To consider the attached report.
Contact Officer: Kate Mulhearn (01296) 585724
The Committee received a progress report on assurance work activity undertaken against the 2016/17 Assurance Plan that had been approved by the Audit Committee in March 2016. The following matters were highlighted:-
Final Reports issued since the previous Committee Meeting
The following reviews had been completed since the last Committee meeting:-
· Accounts Payable – the review identified that much work had been done to improve accounts payable processes and controls since the previous year’s “high risk” internal audit report. Overall the controls in place were operating well, in particular the work-flow to enable “three-way matching” on the ledger system, which had been set up and was being utilised effectively. There had also been more robust monitoring of monthly performance information which had led to a significant improvement in the speed of invoice payments and ensuring invoices received were connected to an approved Purchase Order.
The review had identified 3 low risk findings relating to receipting corporate credit card expenditure, reviewing current Purchase Orders and commitments on a regular basis, and expanding monthly KPI indicators and reporting them to the Strategic Finance Manager
· Council Tax and Business Rates – the report had been classified as low risk. One medium risk had been raised relating to control weaknesses around validating evidence provided when applying Council Tax discounts and ensuring proper follow up to assess whether the discount was still applicable.
Two low risk findings had been found relating to lack of reporting collection rates of prior year arrears and no write off procedures, and a lack of monitoring Valuation Office properties in temporary or no valuation.
After completion of audit review but before finalising the report, the Council had sent out the annual Council Tax letters. The letters contained a numerical error in the precept calculation and whilst the error did not affect the final tax bill calculation for householders, the letters had to be resent to homes across the Vale at a cost of £24,000. This issue had been reviewed and was considered to be a “one-off” oversight and not reflective of systematic failures in the annual council tax billing process. However, the Council needed to learn lessons from this and ensure that the review process for letters was robust and could identify any errors in the future.
· Contract Management – The review had focused on the monitoring procedures for two of the Council’s contracts that were of significant importance both to the Council’s reputation and finances; Everyone Active (who managed two leisure centres) and Ambassador Theatre Group (ATG) (who managed the theatre). Arrangements were in place to ensure regular contract management took place via monthly/quarterly meetings which held the contractors to account against conditions set out in agreed contracts.
Three medium risk areas of weakness had been identified which needed to be addressed to strengthen the contract management control environment.
· Safeguarding – the report had been classified as medium risk.
The compliance rate for completion of the mandatory level 1 e-learning module during the past five years had been 13% which compared poorly to other councils that had compliance rates above 90%. It was mentioned that the Council’s system had not been correctly recording when a staff member completed their e-learning module so the actual completion rate was likely to be higher.
The Council’s safeguarding team had previously discussed safeguarding matters in regular internal meetings but these meetings had not taken place for over a year, partly due to the Council wide restructure and staff changes. It had also been noted that many of the safeguarding related policies such as Whistle-blowing, Safeguarding Guidance, and Disciplinary policies had not been reviewed for more than three years.
Inconsistencies had been identified on whether background checks were undertaken during the recruitment process for identical roles. The central log to record and follow-up background checks did not record important data such as when the background check had been undertaken.
The Section 11 document that had been submitted to the Buckinghamshire County Council in April 2017 was not now reflective of the Council’s position post this review and should be updated and re-submitted in the spirit of openness and transparency.
There had been changes to the Safeguarding Lead and Officer in the past few months and therefore the requirements of these roles were new. Now that these staff were in place and along with the report, new impetus should ensure that the control environment was strengthened by the end of year.
The full review reports were attached as Appendix 3 to the Committee report.
Internal Audit Plan Work in Progress
The following work was being progressed:-
· Debt Recovery – in response to internal audit recommendations from 2015/16 reviews, a project was underway to review the Council’s strategic approach to debt management. Work was ongoing and the Project Board was monitoring progress via monthly meetings.
An update would be provided along with the Accounts Receivable internal audit report to the Audit Committee’s July 2017 meeting
· Accounts Receivable and Service Charges – the work on these reviews had been completed and reports were being prepared.
Overdue Recommendations and Follow Up Work
· Update on Financial Systems – Actions identified in the 2015/16 General Ledger and Budgetary Control internal audit report had been followed up as part of the current year reviews. The actions identified would supersede those from last year. Implementation of actions would be followed up and reported appropriately. The Audit Committee would receive the results of the Accounts Receivable audits at the next meeting.
· Overdue recommendations – no recommendations had passed 3 months of their implementation date. The Committee was informed that a recommendation tracking tool needed to be developed to easily capture and report internal audit actions. This would be done as part of the Business Intelligence Project.
Internal Audit Resource
The Committee was informed that as part of the Commercial AVDC restructure, the model for the provision of internal audit had been reviewed. To achieve the Council’s objectives the preferred model for delivery was a co-source arrangement with a retained Head of Internal Audit position, fulfilled by the Corporate Governance Manager, and buying-in resource to deliver the annual internal audit work programme. This model allowed for the flexibility, insight and innovation achieved through using external suppliers who work with a range of other public and private sector organisations, and also retained the desired level of proximity to the issues and knowledge of AVDC.
Since the last Audit Committee meeting, the proposal had been approved and work had started to develop the scope of work and tender to procure the internal audit service. This was likely to be for a three year term, with options to extend. Up until such stage as the contract had been procured, the Council would continue to engage the services of BDO Internal Audit.
2017/18 Internal Audit Plan
The Committee report detailed the internal audit plan for the second quarter of 2017/18 which included reviews of Company Governance, Commercial AVDC Programme Project Assurance and follow up on the implementation of actions identified in internal audit reports. The plan would be fully developed once the organisational structure had been agreed and would be submitted to the July Audit Committee meeting for approval.
Members sought further information and were informed:-
(i) by the Cabinet Member for Communities that she welcomed this timely review and was committed to ensuring that the review’s recommendations were implemented.
(ii) that action would be taken to ensure there was a higher compliance rate for completion of the mandatory level 1 safeguarding e-learning module and that training records were then correctly updated and recorded.
(iii) that now that the Safeguarding Lead Officer plus other staff were in place following the Council’s restructure and staff changes, then regular internal meeting on safeguarding would be held and safeguarding related policies would be reviewed.
(iv) that the Section 11 self-assessment document, reflecting AVDC’s current position, would be reviewed and re-submitted to the County Council.
Review of Contract Management
(i) that as well as the contract monitoring meetings, the Cabinet Member also held regular meetings with Everyone Active (EA).
(ii) that clarification would be sought as to whether EA recorded feedback from unsatisfied customers as complaints as part of their complaints handling procedure.
(iii) that EA would be asked to also provide information showing trends and whether they were meeting agreed targets as part of performance pack reporting.
It was also commented that it would be appropriate for internal Risk Registers to be maintained to assist in managing major contracts.
(i) that more was being done to develop KPIs for major contracts through the performance information project, in response to the Business Intelligence risk (CRR number 12).
(ii) that the vast majority of invoices were paid far earlier than within 30 days of receipt.
(iii) that Council staff were able to have a corporate credit card if they had an operational business need to use one.
(iv) that Risk Rating colour codings for reviews in the Internal Audit Plan and Progress Tracker (Appendix 2) were only assigned to reviews that had been completed. Reviews that had not yet started or were deferred had been included on the Plan as they had been prioritised when putting together the Plan.
Council Tax and Business Rates
(i) that in response to recommendation 2, the Council would be strengthening processes and procedures to ensure that appropriate evidence was always obtained before applying discounts.
(ii) that there were approximately 100 properties that for various reasons had a temporary or no valuation status. The Valuation Office (VOA) had 90 days in which to resolve these cases and bring them into a proper valuation. In response to the audit finding the Council would be putting in place a process to monitor these properties and formally notify the VOA if they did not meet this timescale.
(iii) that better processes and procedures would be put in place to ensure that prior years arrears were reviewed and reported. Where recovery of debts was deemed irrecoverable then the policy and procedures for debt write off would be applied to ensure they did not escalate to the current large levels.
(1) That the progress reported be noted.
(2) That the 2017/18 Internal Audit Plan for quarter two be approved.