Public Document Pack

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1 Steve Atkinsn MA(Oxn) MBA FlD FRSA Chief Executive Date: 31 May 2013 Public Dcument Pack T: Members f the Finance, Audit & Perfrmance Cmmittee Miss DM Taylr (Chairman) Mr R Mayne (Vice-Chairman) Mr JG Bannister Mrs R Camamile Mr PAS Hall Mr JS Mre Mr K Mrrell Cpy t all ther Members f the Cuncil (ther recipients fr infrmatin) Dear Cuncillr, There will be a meeting f the FINANCE, AUDIT & PERFORMANCE COMMITTEE in the Cuncil Chamber, Cuncil Offices, Argents Mead n MONDAY, 10 JUNE 2013 at 6.30 pm and yur attendance is required. The agenda fr the meeting is set ut verleaf. Yurs sincerely Helen Rishwrth Cmmunicatins & Demcratic Accuntability Officer Cuncil Offices Argents Mead Hinckley Leicestershire LE10 1BZ Telephne MDX N Fax

2 FINANCE, AUDIT & PERFORMANCE COMMITTEE - 10 JUNE 2013 A G E N D A 1. APOLOGIES AND SUBSTITUTIONS 2. MINUTES OF PREVIOUS MEETING (Pages 1-4) T cnfirm the minutes f the meeting f the Finance Audit & Perfrmance Cmmittee held n 4 March ADDITIONAL URGENT BUSINESS BY REASON OF SPECIAL CIRCUMSTANCES T be advised f any additinal items f business which the Chairman decides by reasn f special circumstances shall be taken as matters f urgency at this meeting. 4. DECLARATIONS OF INTEREST T receive verbally frm members any disclsures which they are required t make in accrdance with the Cuncil s cde f cnduct r in pursuance f Sectin 106 f the Lcal Gvernment Finance Act This is in additin t the need fr such disclsure t be als given when the relevant matter is reached n the Agenda. 5. QUESTIONS T hear any questins in accrdance with Cuncil Prcedure Rule AUDIT PROGRESS REPORT (Pages 5-24) Reprt f Internal Audit 7. ANNUAL INTERNAL AUDIT (Pages 25-36) Reprt f Internal Audit 8. ANNUAL GOV STATEMENT (Pages 37-56) Reprt f the Deputy Chief Executive (Crprate Directin) 9. PERFORMANCE MANAGEMENT FRAMEWORK (Pages 57-68) Reprt f the Chief Executive attached. 10. TREASURY MANAGEMENT TO 31 MARCH 2013 (Pages 69-82) Reprt f the Deputy Chief Executive (Crprate Directin). 11. PRUDENTIAL CODE & TREASURY MANAGEMENT ANNUAL REPORT 2012/13 (Pages 83-90) Reprt f the Deputy Chief Executive (Crprate Directin). 12. HOUSING REPAIRS REVIEW (Pages 91-94) Reprt frm Deputy Chief Executive (Crprate Directin) 13. WORK PROGRAMME T discuss the 2013/14 wrk prgramme. 14. ANY OTHER ITEMS OF BUSINESS WHICH THE CHAIRMAN DECIDES HAVE TO BE Cuncil Offices Argents Mead Hinckley Leicestershire LE10 1BZ Telephne MDX N Fax

3 DEALT WITH AS MATTERS OF URGENCY 15. MATTERS FROM WHICH THE PUBLIC MAY BE EXCLUDED T cnsider the passing f a reslutin under Sectin 100A(4) f the Lcal Gvernment Act 1972 excluding the public frm the undermentined item f business n the grunds that it invlves the likely disclsure f exempt infrmatin as defined in paragraphs 3 and 10 f Schedule 12A f the 1972 Act. 16. HINCKLEY CLUB FOR YOUNG PEOPLE (Pages 95-98) Reprt frm Deputy Chief Executive Crprate Directin Cuncil Offices Argents Mead Hinckley Leicestershire LE10 1BZ Telephne MDX N Fax

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5 HINCKLEY AND BOSWORTH BOROUGH COUNCIL FINANCE, AUDIT & PERFORMANCE COMMITTEE 4 MARCH 2013 AT 6.30 PM Agenda Item 2 PRESENT: Mr PAS Hall - Chairman Miss DM Taylr Vice-Chairman Mr JG Bannister, Mrs R Camamile, Mr JS Mre, Mr K Mrrell and Mr K Nichls (fr Mr R Mayne) Als in attendance: Mark Watkins, Alisn Breadn and Tim Ridut Officers in attendance: Katherine Bennett, Luisa Hrtn, Julie Kenny and Sanjiv Khli 440 APOLOGIES AND SUBSTITUTIONS Aplgies were submitted n behalf f Cuncillr Mayne with the substitutin f Cuncillr Nichls authrised in accrdance with Cuncil Prcedure Rule DECLARATIONS OF INTEREST N interests were declared at this stage. 442 MINUTES OF PREVIOUS MEETING On the mtin f Cuncillr Camamile, secnded by Cuncillr Mre, it was RESOLVED the minutes f the meeting held n 10 December 2012 be cnfirmed and signed by the Chairman. 443 EXTERNAL AUDIT 11/12 CERTIFICATION REPORT M Watkins frm PWC presented the Grant Certificatin Reprt which cnsidered the ptential lss f subsidy t the Authrity. As a result f the review it was estimated that there wuld be a lss f 6351 representing 0.03% f the ttal subsidy value. This wuld nt be cnfirmed until the DWP had cmpleted its wrk. It was nted that this was Mark s last meeting, he was thanked fr his input t HBBC. 444 EXTERNAL AUDIT 2012/2013 AUDIT PLAN Alisn Breadn, the new Engagement Leader frm PWC, presented the External Audit plan fr 2012/13. The key activities f the cuncil were reflected within the plan and infrmatin regarding feed and cmmunicatin was cnfirmed. In respnse t a member s questin regarding capital expenditure, Alisn Breadn cnfirmed it wuld be cnsidered as a majr part f the financial management f the Authrity. She cnfirmed that decisins n expenditure were nt challenged unless there was a reasn t indicate that they shuld be due t imprpriety r financial mismanagement. The reprt was nted. Page

6 445 INTERNAL AUDIT UPDATE REPORT Tim Ridut frm CW Audit intrduced the internal audit blck reprt fr the 3 rd quarter. It was nted that tw scheduled Audits wuld be carried ver t 2013/14. The fllwing assurances were given: Benefit Fraud Investigatins significant Assurance Fuel Cntrls Significant Assurance. Fllwing a questin regarding CCTV it was agreed that the Cmmittee wuld be advised regarding CCTV arrangements at the Jubilee Building Anti Fraud this was a benchmarking reprt ffering advice n best practice. Husing repairs This was cvered later n the agenda The tracking reprt was nted. 446 INTERNAL AUDIT PLAN 2013/15 T Ridut presented the reprt and explained that the plan layut was slightly different t previus years due t changes in Internal Audit Standards. The plan explained the purpse f internal audit, hw the plan was frmulated and the reprting lines including relatinships with external audit and fficers. The Plan shwed the days prpsed t be spent n specific audits in the financial years 13/14 and 14/15. There were sme slight amendments due t mvements f audits frm 12/13 and an additinal Husing Repairs audit. The Plan was agreed. 447 PERFORMANCE MANAGEMENT FRAMEWORK The Chief Officer (Crprate & Custmer Resurces, Scrutiny & Ethical Standards) presented the 3 rd quarter reprt shwing perfrmance as at Questins were asked regarding perfrmance indicatrs, service imprvement plans and Crprate Risks: Husing re-let times: a request was made fr an actin plan Web satisfactin: members felt whilst ur site was gd, the planning prtal was difficult t navigate Unifrm upgrade: was it nw cmplete? What was the impact n ur CO2 targets with Jubilee building nt being Excellent rated? A reprt was requested as early as pssible regarding the bus statin, in cnnectin with Crprate Risk S.06. The reprt was nted. 448 GENERAL FUND BUDGET QUARTER /2013 Kat Bennett presented the Revenue and Capital Outturn, the revenue accunt was indicating a 800,000 underspend frm service budgets due t savings and increased incme. The capital budget demnstrated a number f slippages indicating that 3millin had been spent against a prgramme f 4.2 millin. With regard t the HRA, an verspend f 136,194 was indicated thugh it was nted that this was due t the Cuncil s psitin under self financing. In actual terms it was clarified that a smaller surplus was anticipated than what was riginally budgeted. Fllwing a questin regarding NNDR, fficers explained that this was because HBBC had t pay 75% f the NNDR fr the Stke Rad site as there was a delay in the sale. Page

7 SK cnfirmed in respnse t a further questin the dept relcatin csts and the Hub develper incentive. 449 WORK PROGRAMME 2013/14 The fllwing were added t the wrk prgramme: 15 July add training 3 June Missing blck fr quarter tw reprt. 450 HOUSING REPAIRS REVIEW J Kenny presented a reprt regarding the Husing Repairs In Huse service. Origninally an underspend had been nted, but n clser inspectin it appeared that this was due t a backlg in prcessing. A full review had been undertaken and an actin plan had been develped t ensure that the service perfrms and has strng financial cntrl. A number f questins were raised by members regarding staffing and assurances regarding prcesses and it was agreed that there wuld be a full update reprt at the end f April 2013 regarding the utturn psitin and the Actin Plan. (The Meeting clsed at 8.55 pm) CHAIRMAN Page

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9 cw audit services Hinckley & Bswrth Brugh Cuncil Internal Audit Summary Reprt 2012/13 Page 5 June 2013 CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013 Agenda Item 6

10 1. Intrductin This reprt summarises the wrk f Internal Audit fr 2012/2013 which has yet t be reprted t this Cmmittee. It cmplements the Annual Audit Reprt prvided separately n this agenda. 2. Prgress summary The amended internal audit plan fr the 2012/13 year (agreed in June 2012) ttalled 286 days, including additinal wrk agreed during the year. Sectin 5 prvides details f all the audit assignments included in the 2012/13 year, tgether with details f the quarter in which the assignments were delivered. We have delivered 270 days f wrk against the plan and management has requested we delay 2 reviews (Tenant Scrutiny and Sheltered Husing) int 2013/14 (a ttal f 16 planned days). 3. Summary f reviews cmpleted The fllwing reviews have been cmpleted and final reprts agreed with management since the last meeting f this Cmmittee (this includes reviews which were due t be reprted t the cancelled January Cmmittee). The tables belw set ut summaries f the utcmes and any high r medium risk issues raised, and agreed actins t address them. Page 6 CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

11 Review Summary Level f assurance Cuncil Tax System cntrl bjective 1. Suitable, authrised plicies and prcedures are in place cvering Cuncil Tax prcessing, and staff are aware f these and that they need t cmply with them. This audit examined the verall cntrl framewrk in place regarding Cuncil Tax perated by the Leicestershire Revenues & Benefits Partnership n behalf f HBBC (as well as ther partners). A Significant Assurance Opinin was prvided, with 1 medium level and 7 lw level recmmendatins made. The individual level f assurance fr each system cntrl bjective reviewed is prvided belw. Significant Level f Assurance Full Significant Mderate Limited N 2. Relevant prperty recrds are accurately, cmprehensively and efficiently maintained and updated. 3. Cuncil Tax liability is determined efficiently and in line with statutry requirements fr all prperties. Page 7 4. Billing prcedures are in accrdance with statutry regulatins and amunts due in respect f each chargeable prperty have been crrectly calculated and prmptly demanded frm the persn r persns liable. 5. The applicatin f discunts/exemptins is authrised in accrdance with statute, the authrity s plicy and is supprted by dcumentary evidence. 6. Secure and efficient arrangements are made fr all cllectins, and all cllectins are prmptly psted t the crrect tax payers accunts. 7. Cllectin rates and ther key perfrmance indicatrs are regularly mnitred. 8. Refunds are in accrdance with regulatins and the Cuncil s Standing Orders and Financial Regulatins and all refunds are valid and authrised. 9. Recvery and enfrcement prcedures are managed efficiently and in accrdance with statutry requirements. 10. Nn-recverable debts are written-ff in accrdance with plicy and with suitable authrisatin. 11. There is a rutine recnciliatin between the main accunting system, the Cuncil Tax system and the Cash Receipting system. The 1 medium level risk issue and management s respnse are set ut belw: CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

12 System Cntrl Objective 1: Suitable, authrised plicies and prcedures are in place cvering Cuncil Tax prcessing, and staff are aware f these and that they need t cmply with them. Expected Cntrl Audit Finding Risk Risk Ranking 1.1 Plicies and Prcedures As recmmended during the previus audit, standard prcedure ntes shuld be develped t ensure that a cnsistent apprach t CT prcessing is undertaken acrss all three cuncils within the partnership. This is included n the Partnership's Service Imprvement Plan fr 2012/13 which is mnitred n a mnthly basis. The expected cmpletin date is March Recmmendatin Incnsistencies 3 Every effrt shuld be given t ensuring that the cmpletin date f March 2013 fr the standardised prcedure ntes is achieved. Respnse Wh When Our plan is that prcesses and prcedures are harmnised by 31 st March Where prcesses relate t implementatin f Capita prducts in 2013/14 prcesses will be reviewed accrdingly Sue Williams-Lee 31 st March 2013 Page 8 Review Summary Level f assurance Business Rates System cntrl bjective 1. Suitable, authrised plicies and prcedures are in place cvering Business Rates prcessing, and staff are aware f these and that they need t cmply with them. This audit examined the verall cntrl framewrk in place regarding Business Rates perated by the Leicestershire Revenues & Benefits Partnership n behalf f HBBC (as well as ther partners). A Significant Assurance Opinin was prvided, with 1 medium level and 6 lw level recmmendatins made. The individual level f assurance fr each system cntrl bjective reviewed is prvided belw. Significant Level f Assurance Full Significant Mderate Limited N 2. Relevant prperty recrds are accurately, cmprehensively and efficiently maintained and updated. 3. Business Rates liability is determined efficiently and in line with statutry requirements fr all prperties. 4. Billing prcedures are in accrdance with statutry regulatins and amunts due in CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

13 Review Summary Level f assurance respect f each chargeable prperty have been crrectly calculated and prmptly demanded frm the persn r persns liable. 5. The applicatin f reliefs and exemptins is authrised in accrdance with statute, the authrity s plicy and is supprted by dcumentary evidence. 6. Secure and efficient arrangements are made fr all cllectins, and all cllectins are prmptly psted t the crrect tax payers accunts. 7. Cllectin rates and ther key perfrmance indicatrs are regularly mnitred. 8. Refunds are in accrdance with regulatins and the Cuncil s Standing Orders and Financial Regulatins and all refunds are valid and authrised. 9. Recvery and enfrcement prcedures are managed efficiently and in accrdance with statutry requirements. 10. Nn-recverable debts are written-ff in accrdance with plicy and with suitable authrisatin. Page There is a rutine recnciliatin between the main accunting system, the Business Rates system and the Cash Receipting system. The 1 medium level risk issue and management s respnse are set ut belw: System Cntrl Objective 1: Suitable, authrised plicies and prcedures are in place cvering Business Rates prcessing, and staff are aware f these and that they need t cmply with them. Expected Cntrl Audit Finding Risk Risk Ranking 1.1 Plicies and Prcedures As recmmended during the previus audit, standard prcedure ntes shuld be develped t ensure that a cnsistent apprach t business rates prcessing is undertaken acrss all three cuncils within the partnership. This is included n the Partnership's Service Imprvement Plan fr 2012/13 which is mnitred n a mnthly basis. The expected cmpletin date is March Unintended incnsistencies in prcessing CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013 Recmmendatin 3 Every effrt shuld be given t ensuring that the cmpletin date f March 2013 fr the standardised prcedure ntes is achieved. Respnse Wh When Our plan is that prcesses and prcedures are harmnised by 31 st March Where prcesses relate t implementatin f Capita prducts in 2013/14 prcesses will be reviewed accrdingly Sue Williams-Lee 31 st March 2013 Onging

14 Review Summary Level f assurance Benefits System cntrl bjective 1 Suitable, authrised plicies and prcedures are in place cvering Benefits prcessing, verpayments and cunter fraud, and staff are aware f these and that they need t cmply with them. This audit examined the verall cntrl framewrk in place regarding Husing & Cuncil Tax Benefits perated by the Leicestershire Revenues & Benefits Partnership n behalf f HBBC (as well as ther partners). A Significant Assurance Opinin was prvided, with 4 medium level recmmendatins made. The individual level f assurance fr each system cntrl bjective reviewed is prvided belw. 2 Prcesses are in place t ensure all benefit claims are prcessed and payments made in accrdance with regulatins and relevant plicies, and are legitimate and apprpriate. Significant Level f Assurance Full Significant Mderate Limited N Page 10 3 All relevant recrds and accunts are accurately updated in a timely manner t recrd all benefits transactins (including recnciliatins t feeder and ther systems). 4 All payments and assciated utput are timely, recrded securely and data prtected against unauthrised access. 5 Overpayments f benefit are identified and accunted fr in accrdance with legislatin/regulatins, the rganisatin s plicy, standing rders and financial regulatins, and recvery (and where nn-recverable, write ff) arrangements are efficient and effective. 6 Fraud investigatin is in accrdance with statute, prfessinal guidelines and the rganisatin s Standing Orders, Financial Regulatins and relevant plicies. 7 Prcessing times, accuracy, verpayment levels, fraud case utcmes and ther key perfrmance indicatrs are regularly mnitred. The 4 medium level risk issues and management s respnse are set ut belw: CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

15 System Cntrl Objective 1: Suitable, authrised plicies and prcedures are in place cvering Benefits prcessing, verpayments and cunter fraud, and staff are aware f these and that they need t cmply with them. Expected Cntrl Audit Finding Risk Risk Ranking 1.1 Plicies and Prcedures As recmmended during the previus audit, standard prcedure ntes shuld be develped t ensure that a cnsistent apprach t benefits prcessing is undertaken acrss all three cuncils within the Partnership. This is included n the Partnership's Service Imprvement Plan fr 2012/13 which is mnitred n a mnthly basis. The expected cmpletin date is March Unintended incnsistencies in prcessing Recmmendatin 3 Every effrt shuld be made t ensure that the cmpletin date f March 2013 fr the standardised prcedure ntes is achieved. Respnse Wh When Our plan is that prcesses and prcedures are harmnised by 31 st March Where prcesses relate t implementatin f Capita prducts in 2013/14 prcesses will be reviewed accrdingly Leigh Butler 31 st March 2013 Onging Page 11 System Cntrl Objective 2: Prcesses are in place t ensure all benefit claims are prcessed and payments made in accrdance with regulatins and relevant plicies, and are legitimate and apprpriate. Expected Cntrl Audit Finding Risk Risk Ranking 2.1 New claim prcessing All new claims tested fr all three partners had a cmpleted applicatin frm and supprting dcumentatin n file. Of the sample f 75 claims tested (25 fr each partner authrity) 14 had been prcessed utside the 23 day turnarund target, althugh the average prcessing time fr the whle sample was 10.4 days. Recmmendatin Targets nt met. 3 Cntinue t mnitr and imprve prcessing deadlines f new benefit claims. Respnse Wh When We are aware f perfrmance and will cntinue t make changes required t imprve n this. Benefit Team Leaders have and will cntinue t imprve turnarund times. Leigh Butler & Benefit Team Leaders 31 st March 2013 and nging CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013 We are wrking with the DWP Perfrmance Divisin t imprve prcesses f Atlas/ETD

16 Expected Cntrl Audit Finding Risk Risk Ranking Recmmendatin Respnse Wh When data which in turn will assist new claim time 2.2 Change f circumstance prcessing All changes f circumstances had been prcessed crrectly and the claimant had been ntified in all cases. Of the sample f 75 claims tested (25 fr each partner authrity) 10 had been prcessed utside the 17 day turnarund target, althugh the average prcessing time fr the whle sample was 6.3 days. Targets nt achieved. Overpayments may be generated. 3 Cntinue t mnitr and imprve prcessing deadlines f changes f circumstances. We are aware f perfrmance and will cntinue t make changes required t imprve n this. Benefit Team Leaders have and will cntinue t imprve turnarund times. Leigh Butler & Benefit Team Leaders 31 st March 2013 and nging Page 12 We are wrking with the DWP Perfrmance Divisin t imprve prcesses f Atlas/ETD data which in turn will assist new claim time System Cntrl Objective 4: All payments and assciated utput are timely, recrded securely and data prtected against unauthrised access. Expected Cntrl Audit Finding Risk Risk Ranking 4.1 Declaratin f interests We cnfirmed thrugh discussin with the Partnership Manager that a declaratin f interests has nt been cmpleted fr all HBBC and NWL staff; fr the HDC staff a declaratin has been signed but was cmpleted in This matter was raised in the previus year s Internal Audit reprt and agreed t be addressed by January Management nted in respnse t the previus audit reprt that There is an audit lg held within the Capita Academy systems Emplyees culd access and prcess claims/ transactins invlving family and friends withut the Partnership r relevant Cuncil having any knwledge. Recmmendatin 3 a) Arrangements shuld be put in place as sn as practicable t ensure all staff declare any interests they may have. Respnse Wh When A respnse frm Unisn is due imminently end f December Wrk with HR teams t agree prcess fr this. Als HR will include within their wn plicies t ensure staff wh claim benefit / any claims maintenance will Leigh Butler & HR Managers 31 st March 2013 (Agreement with HR managers cncerning frms and prcedures t be adpted) CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

17 Expected Cntrl Audit Finding Risk Risk Ranking Respnse Wh When Recmmendatin Page 13 f wh has viewed and updated recrds. Additinally, a further system cntrl already exists which prevents users frm accessing pre-determined accunts. It shuld be nted that staff are made aware when they cmmence emplyment / sign their cntract that accessing the system fr nn wrk related r fraudulent purpses will lead t disciplinary actin, which culd result in dismissal. Clearly these are mitigatins hwever the need fr a declaratin f interests remains. The Partnership Manager advised that the prpsal currently is that HDC s declaratin f interest frm and NWL's declaratin statement will be used fr all staff within the Partnership. The Partnership Manager is currently discussing the declaratin with all 3 cuncil's Human Resurce Managers and Unisn t agree the cntents f and apprach t the declaratin. b) Staff shuld be prevented frm wrking n r accessing any cases in which they have declared an interest. c) In advance f the arrangements fr frmal declaratins being made by all staff, it wuld be prudent fr a reminder t be issued t all staff regarding their cntractual bligatins regarding accessing the benefits system/data and the pssible cnsequences f a breach. be undertaken by benefit team leader and must g thrugh that channel. Staff and system users will be infrmed t include cmpletin f declaratin Staff wh have declared an interest will nt have access t claim recrds and this is cntrlled within the benefit applicatin. Staff will be infrmed befre prcedure is implemented f the cntractual respnsibility t infrm and advise accrdingly. This will be crdinated thrugh HR teams 31 st May 2013 (Anticipated) 30th April 2013 (Anticipated) CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

18 Review Summary Level f assurance Page 14 Budgetary Cntrl System cntrl bjective 1 The Authrity prepares a Medium Term Financial Strategy (MTFS) which is designed t deliver strategic pririties and cntains rbust key assumptins. 2 Budgets are set in a structured, cmprehensive and rbust manner in accrdance with the rganisatins plans and bjectives and the MTFS. 3 Any changes t the startpint budget are apprpriately authrised, recrded and reprted (including virement). 4 Respnsibility fr cntrlling budgets is delegated t trained and clearly defined budget hlders wh receive apprpriate supprt frm the finance department. 5 Accurate and cmplete financial infrmatin is prduced in a timely manner t budget hlders and cmmittees fr inspectin, analysis and cntrl f budget perfrmance. 6 Budget variatins are analysed, investigated, explained and acted upn. 7 Regular and rbust frecasts are undertaken t prject utturn against budget. 8 Any savings plans established t ensure a balanced budget are rbust, and are reprted upn and mnitred at relevant Cmmittee and Cuncil level. This audit examined the verall cntrl framewrk in place regarding budgetary cntrl. A Full Assurance Opinin was prvided, with 1 lw level recmmendatin made. The individual level f assurance fr each system cntrl bjective reviewed is prvided belw. Full Level f Assurance Full Significant Mderate Limited N Custmer Services (receptin) This review was the first stage f a befre and after advisry assessment f the Cuncil s arrangements t assess and assure itself regarding custmer service at its receptin pint. The secnd stage f this wrk will be carried ut fllwing the Cuncil s ffice mve t Hinckley Hub. We prvided bservatins at this stage f the review, which related t the services currently being prvided at Argents Mead and preparatins fr the frthcming mve. The verall cnclusin reached at this stage f the review is that the Cuncil has been very practive in planning the mve f the receptin t the Hinckley Hub and that all pssible arrangements are in place t ensure that effective receptin services will be delivered at the new site with the minimum CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

19 level f disruptin. Management have identified a number f key issues and risks that arise frm the frthcming mve and are taking actin in each case t address these. Review Summary Level f assurance Payrll & Expenses System cntrl bjective 1 Permanent payrll data held n the system is accurate, and any amendments t payrll data are valid, accurate, apprpriately authrised and timely. This audit examined the key cntrls in place regarding payrll and expenses. A Full Assurance Opinin was prvided, with 1 lw level recmmendatin made. The individual level f assurance fr each system cntrl bjective reviewed is prvided belw. Full Level f Assurance Full Significant Mderate Limited N Page 15 2 All deductins made frm salaries are accurate, timely and authrised. 3 The payrll is prcessed in an accurate and timely manner, including any temprary variatins t pay. 4 The security f payrll data is adequately maintained. Review Summary Level f assurance Legal Services (IT audit - case management system) System cntrl bjective 1 The design, peratin, use, and management f data systems is subject t statutry, regulatry and cntractual security requirements. This audit examined the key cntrls in place regarding the implementatin f the system. A Significant Assurance Opinin was prvided, with 3 medium and 2 lw level recmmendatins made. The individual level f assurance fr each system cntrl bjective reviewed is prvided belw. 2 Access t data, infrmatin prcessing facilities, and business prcesses shuld be cntrlled n the basis f business and security requirements. Significant Level f Assurance Full Significant Mderate Limited N 3 System access and usage is apprpriately lgged and mnitred 4 The bjectives f the prject, user requirements and level f functinality required are CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

20 Review Summary Level f assurance achieved. 5 That reprts can be generated t gather apprpriate management infrmatin. The 3 medium level risk issues and management s respnse are set ut belw: Page 16 Expected Cntrl Audit Finding Risk Risk Ranking 2.1 Cntingency The current Business Cntinuity Plan fr Crprate and Scrutiny Services is dated 2009 and therefre des nt include elements specific t the IKEN management system (implemented in Nvember 2012). Further the requirements fr the availability f the IKEN system have nt been prvided t ICT t allw them t ensure that the applicatin is made available when required (thrugh their Disaster Recvery prcedures). 2.2 User Identificatin There are 6 user accunts that are generic n the IKEN Case Management System. It is accepted that the number f generic ID's may be due t the riginal implementatin f the system, where suppliers will usually include a number f accunts as part f the verall implementatin and these have nt been remved. Unnecessary delays in recvering critical systems. New systems nt included in Disaster Recvery prcedures, resulting in nnrecvery Unauthrised access undetected, lack f accuntability. Recmmendatin 3 Legal Services shuld ensure that the IKEN applicatin is risk assessed and a business impact analysis undertaken t determine Legal s requirements in the event that the system fails r is unavailable fr a perid f time. Results frm the abve exercise shuld then be detailed within the Business Cntinuity Plan fr Crprate and Scrutiny Services. ICT shuld be infrmed f the requirements fr supprting the IKEN applicatin t ensure that Disaster Recvery plans are in place. 3 Management shuld ensure that all staff, IT and Suppliers have individual user ID's that allw their actins n the IKEN system t be individually identified Respnse Wh When The business cntinuity plan is being updated currently as part f the Cuncil ff ice mve in May and June Legal s requirement s fr the IKEN system will be taken int accunt in this review. This matter is being raised with the supplier and we are requesting that they have individually identified lgns. We currently await a respnse. Adam Bttmley Senir Slicitr Adam Bttmley Senir Slicitr By end June 2013 July 2013 CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

21 Expected Cntrl Audit Finding Risk Risk Ranking Respnse Wh When Recmmendatin 2.3 Privilege Management There are three staff within the Legal Sectin with respnsibilities fr administrating IKEN, hwever, a review f user accunts and access levels identified three generic user accunts that als had either "IKEN supprt - Admin" r "System Administratr". Unauthrised users btaining access t sensitive data. 3 Ensure that the number f users with System Administratr access t IKEN is restricted t 2/3 staff within the sectin and that access t the rle is restricted t these staff. The three accunts nted are all generic accunts set up by the supplier and this is being addressed alng with pint 2.2 abve. Adam Bttmley Senir Slicitr July 2013 Review Summary Level f assurance Page 17 Husing Rents System cntrl bjective 1 Apprved plicies and prcedures are in place cvering all aspects f rent and arrears administratin and t ensure cmpliance with legal requirements. 2 Rent is charged crrectly n all prperties in accrdance with plicy, and with dcumented calculatins f grss and net rent fr each prperty. 3 Rbust arrangements are in place fr timely and cmplete cllectin f rent payments and crediting these t the crrect accunt. This audit examined the key cntrls in place regarding husing rents. A Significant Assurance Opinin was prvided, with 3 medium and 5 lw level recmmendatins made. The individual level f assurance fr each system cntrl bjective reviewed is prvided belw. Significant Level f Assurance Full Significant Mderate Limited N 4 Arrangements t deal with arrears cmply with plicy and ensure efficient recvery f utstanding sums. 5 Access t system functins is restricted t authrised persnnel and the security and integrity f the system is maintained. 6 Perfrmance against targets in cllecting rent and arrears is suitably mnitred. The 3 medium level risk issues and management s respnse are set ut belw: CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

22 System Cntrl Objective 4: Arrangements t deal with arrears cmply with plicy and ensure efficient recvery f utstanding sums. Expected Cntrl Audit Finding Risk Risk Ranking Respnse Wh When Recmmendatin Page Debt Cllectin Agency 4.2Recvery csts The Authrity des nt currently use the services f a debt cllectin agency. It was reprted that previus attempts t use an agency had nt yielded particularly successful results. The Cuncil des nt add recvery and curt csts t accunts that are in arrears. This decisin was taken at least fur r five years ag n the basis that adding such csts nly increased debt levels where there was little prspect f recvery. It is understd that this decisin was nt subject t frmal discussin and apprval at Cuncil level. Increasing risk f bad debts due t natinal changes in benefits payments. Increasing recvery csts being brne slely by the Cuncil. 3 The decisin nt use a debt cllectin agency shuld be recnsidered in the light f the pr ecnmic climate and the ptential impact that reductins in benefits payment may have n rent recvery rates. 3 In the light f nging reductins in benefits payments t tenants, the cuncil shuld frmally cnsider whether recvery and curt csts shuld be added, either in full r in part, t rent accunts in arrears. Review decisin nt t use debt cllectin agency, any review will be balanced with ur respnsibilities as a landlrd t supprt and assist tenants in difficultly. T review hw curt csts are dealt with. Sharn Stacey, Chief Officer Husing, Cmmunity Safety & Partnerships J Wykes, Husing Optins and Rents Manager Sharn Stacey, Chief Officer Husing, Cmmunity Safety & Partnerships J Wykes, Husing Optins and Rents Manager Octber 2013 Octber 2013 System Cntrl Objective 6: Perfrmance against targets in cllecting rent and arrears is suitably mnitred. Expected Cntrl 6.1Arrears Cllectin Mnitring Audit Finding Risk Risk Ranking Rent cllectin rates are regularly reprted n and mnitred thrugh the Cuncil's perfrmance management system. The rate is calculated n the basis f the amunt f rent cllected t date, which is then extraplated t take accunt f hwever many weeks f the year remain. The value f rent arrears is nt hwever immediately identifiable frm these rent cllectin rates, particularly as pre-paid accunts are included in the cllectin rate and Lack f clarity n specific mnitring f arrears recvery perfrmance. Likelihd f increased rent accunt arrears in current climate. CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013 Recmmendatin 3 In the light f reductins in benefit payments t cuncil tenants, the mnitring reprts prduced regularly fr senir management review shuld be strengthened t include specific data n the age prfile f rent accunts in arrears and ther perfrmance infrmatin related t actin taken n accunts in Respnse Wh When Wrk underway t increase perfrmance mnitring thrugh Husemark Sharn Stacey, Chief Officer Husing, Cmmunity Safety & Partnerships J Wykes, Husing Optins and Rents Manager July 2013

23 Expected Cntrl Audit Finding Risk Risk Ranking terminated tenant accunt debts are nt included in the calculatin. The system is capable f prviding details n aged debt analysis f accunts in arrears, althugh such reprts are nt rutinely prduced. As at 5/2/13 aged debt analysis was as fllws: Perid /s N f accunts Value ( ) 5-13 weeks , weeks , weeks 56 14, weeks 62 22,323,93 >1 year, < 2 years , > 2 years , Recmmendatin arrears. Targets shuld be set and mnitred fr reducing lng verdue rent arrears. Respnse Wh When Page 19 Member Standards f Cnduct arrangements We have cmpleted an advisry review n the arrangements in place regarding member standards f cnduct and have reprted n this wrk by letter t the Mnitring Officer. The review did nt prvide an verall assurance pinin, but raised matters fr cnsideratin where cnsidered apprpriate. We d nt cnsider there are any significant matters that need t be raised with this Cmmittee. 4. Recmmendatin tracking CW Audit Services has implemented a system fr tracking the actining f agreed Internal Audit recmmendatins, as a management assurance tl fr the Cuncil and specifically this Cmmittee. Managers are respnsible fr updating actins taken and ther key infrmatin directly n the system. A further update fr the Cmmittee is prvided belw. This refers t all actins agreed and due by 31/3/13 in relatin t audit reprts issued in the current year up t nw, and any remaining legacy actins carried frward frm reviews carried ut by the previus Internal Audit prvider. These latter issues have been referred t specifically in previus reprts t this Cmmittee at the end f 2011/12. CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

24 The first table belw represents the status f agreed actins due t be implemented by 31/3/2013, the secnd table the age f the utstanding recmmendatins (based n the riginal date due fr implementatin). The status shwn is as advised by the relevant manager/head f Service and des nt imply that Internal Audit have verified the status. Summary 1 Critical 2 High 3 Medium Due by 31/3/ Implemented Clsed (effectively implemented r system changed) In prgress but nt cmplete Lw Ttal Page 20 Outstanding (nt started) Time verdue fr actins /s r nt cmplete 1 Critical 2 High 3 Medium 4 Lw Ttal Less than 3 mnths mnths Greater than 6 mnths Ttal CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

25 The 2 issues mre than 6 mnths verdue are as fllws: Review Recmmendatin Risk Rating 2012/13 Husing Perfrmance management Repairs Management shuld ensure that perfrmance targets are set fr the husing repairs functin and these are regularly mnitred and reprted upn. In additin cnsideratin shuld be given t mnitring and reprting upn the perfrmance f cntractrs separately. Respnse 3 Regular perfrmance management infrmatin needs t be widened t cver the majr aspects f the service. Currently custmer satisfactin infrmatin is cllected and recrded. The Principal Husing Repairs Officer will ensure regular updating f infrmatin n the Cuncil s TEN. Current Status per update Nw being addressed as part f wider Husing Repairs Actin Plan. T be implemented by end July Page /13 Husing Repairs Husing repairs (cntractr) a) Management shuld review the ttal value f expenditure n cntractrs t ensure that the cuncil is btaining value fr mney in respect f their services. b) Cntractr perfrmance shuld be mnitred and reprted upn 3 A review f Cntractrs used, and the assciated spend, will take place t ensure value fr mney. These type f errrs will be reduced when the new Direct Wrks System is intrduced. Until then, randm checks f data quality will take place. Nw being addressed as part f wider Husing Repairs Actin Plan. T be implemented by end July c) Every effrt shuld be made t ensure pst inspectins are cmpleted in a timely manner. CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

26 2012/13 Internal audit plan Descriptin f audit Qtr 1 Qtr 2 Qtr 3 Qtr 4 Current Status Assurance level Budgetary Cntrl Final reprt issued Full Main Accunting Final reprt issued Significant Capital Accunting Agreed t be carried ut in Mayin prgress Cuncil Tax (see nte abve re LRBP) Final reprt issued Significant Page 22 Business Rates (see nte abve re LRBP) Benefits (see nte abve re LRBP) Benefit Fraud Investigatin ( jint review with OWBC) Final reprt issued Final reprt issued Assurance letter issued Significant Significant Significant Creditrs Final reprt issued Significant Debtrs Final reprt issued Significant Treasury Management Final reprt issued Significant Incme Management & Cash Receipting Crprate Gvernance (standards f cnduct) Final reprt issued Significant Letter issued (advisry) N/A CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

27 Descriptin f audit Qtr 1 Qtr 2 Qtr 3 Qtr 4 Current Status Assurance level Risk Management Final reprt issued Significant Custmer Services (receptin) Letter issued N/A Anti-Fraud & Crruptin Final reprt issued Significant Payrll & Expenses Final reprt issued Full Legal Services (IT audit - case management system) Final reprt issued Significant Page 23 Allcatins Chice Based Lettings Final reprt issued Full Husing Rents Tenant Scrutiny Sheltered Husing Final reprt issued Significant Requested t pstpne int 2013/14 plan Requested t pstpne int 2013/14 plan Argents Mead Draft Letter issued Twn Centre Regeneratin T be carried ut in 2013/14 Husing Repairs Final reprt issued Significant CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

28 Descriptin f audit Qtr 1 Qtr 2 Qtr 3 Qtr 4 Current Status Assurance level Fuel Cntrls Final reprt issued Significant Cntract Management (Grunds Maintenance) Final reprt issued Significant Additinal review: Husing Repairs Cmplete; reprt issued N/A Page 24 CW Audit Services Hinckley & Bswrth Brugh Cuncil Internal Audit Prgress Reprt 2012/13 June 2013

29 cw audit services Hinckley & Bswrth Brugh Cuncil Page 25 Annual Internal Audit Reprt 2012/13 May 2013 Getting value frm yur service Agenda Item 7

30 Cntents 1. Intrductin Annual Head f Internal Audit Opinin Wrk undertaken during the year... 3 Page 26

31 Page 27 1 Intrductin This annual reprt prvides my pinin (see sectin 2) as the Head f Internal Audit t Hinckley & Bswrth Brugh Cuncil. It als summarises the activities f Internal Audit fr the perid 1 st April 2012 t 31 st March The Cuncil is required by law (Accunts & Audit Regulatins 2011) t maintain an adequate and effective system f internal audit f its accunting recrds and internal cntrl systems in accrdance with prper internal audit practices. The Public Sectr Internal Audit Standards (PSIAS) require the Head f Internal Audit t prvide a written reprt t thse charged with gvernance, t supprt the Annual Gvernance Statement, AGS), setting ut: An pinin n the verall adequacy and effectiveness f the rganisatin s cntrl envirnment ; Disclse any qualificatins t that pinin, tgether with the reasns fr that qualificatin; Present a summary f the wrk carried ut by Internal Audit during the year frm which the pinin is derived, including any reliance that is being placed upn third party assurances; Draw attentin t any issues the Head f Internal Audit deems particularly relevant t the Annual Gvernance Statement (AGS) Cnsider delivery and perfrmance f the Internal Audit functin against that planned; Cmment n cmpliance with these Standards and the results f any quality assurance prgramme. The Cuncil shuld cnsider my pinin, tgether with management assurances, its wn knwledge f the rganisatin and assurances received thrughut the year frm ther review bdies (such as External Audit) when prducing its AGS. My pinin takes int accunt the range f individual pinins arising frm risk-based audit assignments that have been reprted thrughut the year. An internal audit plan was develped t prvide yu with independent assurance n the adequacy and effectiveness f systems f cntrl acrss a range f financial and rganisatinal areas. A summary f the wrk we have perfrmed and delivery against the plan is prvided in sectin 3. Alngside the delivery f the peratinal internal audit wrk, we have met regularly with Cuncil management t ensure any issues regarding ur perfrmance culd be highlighted and any necessary actin taken t reslve these. Fllwing each audit, management are als requested t prvide feedback n the service received. N significant issues r cncerns regarding the internal audit service have been raised t date. CW Audit Services Internal Audit Annual Reprt 2012/13 Hinckley & Bswrth Brugh Cuncil 1

32 Page 28 2 Annual Head f Internal Audit Opinin Rles and respnsibilities The rganisatin is respnsible fr establishing and maintaining apprpriate risk management prcesses, cntrl systems, accunting recrds and gvernance arrangements. Internal Audit prvides an independent and bjective pinin t the rganisatin n the cntrl envirnment and plays a vital part in advising the rganisatin whether these arrangements are in place and perating crrectly. The Annual Gvernance Statement (AGS) is an annual statement by the Leader and Chief Executive, that recgnises, recrds and publishes an authrity s gvernance arrangements. In accrdance with PSIAS, the Head f Internal Audit (HIA) is required t prvide an annual pinin, based upn and limited t the wrk perfrmed, n the verall adequacy and effectiveness f the rganisatin s risk management, cntrl and gvernance prcesses (i.e. the rganisatin s system f internal cntrl). This is achieved thrugh a risk-based plan f wrk, agreed with management and apprved by the Finance, Audit and Perfrmance Cmmittee, which shuld prvide a reasnable level f assurance, subject t the inherent limitatins described belw. The Head f Internal Audit s rle is als cvered by the CIPFA Guidance n the Rle f the Head f Internal Audit; we cnsider we cmply substantially with the cntent f this Guidance. The pinin des nt imply that Internal Audit have reviewed all risks and assurances relating t the rganisatin. The pinin is substantially derived frm the cnduct f risk-based plans. As such, it is ne cmpnent that the rganisatin takes int accunt in making its AGS. The Head f Internal Audit Opinin My pinin is set ut as fllws: 1. Overall pinin; 2. Basis fr the pinin; My verall pinin is that significant assurance can be given that there is a generally sund system f internal cntrl, designed t meet the rganisatin s bjectives, and that cntrls are generally being applied cnsistently. Hwever, sme weakness in the design and/r incnsistent applicatin f cntrls put the achievement f particular bjectives at risk. CW Audit Services Internal Audit Annual Reprt 2012/13 Hinckley & Bswrth Brugh Cuncil 2

33 The basis fr frming my pinin is as fllws: 1. An initial assessment f the design and peratin f the underpinning risk management framewrk and supprting prcesses; and 2. An assessment f the range f individual pinins arising frm risk-based audit assignments cntained within internal audit risk-based plans that have been reprted thrughut the year. This assessment has taken accunt f the relative materiality f these areas and management s prgress in respect f addressing cntrl weaknesses. 3. Any reliance that is being placed upn third party assurances. 3 Wrk undertaken during the year Page 29 Summary f assurances prvided During the curse f the year we have cnducted wrk t prvide assurance ver financial, gvernance and peratinal systems. Appendix One summarises the assurance levels we have given. Delivery f the plan An internal audit plan fr 2012/13 was develped t prvide yu with independent assurance n the adequacy and effectiveness f systems f cntrl acrss a range f financial and rganisatinal areas. T achieve this ur internal audit plan was divided int tw brad categries; wrk n the financial systems that underpin yur financial prcessing and reprting and then brader risk fcused wrk driven essentially by principal risk areas that had been identified in yur risk register. A summary f wrk undertaken is included belw: During the year we have undertaken reviews f yur cre financial systems (including financial management, general ledger and financial transactins) and given full r significant assurance with regard t the management f risk in these areas. We have undertaken a number f pieces f wrk n areas f principal risk. In general we have been able t cnclude that these systems are rbust and perate in a gd cntrl envirnment. It is my view, taking accunt f the respective levels f assurance prvided fr each audit review, an assessment f the relevant weighting f each individual assignment and the extent t which agreed actins have been implemented, that yu have a generally sund system f internal cntrl. Hwever we d need t highlight a Significant Internal Cntrl Issue that wuld require disclsure within yur AGS, as fllws: CW Audit Services Internal Audit Annual Reprt 2012/13 Hinckley & Bswrth Brugh Cuncil 3

34 Page 30 The Cuncil experienced issues regarding Husing Repairs management during 2012/13 which impacted n the accuracy and timeliness f budget management during the year. In ur rutine wrk we highlighted ptential cntrl imprvements including with regard t rdering and pricing f wrk; subsequently we were requested by the Cuncil t supprt an internal management review n Husing Repairs by assessing a detailed sample f repairs jbs. We prvided a reprt t the Cuncil n this additinal review which set ut a number f areas fr imprvement regarding rdering and pricing f wrk, arrangements t authrise internal and external wrks rders and variatins, and effective use f the Orchard system. Management tk accunt f ur findings and recmmendatins in their wn actin plan fr service imprvement, which has been reprted n t members during the year. Implementatin f this actin plan cntinues, and we will carry ut fllw-up review during 2013/14. Third party assurances In arriving at ur verall Annual Head f Internal Audit Opinin, we have nt sught t place reliance n any third party assurances. Fllwing up f actins arising frm ur wrk All recmmendatins and agreed actins are subject t an nging recmmendatin tracking prcess that is facilitated by CW Audit Services, but cmpleted by the relevant managers respnsible fr implementing the recmmendatins. This is undertaken n a self-assessment basis, but is supplemented by ur independent fllw-up reviews where this is deemed necessary (fr example fllwing the issuance f a limited r mderate assurance reprt). A summary f the recmmendatin tracking results fr the 2012/13 year is included as Appendix 2 t this reprt. In additin elements f ur wrk invlve annual cverage f key areas f cntrl fr the rganisatin, such as in relatin t key financial systems, and in such cases we als rutinely fllw up previusly-agreed actins at each review. Clsing remarks I have discussed and agreed this Annual Reprt and Head f Internal Audit Opinin with the Finance, Audit & Perfrmance Cmmittee. Further detailed findings, cnclusins and recmmendatins in the areas cvered by ur internal audit plan are cvered within the prgress reprts and individual assignment reprts that have been issued t the Cmmittee during the year. CW Audit Services Internal Audit Annual Reprt 2012/13 Hinckley & Bswrth Brugh Cuncil 4