The public and not-for-profit sectors continue to face an unprecedented challenge in response to the Covid-19 pandemic. As well as looking after their employees, local residents, local businesses, patients, the supply chain, and service users, they have, like people and organisations all over the country, had to adapt at speed to new ways of working.
Since the start of the crisis, we have listened to our clients and supported them in navigating the sudden shift in priorities. A key challenge being to identify what the immediate and future risk priorities are, to be mindful of them, and identify the capacity to manage those risks and, where possible, also exploit the opportunities arising to the organisation’s benefit.
New risks and opportunities
As we look towards the easing of lockdown, over the course of the next few weeks we will take stock of the risks and opportunities for public services arising from Covid-19, including:
- New ways of working
- Cyber threats
- Fraud risk
- Financial support schemes
Can/should Covid-19 become a catalyst for change to new ways of working?
Organisations are putting in place short-term measures to support decision making at the board and managerial level. These need to be effective to demonstrate good decision making. Within the confines of any legislative matters, they also present an opportunity to revisit and restructure your approach going forwards.
Many clients have used the crisis to initiate overdue business transformation programmes. Public services and their users are adapting and re-evaluating the way they work, both with their colleagues and with service users. The quick transition to remote working has become a catalyst for change: the opportunity to improve systems and process design to accelerate transformation programmes.
Increasing focus on Cyber threats for already stretched IT infrastructures
We are seeing an increased number of cyber-attacks aiming to exploit fear around the pandemic, on top of a stretched IT infrastructure for staff and customers.
Business continuity and increased IT resilience means organisations are seriously looking at their digital transformation strategies. This brings with it an increased level of cyber threat and increased level of vulnerabilities that public service organisations need to address.
Covid-19 is providing fertile ground for fraud
The combination of financial and health threats is making people more vulnerable and creating opportunities for fraudsters.
Government guidance issued in March 2020 explained the increased threat of fraud in emergency situations. The National Audit Office issued guidance for audit and risk committee members, highlighting increased risks of fraud and error from Covid-19, including: procurement, contractors, payments/grants/loans, and cyber security.
Therefore, now is the time to ensure you have the most appropriate processes, controls and technology in place to ensure your business is not affected.
Insights: current issues for local authorities
Business rate relief and grants
On 7 July, the Government published information showing £12.33billion had been allocated to local authorities under the Small Business Grants Fund (SBGF) scheme and Retail, Hospitality and Leisure Business Grants Fund (RHLGF). This showed £10.65billion having been distributed across 867,667 grant payments by 6 July.
This was a huge task, carried out at pace, to allocate funds in support of local economies. Local authorities are accountable for the distribution of these monies and therefore, should be able to demonstrate that the process was well managed, which would include an effective risk analysis and post-implementation assurance to assess the risk of any grant or payments made that should be clawed back.
Local authorities: commercial property investment
Over the past few years, local authorities have sought out new income streams to support expenditure, with many venturing into the property investment market: some in the context of economic regeneration, some in the context of income generation. Analysis by The Guardian indicates that “more than 30 local authorities receive at least a quarter of their annual income from commercial investments” and this July, the Public Accounts Committee has expressed concerns over commercial property investments.
Our local government insight report “Pushing Boundaries, Securing Futures” highlighted several challenges that now need a sharper focus since Covid-19. As the economic impact of Covid-19 further materialises, we believe this is an area that will gather further attention on:
- the short-term impact of a reliable income stream;
- the longer-term viability of investments, particularly those that had low-risk premiums built into the return on investment decisions;
- the effectiveness of systems of governance and internal control; and
- the robustness of financial strategies and financial management.
To discuss these challenges and opportunities further, please get in touch with your Mazars contact, or please do not hesitate to click the button below:
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1 Source: https://www.gov.uk/government/publications/fraud-control-in-emergency-management-covid-19-uk-government-guide
2 Source: https://www.nao.org.uk/report/guidance-for-audit-and-risk-committees-on-financial-reporting-and-management-during-covid-19/
3 Source: https://www.gov.uk/government/publications/coronavirus-grant-funding-local-authority-payments-to-small-and-medium-businesses
4 Source: https://www.theguardian.com/world/2020/jul/13/monday-briefing-councils-lose-millions-in-covid-19-crunch
5 Source: https://publications.parliament.uk/pa/cm5801/cmselect/cmpubacc/312/31202.htm
6 Source: https://www.mazars.co.uk/Home/Industries/Public-Services/Local-Authority-Insights/Pushing-Boundaries-Securing-Futures