Image caption A4e is a contractor for the government's welfare-to-work schemes

An investigation into an allegation of attempted fraud against welfare to work company A4e has been launched by the Department for Work and Pensions.

It said it had been made aware of an allegation of attempted fraud in relation to a contract with the firm.

Police are already investigating claims of irregularities at the company.

The company, which had launched an internal audit, said it took any allegations of fraudulent or illegal activity extremely seriously.

As part of its work, the Sheffield-based company handles millions of pounds worth of government contracts for welfare-to-work schemes.

The new allegation is in relation to a work experience scheme called Mandatory Work Activity, launched by the current government in May 2010.

'Co-operate fully'

The DWP said it had "immediately commenced" an independent audit of its commercial relationships with A4e following the allegation.

"We have required A4e to make available all documentation which our auditors may require and provide full access to interview any A4e employees. This is separate from the independent review of internal controls which A4e has previously announced," a statement said.

A4e's history A4e, which stands for Action for Employment, was established in Sheffield in 1991.

It was set up to provide redundant steelworkers with the training they required to get jobs in other industries.

The company then steadily expanded across the UK, before entering Germany in 2009, Poland in 2008, and Australia in 2010.

"We have made it absolutely clear to A4e that we take this matter very seriously, and that if, at any point during the audit or thereafter, we find evidence of systemic fraud in DWP's contracts with A4e, we will not hesitate to immediately terminate our commercial relationship."

In a statement, A4e said: "We obviously acknowledge the concerns raised by DWP, and we welcome and will co-operate fully with their planned investigations.

"A4e has more than 3,500 staff and operates out of 200 offices in the UK. From December 2005 to date, nine cases relating to A4e have been referred to the Department of Work and Pensions to review claims submissions.

"Of these nine referrals, one, dating back to May 2008, resulted in the prosecution of an individual member of A4e staff, which was widely reported at the time.

"Another is the case now being handled by Thames Valley Police. In each of the remaining, closed cases, the DWP's view was that these were not incidences of malpractice."

Independent audit

A4e added that the firm's board had legal firm White & Case to lead a review of its controls and procedures.

Last month four ex-members of staff of A4e were arrested on suspicion of fraud at the company dating back to 2010.

As part of its work, A4e handles millions of pounds worth of government contracts for welfare-to-work schemes.

More than 24,000 people have been through the Mandatory Work Activity programme, which involves a four-week placement including maintenance work on houses, renovating furniture or supporting charities, since its launch.

The scheme is aimed at getting people into a working routine if they needed an additional "push" to find a job.

A4e started in South Yorkshire more than 20 years ago to provide retraining to large numbers of Sheffield steelworkers who became redundant when the industry started to decline.