Audit & Review Section April 2003 June 2003

BOROUGH OF POOLE

REPORT TO SERVICE PROVISION SCRUTINY COMMITTEE

6 NOVEMBER 2003

AUDIT & REVIEW SECTION –

APRIL 2003 – JUNE 2003

PART OF PUBLISHED FORWARD PLAN: NO

STATUS – GENERAL

1.PURPOSE AND POLICY CONTEXT

1.1 This Report gives details of the audit work undertaken during the first quarter of 2003/2004 and highlights the key findings and recommendations.

2. DECISION REQUIRED

2.1 Members are asked to note the following report on the audits carried out during the first quarter of 2003/2004.

3.PLANNED AUDITS

3.1Key Financial Systems

3.1.1Housing Benefits (Revenue & Benefits) – Housing Benefits is considered to be one of the key financial systems by the Audit Commission and therefore is one of the higher risk audits on the Audit Plan. The audit concluded that the controls appeared to be adequate and operating in line with CIPFA (Chartered Institute of Public Finance and Accountancy) audit guidelines. However a total of seven recommendations were made to improve the system.

3.1.2No ‘high priority’ recommendations were made. Four ‘medium priority’ recommendations covered:

• Write off authorisation procedures
• Codes of practice/conduct acknowledgement
• Statistical performance information
• Computer system data integrity

3.1.3Housing Rents (Revenue & Benefits) – The Housing Rents system is an Audit Commission key financial system and therefore a ‘high risk’ audit. Approximately £13 million of income is raised annually through housing rents.

3.1.4The system appeared to be operating satisfactorily and in accordance with CIPFA audit guidelines. However, a total of 5 recommendations were made to improve the system. Allfive recommendations (including four medium and one low priority) had not been implemented from the previous audit (see para.5.3.1). These have been re-recommended.

3.1.5No ‘high priority‘ recommendations were made. The four ‘medium priority’ repeat recommendations covered:

• Computer system property reconciliation
• Computer system financial reconciliation
• Void procedures
• Computer system access privileges

The majority of these recommendations are planned to be implemented with the introduction of the new housing computer system, which is currently ongoing.

3.1.6Payroll – The Payroll system is an Audit Commission key financial system and therefore a ‘higher risk’ audit. The system processes payments to 5440 employees with a total employment paybill to the Authority of £80 million per year.

3.1.7The system appeared to be operating satisfactorily and in accordance with CIPFA audit guidelines. However, a total of 13 recommendations were made to improve the system. Three recommendations (‘low priority’) had not been implemented from the previous audit (see para.5.3.1)

Three ‘high priority’ recommendations were made covering:

• Staff record verification procedures
• Review of benefits in kind process
• Computer system access permissions

Six ‘medium priority’ recommendations were made including:

• Procedures documentation
• Risk assessment of P9D(staff on low salary) process
• Management reports (3 recommendations)
• Leavers procedures

3.1.8Capital Accounting - The Capital Accounting system is also an Audit Commission key financial system and a ‘high risk’ area on the audit plan.

3.1.9The system appeared to be operating satisfactorily and in accordance with the CIPFA audit guidelines. However, 1 ‘high priority’ recommendation was made to improve the system covering:

• Management Reporting

3.2Other Systems

Audits were also completed in the following Service Units

Adult Social Services (Commissioning)

3.2.1Home Care – The system generally appeared to be operating satisfactorily. However a total of thirteen recommendations were made including four (three ‘high’ & one ‘medium’ priority – see para.5.3.1) which had not been implemented from the previous audit. Three ‘high priority’ repeat recommendations covered:

• Contract letting procedures
• Contract risk appraisal
• Contract contingency planning

Nine ‘medium priority’ recommendations included:

• Care provider selection/monitoring procedures
• Home Care Strategy

• Reconciliation of CareFirst computer system to the financial computer system (repeat recommendation)

• Computer system input/authorisation checks
• Care Provider queries
• Budgetary control training

3.2.2Supporting People - The system generally appeared to be operating satisfactorily. However a total of seventeen recommendations were made. Two ‘high priority’ recommendations covered:

• Computer system access permissions
• Payment process

Fifteen ‘medium priority’ recommendations included:

• Computer system input/authorisation/output/report procedures
• Contract risk appraisal
• System documentation

Housing & Community Safety Services

3.2.3Housing Renewal Grants – The system generally appeared to be operating satisfactorily. However a total of four recommendations were made. Three ‘medium’ priority recommendations included:

• Procedure documentation
• Grant condition checks

Property Services

3.2.4Asset Register – The system generally appeared to be operating satisfactorily. However a total of thirteen recommendations were made including nine, which had not been implemented from the previous audit (six ‘medium’ & three ‘low priority’ – see para.5.3.1). Eight ‘medium priority’ recommendations included:

• Valuation procedures
• Property disposal procedures

3.2.5Commercial Property – The system generally appeared to be operating satisfactorily. However a total of seven recommendations were made. Four ‘medium priority’ recommendations covered:

• Clarifying responsibility for leases/licences
• Reviewing existing leases/licences
• Lease/licence income
• Management reports

School Advice & Support –

3.2.6Schools – Audit & Review carried out end of year checks on the financial statements of the foundation schools. Audit certificates were issued to the schools stating that they gave a ‘true & fair view’ of the state of the school’s accounts.

Transportation Services

3.2.7Decriminalised Parking – The system generally appeared to be operating satisfactorily. However a total of five recommendations were made. One ‘high priority’ recommendation covered:

• Income Recovery procedures

Four ‘medium priority’ recommendations included:

• Write off procedures
• Performance monitoring

4.ADVICE, CONSULTANCY & OTHER WORK

4.1Performance Indicators

4.1.1Further work was carried out in conjunction with the Audit Commission on the audit of the Authority’s Performance Indicators for 2002/03. This exercise was recently satisfactorily finalised.

4.2Advice and Consultancy

4.2.1Planning Design & Control Services – Development Control Joint Review - Further work was carried out on a joint review by the Audit Commission and Audit & Review on planning applications and enforcement procedures (which also included Section 106 procedures). A draft report has now been issued.

4.2.2Property Services – Cleaning Standards - A review was carried out concerning the cleaning contract. Recommendations were made to ensure default notices were issued where appropriate.

5.RECOMMENDATIONS NOT IMPLEMENTED

5.1Follow up reviews were carried out to ascertain whether the risks identified in previous audits had been appropriately addressed through implementation of the audit recommendations. The tables below summarise the findings of the follow up audits.

• The Service Unit Head stated not implemented due to staff turnover & resource issues.

• Recommendations have been re-iterated and an action plan for implementation agreed.

• 1 recommendation dependant on Dorset County Council action

• others due to pressure of work.

• Recommendations have been re-iterated and an action plan for implementation agreed.

• Delayed due to implementation of a new Housing computer system.

• 1 Recommendation implemented & other 4 to be implemented using the new computer system.

• Due to staff resources (although work had been carried out on some recommendations).

• Recommendations have been re-iterated and an action plan/timetable has been agreed.

* New target dates have been agreed with auditees where recommendations have been repeated.

6.Investigations

6.1The review into financial management arrangements within Social Services was completed. The recommendations have been agreed with the relevant Policy Director and have been reported to members separately (Cabinet 29th July)

6.2Further work was carried out on the Audit Commission’s “National Fraud Initiative” data matching exercise. Audit & Review assessed the work carried out by the relevant Service Units to investigate the ‘matches’ which indicate potential fraud. Recommendations were made to improve the documentation of work carried out by the Service Units. There have been no reported savings as a result of the exercise.

6.3A review into an allegation received concerning acceptance of hospitality was carried out. The specific allegation was found to be unproven. Recommendations were made to improve procedures.

6.4An investigation was carried out into missing money at a leisure centre. Recommendations to improve cash handling/banking procedures were made.

6.5Audit & Review investigated a complaint on an alleged website weakness in the online payments internet system. Recommendations were made to improve the security of the website and also on the process for responding to complainants.

6.6A review into theft of money at a social services establishment was carried out. Recommendations to improve cash security were made.

6.7An allegation was received concerning a childminders financial activities. The allegation was found to be unproven.

6.8Audit & Review investigated an incident involving a sum of money going missing at a Social Services trading establishment. Procedures were reviewed to prevent a reoccurrence.

6.9A review was carried out into concerns over the financial management of a pre-school. The

review recommended that financial support/assistance should be sought from Pupil & Parent Support Services.

7. Conclusion

7.1Recommendations were made following audits and investigations in a number of areas. These will be followed up to ensure that any risks have been appropriately addressed.

R L Jackson

Head of Financial Services

Background Papers Nil

Name and Telephone Number of Officer to Contact:Keith McCormick 633123

file metis/committee reports\SPSCjun2003

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