Auditors accused ministers today of leaving "glaring holes" in fraud controls on controversial welfare-to-work firm A4e.
The National Audit Office (NAO) said vital evidence was missed in risk assessments of the company, which holds government contracts worth more than £70 million a year.
The Department for Work and Pensions (DWP) was blamed for failing to request internal audit reports, including a paper highlighting nine cases of potential fraud and seven of improper practice by employees at A4e.
The NAO published its findings today after the government announced that the company's Mandatory Work Activity contract in the south-east was being axed. The contract with A4e terminated just one day before this report was published after the government decided that continuing would be "too great a risk"
Employment Minister Chris Grayling still in denial, believes a review by the DWP had not uncovered any fraud.
Respect For the Unemployed & Benefit Claimants finds the government contemptuous !
We're not surprised by the response, right up to the last minute the government we're in denial regarding corporate fraud at A4e. If a benefit claimant had been accused of fraud, they would have been prosecuted - guilty or not.
The Department for Work and Pensions knew fraud was a problem but 'turned a blind eye' at the obvious sources of evidence.
They ignored internal audit reports which point to the real risk of systematic fraud and bad practice in A4E. The department forgot key controls and left the new deal programme open to abuse.
Respect for the Unemployed & Benefit Claimants believes fraud is built within the foundations of the 'Work Programme'.
Welfare-to-work firm A4e knew of widespread fraud and systemic failures by management to control it !
Auditors found staff claiming for putting people into jobs which did not exist, jobs which did not qualify for payment and fabricating paperwork.
Police are investigating irregularities at the company, which was paid £200m a year by the government for so-called training, the unemployed and getting them into long-term jobs.
As part of its work, A4e received millions of pounds worth of government contracts for welfare-to-work schemes. The official unemployment statistics published today in the UK also revealed that there are almost six unemployed people for every job vacancy in our economy. The number of vacancies fell by 7,000 to 457,000 in the three months to April - also down 12,000 on a year earlier.
A4e fiddling claims, the unemployment statistics are deceptive - ask the question: Who's fiddling the benefits system ?