To consider the attached report.
Contact Officer: Nuala Donnelly (01296) 585164
The Committee received a report from the External Auditors on their work associated with the certification of grant claims for 2016/17 submitted by AVDC.
From 1 April 2015, the duty to make arrangements for the certification of relevant claims and returns and to prescribe scales of fees for this work had been delegated to the Public Sector Audit Appointments Ltd (PSAA) by the Secretary of State for Communities and Local Government.
For 2016-17, these arrangements required only the certification of the housing benefits subsidy claim. In certifying this the external auditors had followed a methodology determined by the Department for Work and Pensions and had not undertaken an audit of the claim. Instead, the work 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. Where initial testing errors in the calculation of benefit or compilation of the claim were found, the certification guidance required the auditors to complete more extensive ‘40+’ or extended testing.
The external auditors reported that they had checked and certified the housing benefits subsidy claim with a total value of £44,887,809. This had allowed them to meet the submission deadline. A qualification letter had been issued, details of which were included in section 1 of the report.
The certification work had found errors which the Council had corrected. These amendments had increased the claim by £20,585 to £44,908,394, that was a marginal effect on the grant due. With the history of the clawback in 2015-16, it had been noted that the Council had implemented most of the recommendations from last year and had improved arrangements significantly.
Fees for certification and other returns work were summarised in section 3. The housing benefits subsidy claim fees for 2016-17 were published by the PSAA in March 2016 and were available on the PSAA’s website (www.psaa.co.uk).
The main issues reported had related to Cell 11 Non-HRA. Testing of the initial sample had identified some incorrect classification of accommodation which had been classified as an error for subsidy purposes.
The results from the testing were as follows:-
· Cell 11 – all cases had been reviewed in full in order to correct the claim. Due to amendments then made by the Council it had concluded that the Non-HRA cells were fairly stated.
· Cell 94 Rent Allowance: in line with DWP guidance, where errors had been identified in the prior year then, unless the authority could prove that the error type would not be replicated in the current year, work proceeded immediately to 40+ testing irrespective of the outcome of initial testing. This was completed in respect of prior year errors identified on both Rent Allowance earnings and child care costs cases. The following errors were identified:
o Earnings – no errors had been in initial sampling of cases and 2 failures in the extended 40+ testing on a sub-population of 40 Rent Allowance cases with earnings. Both of these errors had resulted in an overpayment of benefits as a result of the incorrect determination of earnings. This error had been extrapolated and reported in the qualification letter.
o Child Care Costs – no errors had been identified in initial sampling of cases and 3 failures in the extended 40+ testing on a sub-population of Rent Allowance cases with Child Care Costs. 2 of these failures resulted in an overpayment of benefits as a result of the incorrect determination of Child Care Costs. This error type had been extrapolated and reported in the qualification letter.
o Rent (service charges) – initial testing of Rent Allowances had identified an error in respect of rental service charges. Further investigation had identified that this error type was isolated to one particular area of housing. A review of claims in the relevant housing area was performed and it was found that 10 out of 14 cases had the same error. The errors had been adjusted in the claim.
o Cell 225 Modified Schemes – testing of modified schemes had identified 4 errors out of a small population of 14 cases in total. The claim had been adjusted for these errors.
The Committee was informed that the indicative certification fee for 2017/18 would be £17,411, which was set by the PSAA. From 2018/19, the Council would be responsible for appointing their own reporting accountant to undertake the certification of the housing benefit subsidy claim in accordance with the Housing Benefit Assurance Process (HBAP) requirements that had been established by the DWP.
Members discussed the claim and noted that the Council had implemented most of the recommendations from last year and had improved arrangements significantly. As such, a reimbursement to DWP would not be required this year.
That the external auditors report on the certification of claims and returns by AVDC for 2016/17 be noted.