BOROUGH OF POOLE

REPORT TO RESOURCES OVERVIEW GROUP

2 OCTOBER 2003

AUDIT & REVIEW SECTION - QUARTERLY REPORT

APRIL 2003 – JUNE 2003

PART OF PUBLISHED FORWARD PLAN: NO

STATUS – GENERAL

1.PURPOSE AND POLICY CONTEXT

1.1 This Report gives a summary of the audit and risk management/insurance work of the Section

in the first quarter of 2003/2004.

2. DECISION REQUIRED

2.1 Members are asked to note the following report on the work of the Audit & Review Section for the first quarter of 2003/2004.

3.Best Value and Member Reporting

3.1Performance Indicators

3.1.1Further 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.Insurance & Risk Management

4.1Insurance

4.1.1The April to June 2003 quarter performance indicators –

CLAIM TYPE / TOTAL CLAIMS RECEIVED
Apr to Jun ‘02 / Jul to Sept ‘02 / Oct to Dec ‘02 / Jan to Mar ‘03 / Apr to Jun ‘03
Public Liability / 47 / 56 / 52 / 36 / 46
Property General / 1 / 5 / 8 / 4 / 5
Property Education / 8 / 5 / 15 / 16 / 7
Leased Vehicles / 1 / 0 / 0 / 1 / 1
Commercial Vehicles / 14 / 14 / 29 / 23 / 20
Other / 4 / 1 / 3 / 1 / 5
TOTAL / 75 / 81 / 107 / 81 / 84
Amounts paid to claimants below the excess level of £500 per claim (public liability) / £6,560 / £3,896 / £6,285 / £5,057 / £7,105
Respond to claimant within 2 working days of receipt / 100% / 100% / 100% / 100% / 100%

4.1.2Movements in the number of Live Claims between January 2003 and June 2003 are shown below:

Claim Type / Live Claims
1st January ‘03 / New Claims Received / Claims Settled / Live Claims 30th June ‘03
Public Liability / 197 / 82 / 78 / 201
Employers Liability / 22 / 6 / 5 / 23
Motor Vehicles / 108 / 45 / 67 / 86
Property – General / 6 / 9 / 3 / 12
Property – Education / 8 / 23 / 22 / 9
Total / 341 / 165 / 175 / 331

4.2Significant Insurance Events

4.2.1An act of vandalism at Shore Road promenade occurred. Damage was caused to ten beach huts to the value of approximately £2,250. (This is in addition to the fifty beach huts vandalised during the last quarter).

4.2.2Rossmore Leisure Centre suffered a theft of lead from the roof. We are awaiting a repair quote, however it is estimated at approximately £2,500. The lead will be replaced with an alternative material to reduce the risk of further incidents occurring.

4.2.3A claim has been logged regarding subsidence at a council dwelling. The insurers are currently appointing a technical survey. This work is valued at approximately £28,000.

4.2.4Three laptop computers were stolen from the Civic Centre. The police have been advised and Audit and Review have made recommendations to Property Services to improve buildings security arrangements, particularly during out of business hours. The value of this claim is estimated at £3,600.

4.3Risk and Insurance Client Satisfaction Questionnaires

4.3.1Audit and Review have prepared a schedule to visit those Service Units and Schools which scored the service as ‘unsatisfactory’, to clarify their risk management and insurance arrangements.

4.4Risk Management

4.4.1The Chief Auditor took a draft risk management paper to Management Team. The implementation of risk management is to considered in conjunction with business & corporate plans.

5.Planned Audits/Advice & Consultancy

5.1Key Financial Systems/Audit Recommendations

5.1.1Housing 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.

5.1.2No ‘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

5.1.3Housing 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.

5.1.4The 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.

No ‘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.

5.1.5Payroll – 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.

5.1.6The 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

5.1.7Capital Accounting - The Capital Accounting system is also an Audit Commission key financial system and a ‘high risk’ area on the audit plan.

5.1.8The 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

5.1.9Other Systems

Audits were also completed in the following Service Units

Adult Social Services (Commissioning)

Home 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

Supporting 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

Housing 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

Asset 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

Commercial 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 –

Schools – 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

Decriminalised 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

5.2Advice/Consultancy

5.2.1Annual Audit Plan 2003/04 - During the quarter, the annual audit plan for 2003/04 was

discussed and agreed with Service Unit Heads.

Planning 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.

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

5.3Performance Indicators

Month / % Audit Plan Completed / % Time Spent vs Planned on Audit
(-under +over) / % Recommendations Accepted / % Previous Recommendations Implemented
(follow up)* / Auditee Satisfaction Score **
April / 6.8% / 0% / 100 / 38 / N/A
May / 6.8% / -2.6% / 100 / 72 / 1
June / 8.1% / 0% / 100 / 78 / N/A
Cumulative for 3 months / 21.7% / -1.4% / 100 / 70 / 1
TARGETS for 2003/04 / 100% / 0% / 100% / 100% / 2

* See Paragraph 5.3.1

** KEY 1=Very Satisfied 2=Satisfied 3=Dissatisfied 4=Very Dissatisfied

5.3.1Recommendations Not Implemented

Number of Recommendations Not Implemented During Quarter / Number of Recommendations Checked in the Quarter / % Recommendations Not Implemented
21 / 79 / 27%
Audit
(Service Unit) / No. Original Recs / Recs
Not Implemented / Priority of Recs Not Implemented / Service Unit Head Reasons for Non-Implementation / Further Action Taken
(see * below)
Home Care
(A.Social Services.C) / 15 / 4 / 3 High priority & 1 medium priority /
  • 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.

Payroll (Financial Services) / 6 / 3 / 3 low priority /
  • 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.

Housing Rents (Housing Management Services) / 8 / 5 / 4 medium & 1 low priority /
  • Delayed due to implementation of a new Housing computer system.
/
  • 1 Recommendation implemented & other 4 to be implemented using the new computer system.

Asset Register (Property Services) / 24 / 9 / 6 medium priority & 3 low priority /
  • 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.Time Analysis

7.1The following summarises the target and actual time spent on Audit & Review activities:

QUARTER ENDING JUNE 2003
ACTIVITY / Target (Days) / Actual (Days) / Variance (Days)
+ more than planned /
- less than planned
PLANNED AUDITS / 198 / 147 / -51
ADVICE/CONSULTANCY / 75 / 90 / +15
INVESTIGATIONS / 53 / 53 / 0
BEST VALUE/MEMBER REPORTING / 34 / 15 / -19
INDIRECT TIME
Audit Administration / 89 / 61 / -28
Leave / 80 / 83 / +3
Courses / 23 / 17 / -6
Sick / 14 / 7 / -7
TOTAL / 566 / 473 / -93

8. Conclusion

8.1The work carried out by Audit & Review on the Borough’s Performance Indicators was commended by the Audit Commission.

8.2Staff resources (vacant Auditor/Audit Assistant posts) for the quarter, account for the deficit on the total planned days. Both the Auditor and Audit Assistant posts have now been filled.

8.3The Audit Commission reviewed the work of Audit & Review and found that their testing was adequate and the conclusions reached were soundly based for routine audits. Therefore the Audit Commission were able to place reliance on Audit & Review’s work contributing to their assessment of the core processes of the Authority.

8.4Audit & Review continue to establish partnership arrangements with the Audit Commission and recent work has been carried out in partnership with the Audit Commission on information technology & communication security of the Authority’s networks and also on Development Control in Planning Design & Control Services.

8.5Audit & Review are advising on development of performance and risk management in the Authority and will continue to assist management to achieve the organisation’s objectives.

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\qrpjun05.09.03

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