Gravesham Borough Council

Transcription

1 Gravesham Borough Council Report to: Finance & Audit Committee Date: 21 February 2008 Reporting officer: Subject: Senior Auditor Audit Opinion of Unsatisfactory Council Tax Purpose and summary of report: To notify Members of an audit opinion of unsatisfactory given to the Administration and Recovery of Council Tax following an internal audit review. Recommendations: Members are requested to consider the report and determine any appropriate action required. 1. Introduction 1.1 In accordance with the terms of reference of this committee, Internal Audit is required to report to Members where an internal audit review results in an audit opinion of unsatisfactory. 2. Audit Process Background 2.1 As part of the internal audit plan a routine audit review was carried out to provide management with an opinion on the adequacy of controls operating over the authority s administration and recovery of Council Tax. 2.2 Audit testing identified a number of key control weaknesses in the Council Tax administration and recovery process resulting in an interim audit report with an unsatisfactory opinion. Following the result of this audit and at the request of the Director (Service Improvement) the Audit Manager agreed that internal audit would work with the Council Tax team on an advice basis to help improve the procedures and controls in place to meet the objectives of the service. 3. Findings of the Interim Audit Review 3.1 According to the Statement of Accounts for , the total income generated from council tax during the year including the receipt of council tax benefits, was 42.68million. The council s Performance Plan for indicates that 94.01% of the total council tax due for the year was successfully collected by the council

2 against a target of 97%. This performance places the council in the bottom quartile of national performance for council tax collection. 3.2 The level of outstanding council tax debt at 31 August 2007 was 1,919,840. The high level of arrears and low collection rate contributed to determining the unsatisfactory opinion but in addition to these a number of key control weaknesses were found. 3.3 At the time of audit, both the Assistant Manager (Local Taxation) and the Senior Visiting Officer had been absent due to sickness for three and five months respectively. The absence of documented procedure notes to follow left the remaining staff with limited awareness of all of the tasks and responsibilities of the absent officers. The problem was compounded by the fact that the remaining staff were themselves getting used to using the new council tax computer system. 3.4 Additionally due to the absence through sickness of the Senior Visiting Officer, the two Visiting Officers were working without a direct line manager in the office. These officers are responsible for deciding whether exemptions or discounts on properties should be awarded, terminated or revoked yet internal audit were unable to locate documented procedure notes to aid this work. The audit found that as a result of the lack of supervision and procedure notes, both officers had adopted differing styles and methods of work and there is a risk that this lack of consistency of approach could potentially lead to difficulties in justifying decisions made. 3.5 Prior to the implementation of the new system it was acknowledged that the data held by the old system would require cleansing prior to being transferred. In practice however this data cleansing was not carried out prior to the adoption of the new computer system. It is understood that this was due to insufficient resources being available to complete the exercise prior to the new system going live. As the data cleansing exercise had not been completed it was not possible to be confident that all data relating to previous years had been transferred accurately to the new system. A decision was therefore taken to implement the system on a single year recovery basis to avoid the risk of customers being pursued for an outstanding debt that may actually have been paid. Internal audit were advised that the single year recovery mode results in the system only prompting action against balances due for the current year with no recovery action being instigated against previous year debts. 3.6 Internal Audit consider that whilst it was appropriate to initially run the system in single year recovery mode it was necessary to move to the multi year recovery mode once the data cleansing exercise had been completed. As such the Council Tax department was not making full use of the system s capability to chase payment of previous years debts alongside current year balances. 3.7 It is acknowledged that significant efforts are now being made to try and recover outstanding amounts under the new management structure. However delays in the instigation of recovery action may hinder or prevent recovery due to the time passed since the debt was initially incurred and it is quite possible that legislation may prevent the council from pursuing some of this debt. Following the completion of the initial audit work, Internal Audit worked closely with the Council Tax management and staff to help introduce more effective reminder and recovery procedures. 2

3 3.8 Internal Audit will be conducting a follow-up review of the administration and recovery of council tax commencing in March 2008 to assess the progress made by the Council Tax Team. 4. Risk 4.1 It is considered by internal audit that immediate action is required to tackle outstanding debt from previous years in order to minimise the financial loss through uncollectable debt. Action is also required to make better use of the Northgate council tax computer system s capabilities to improve the administration and recovery processes in respect of current year debt. 4.2 Failure to take action in response to the audit findings will restrict the Revenues Team s ability to maximise the collection of Council Tax relating to previous, current and future years. 5. Management Response to the Audit Review 5.1 Management acknowledge the control weaknesses identified by the internal audit review and have been taking positive action to improve procedures and controls within the administration and recovery of council tax. The audit highlighted four key areas where action was required and these can be summarised as a need to: increase income collection; reduce the level of arrears; improve procedure notes and to move the computer system to a multi-year recovery mode following the completion of the data cleansing exercise. 5.2 Management welcomed the pro-active approach adopted by internal audit to assist the council tax team in improving their processes and procedures and the main actions completed by the council tax management are outlined below. 5.3 Action to increase council tax income collection: From April 2007 a new operational approach was introduced to assign particular members of staff to specific tasks. This enabled individual areas of work to be clearly defined so that appropriate resources could be allocated to the task and their progress monitored. Two members of staff were assigned to clearing the backlog of work. This task was closely monitored and the work was completed by the end of May Specific staff were assigned to deal with all enquires beyond the knowledge and experience of the Customer Contact Centre staff. All council tax enquiries come into the Contact Centre and the aim is for the majority of enquiries to be resolved at the first point of contact. However, some enquiries require council tax staff expertise and particular staff were assigned to take these more complex enquiries this approach resolved the problem at the time and the council tax team are now dealing with such enquires on a daily rota basis Fortnightly liaison meetings were introduced and are held between Council Tax and the Customer Contact Centre to ensure that operational issues are effectively co-ordinated. For example, the phasing of billing and reminder runs are agreed to minimise peaks in telephone enquiries and the consequent impact on the Contact Centre. 3

4 Customer Contact Centre staff have also received additional council tax system training which has enabled them to deal more confidently with more complex enquiries at the first point of contact with customers. Following the training increased access to the council tax computer system has been given to the Customer Contact Centre staff to enable them to deal with more enquiries at the first point of contact. Council Tax staff received council tax computer system training from the system supplier, Northgate, in August Regular Council Tax team meetings have been introduced and staff are now allocated work on a weekly basis. The team leader issues a weekly rota which enables customer service and management priorities to be taken into account. The temporary staff who were used to help the council tax team deal with the volume of work following the move to the new computer system have completed their tasks and are no longer employed by the council. Internal audit assisted the council tax team in designing and implementing new procedures to improve the routine reminder and recovery stages of the council tax collection process. This work involved the preparation of a procedural flowchart to optimise the system billing and reminder runs. The new routine processes were supported by updated reminder and recovery letters. The objective was to standardise the monthly billing and recovery processes and to provide customers with clearer information in the standard letters. A key feature of this new process was the preparation of a clear timetable of billing, reminder and recovery dates. Figures relating to income and arrears are monitored monthly to identify any required action. Further improvement work is now underway to increase the levels of on-line and direct debit payments. A marketing programme is underway targeting existing cash payers to try and encourage them to move to an automated or on-line method of payment. 5.4 As at 12 February 2008, 36.6 million had been collected in respect of 2007/08 council tax against a liability of 39.1 million for the year. This shows 93.6 per cent of the council tax due has been collected. Last year the year-end collection rate was per cent of the liability and therefore current results indicate that we are on course to improve upon this figure. The target for the current year is to achieve a collection rate of 97.5 per cent and the council tax team will continue to apply pro-active recovery action to maximise the collection rate in the last two months of the year to achieve this target. 5.5 Action to reduce the level of arrears: Existing debt was divided into three categories and appropriate recovery action applied based on the age of the debt: o Debt incurred up to 31 March 2006 o Debt occurring in the financial year of 2006/07 o Debt arising during the current financial year Debt incurred up to 31 March 2006: o This debt was referred to Newlyn s, a debt recovery agency, to send a reminder letter and a follow up letter if required. This work took place over a three month period and so far we have collected 69, from this process 4

5 o o o A further amount of debt has been identified for recovery action through Churchill s, a bailiff company. A team is currently being set up within the council tax section to control this process and monitor collection levels. Where people do not respond or have not responded to initial recovery action, officers in Council Tax will progress liability orders via the Court and then issue the work to bailiffs or arrange cases for write off where appropriate. Work is on-going to identify cases where it is not possible to trace the debtor or where it is not cost effective to recover the debt so that these cases may be written off in accordance with the council s write off policies. Debt occurring in 2006/07 o Two members of staff have been assigned to recovering debt arising in 2006/07. Initial reminder letters have been sent out followed by a second letter, if required. Where payments are not received the cases are being taken through the court and passed to the bailiffs to pursue collection of the debt. Debt arising during the current financial year. o The council tax team dealing with the current work on Council Tax collection for this year progress the collection of debt as cases arise. The first reminder letters were sent out during May 2007 and cases are being followed through to court for liability orders and then passed to the bailiffs for debt collection in cases where payments have not been received. All cases of debt arising during the current financial year have been actioned through the recovery process. o The most recent court date was on 8 February 2008 and a further court date is set for the end of the month it is anticipated that this action will generate a higher rate of collection during February and March, than has been experienced in the last two years. 5.6 The table below shows the latest council tax arrears figures. Council Tax Arrears as at 31 January 2008 Arrears as at 31 March 2007 Arrears as at 31 January 2008 Total Collected Arrears outstanding for ,206,695 1,522, ,300 Arrears outstanding pre ,827,834 2,602, ,945 Total 5,034,529 4,125, , The table above shows the progress that has been made in the current year in terms of collecting debt from previous years. Action is being taken to identify accounts for write off where appropriate, for example, where the person has been declared bankrupt, has died or cannot be traced. It should be emphasised that the fact that the debt has not been collected in the year where it arises does not mean that it will not be collected. 5

6 5.8 Action to improve procedure notes: A review of all council tax procedure notes is currently underway and procedure notes are being updated to reflect any changes in processes and procedures. Additional procedures are also being introduced to improve consistency in processing and the resilience of the council tax collection systems. For example, a new timetable has been developed by the Senior System Support Officer identifying the target dates when reminders and summons letters should be run. 5.9 Action to complete data cleansing: During April 2007 one member of staff was assigned to tackling the data cleansing work and this task was completed by the end of June As recommended by internal audit the computer system multi-year recovery mode will be made operational. A decision has been made not to introduce this change mid-year and accordingly the system will be updated to run multiyear recovery with effect from 1 April It is anticipated that this will improve the collection of debts relating to previous years In addition to the action taken in response to the internal audit report, work has also been undertaken to improve staff morale and confidence. Staff training and development has been given a renewed priority to help improve co-operation and the co-ordination of work between teams. The council tax team had staff development day at the Riverside Centre in October Building on this the revenues and benefits staff had a very successful team building day in July Since the team building day regular joint Revenues & Benefits meetings have taken place during which staff have proposed and agreed a number of new initiatives. For instance Benefits staff have now been trained to create their own council tax account numbers and any single person discounts for any new benefit claims. Two new officers were recruited to the council tax team in September 2007 taking the team up to six permanent Revenues Officers The past year has seen some significant changes for the council tax team in terms of systems and procedures. The team have adopted a positive attitude in implementing improvements and have used the internal audit review to help direct this work. The team has also learnt through this experience that it is possible to continuously develop and improve systems and processes. As a result the management and staff are pro-actively looking for areas where further improvements can be made. Background Papers: Background papers relating to this report are held within Internal Audit (Audit Reference FS50) 6