’s councils have a duty to safeguard public money and protect against fraud.

“At the heart of this is having and implementing effective systems and checks to monitor, manage and review financial systems”, the report noted.

“They must also act on recommendations from internal and external auditors to address identified weaknesses and risks in key processes.”

Andrew Burns, Deputy Chair of the Accounts Commission, said: “This is a cautionary tale. 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. This case shows the risks when internal controls aren’t followed.

“The member of staff who identified and spoke out must be praised. 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.”