To consider the attached report.
Contact Officer: Andrew Small (01296) 585507
The Committee received a report from the External Auditors on their work associated with the certification of grant claims for 2015/16 submitted by AVDC. This year there had only been one claim requiring certification, which was the Housing Benefits Subsidy Claim, which had a total value of £45.1m.
Certification work was not an audit. It involved executing prescribed tests which were designed to give reasonable assurance that claims and returns were fairly stated and in accordance with specified terms and conditions. Under section 28 of the Audit Commission Act 1998, as transitionally saved, the Audit Commission made arrangements for certifying claims and returns in respect of the 2015/16 financial year. In certifying this the external auditors followed a methodology determined by the Department for Works and Pensions.
The certification guidance required the auditors to complete more extensive ‘40+’ or extended testing if initial testing errors in the calculation of benefit or compilation of the claim. Errors had been found which had required additional testing to be carried out in several areas. The identified errors had been amended by the Council and had a small net impact on the claim.
The identified errors had related to Backdated Expenditure, Non HRA – Weekly Rent Liability, Self Employed Earnings, Weekly Rent Liability, Childcare Costs and Earned Income, details of which were included in the Committee report. The total value of extrapolated overpayments across all of these areas was £225,639. If the Council was to amend based on these extrapolations, it would increased the Local Authority error amount to £377,333, which was over the £234,776 threshold which guaranteed reimbursement of the full subsidy from the DWP.
These extrapolations had been reported within the qualification letter to the DWP, who would decide whether to ask the Council to carry out further work to quantify the error or to claw back the benefit subsidy paid.
The work had also led to two recommendations being made to minimise errors made when processing future claims, namely:
· That the Council ensure that supporting information was obtained from claimants for all self-employed cases.
· That Council staff should receive continuous training on documentation requirements, particularly for staff who were new to the role.
The indicative fees payable for the grant claim work for 2015/16 was £11,286. However, an additional fee of £6,125 would be required to cover the work needed to complete the additional testing of this year’s claim. This additional fee was under review and subject to agreement by PSAA so was not yet confirmed.
Members requested additional information and were informed that incorrect calculations for self employed earnings were partly due to an discrepancy whereby the methodology that the Council was required to use in calculating self employed earnings differed from the guidance given to external auditors on how they audited such claims. AVDC had previously raised this issue with the DWP. The Director with responsibility for Finance informed Members of measures that had been undertaken to reduce and mitigate these LA overpayment errors. These included:-
· meeting with Revenues and Benefits staff to get an understanding of how self employed earnings cases were assessed.
· examining management checks and the sign off process for self employed earnings claims.
· a self employment module being available in the Revenues and Benefits software system.
· diarising more frequent reviews of self employed earnings data.
· more staff training would be arranged.
The Committee was also informed that an internal audit review of Housing Benefits subsidy claim processes was being conducted which would pick up on last year’s internal audit review and the findings of the external audit report. This review would include looking at the mitigation measures being put in place, standard of quality checking and management responses. More information would be reported to the Audit Committee in March 2017, including any responses received from DWP to the qualification letter.
Members were also informed:-
(i) that HB claimants who moved to a different area did not carry forward their grant claim and would need to be re-assessed. The same situation would apply to Aylesbury Vale residents who moved to another part of the country.
(ii) that AVDC would stop any instances of HB overpayment as soon as the Council became aware of it.
(iii) that the external auditors would provide information to the March meeting, comparing AVDC’s HB subsidy claim performance to similar Councils.
(iv) that it was possible that the DWP would require more in-depth testing to be done on HB subsidy claims for 2015-16. The Council kept a small reserve to cover the payment of additional audit fees.
(v) that the internal audit review of Housing Benefits had commenced. The review would include looking at whether AVDC had captured all the lessons learnt, including from the subsidy audit, to improve processes for the future. The internal audit report would be submitted to the March 2017 meeting.
(1) That the external auditors report on the certification of claims and returns by AVDC for 2015/16 be noted.
(2) That further information on the HB subsidy claims and processes would be reported to the next meeting.