HERTFORDSHIRE COUNTY COUNCIL
AUDIT PANEL
THURSDAY 2 FEBRUARY 2006 at 2 P.M.
PROGRESS REPORT ON THE OPERATION OF SAP SYSTEM
Report of the Finance Director
Author: Peter Maguire Tel: 01992 588830
- Background
The Panel at its meeting on 3 March 2005 received its most recent progress report on the SAP system and asked for a further update at this meeting, highlighting any outstanding issues.
2.Progress Report
The SAP system has now stabilised and the teething problems have been overcome.
A post implementation review was carried out in the summer and a number of projects have emerged from it. In particular, there is a major procurement project and one looking at reporting across the piece.
During 2005, the SMB scorecard was successfully implemented using the SEM module of SAP and further scorecards for Corporate Services, Environment and Children, Schools and Families are planned for early 2006.
Other key pieces of work have been completed, or are underway, all aiming to deliver the following benefits:
- More streamlined, effective processes leading to reduced process costs;
- Improved financial and contract management;
- Improved service delivery.
3.Finance
The 2004/5 year end was completed successfully in SAP and in record time. More reporting is now on-stream and more information is becoming available from Business Warehouse.
The County Council now has the chair of the SAP Business Warehouse public sector special interest group.
4.Review of Debt Management Processes
Effective debt management is a key deliverable for the Authority, and a project is now underway to review current processes, both in HCC and Serco, and make recommendations to improve debt collection.
The objectives of the project are to:
- Agree targets for debt recovery and methods for measuring performance
- Evaluate effectiveness and cost of current debt recovery actions/ process
- Review debt reporting e.g. ease of reporting and utility of the information produced
- Identify areas for improvement and recommend actions to address these
- Implement any process changes, including changes to roles and responsibilities, and develop additional reports where necessary.
Initial findings and recommendations have been submitted to Finance Board, for implementation by April 2006.
5.Procurement
A wide-ranging procurement project is currently underway, looking at all aspects of the procurement process to deliver process and contract efficiencies, including paying more suppliers by BACS rather than cheque and emailing the remittances, thus removing significant process and paper from this area.
A number of additional on-line catalogues have been introduced in 2005, taking the total to 13, thus increasing the volume of purchases which can be done on-line.
It is planned to introduce Procurement Cards for low value goods and this will be rolled out in 2006.
6.Human Resources (HR)
Further ‘training and events’ modules of SAP are being held, following a successful pilot, allowing delivery of internal training courses to be managed on-line.
It is planned to develop and roll out parts of employee self service (ESS) throughout 2006 and work with Manpower and Corporate HR to develop an employee portal to streamline the recruitment process.
7.SAP - Controls
Serco (formerly ITNET) are responsible for managing some key control accounts. This has previously required significant support from HCC staff.
As part of the successful renegotiation of the Managed Financial Services contract with Serco, they were required to recruit a qualified accountant and to remodel their controls team by September 2005. This has been done and has significantly strengthened overall control.
Internal Audit and the SHARP team have agreed with Serco new audit packs for financial and payroll reconciliations, and these are now being successfully produced on a monthly basis.
8.Schools
Meetings of the schools’ focus group continued termly during the year, to ensure effective communication with schools on their system issues.
Significant improvements in all areas mean that these meetings will hence only be required half-yearly.
All schools are now receiving their key financial reports earlier by email, which assists with their monthly finance reporting.
Work is underway to develop a pre-payroll report, to be emailed monthly to schools, which will allow them to review their payroll charges and identify inaccuracies in advance of running the payroll.
A joint Serco/HCC team has been established to handle schools’ starters, leavers and contract changes, with team members having responsibility for a specific group of schools. This has successfully addressed many of the communication issues schools had identified when the functions were split between Serco and CSF schools’ HR team.
Remote timesheet entry into SAP has been implemented in a pilot group of approximately 60 schools and it is planned to roll this out across all schools in 2006/07.
9.Payroll Overpayments
These occur for a number of reasons, primarily late notification of leavers and late input of contract changes which result in reduced basic salary (e.g. reduction in contracted hours).
These overpayments must then be recovered, either through future salary payments for existing staff or by issuing an invoice where the person has left HCC’s employment.
A number of actions have been taken to improve control and recovery in this area including:
- System changes to prevent staff being paid beyond their contract end date;
- Monthly validation of forthcoming contract end dates;
- Immediate contact by the joint schools’ team with overpaid employees to arrange recovery;
- A pilot process, starting on 23 January 2006 in CSF HR (non-schools) and ACS HR, to implement a similar process of immediate contact;
- System changes to improve the accounting controls and monitoring of recovery of overpayments;
- Improved record-keeping to allow root-cause analysis to inform other initiatives aimed at preventing over-payments occurring.
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Item 6 - SAP System Progress Report