Essex Fire Authority. Fleet Management. Internal Audit Report (4.12/13) 28 February 2013 FINAL. Overall Opinion

Transcription

1 Essex Fire Authority Fleet Management Internal Audit Report (4.12/13) 28 February 2013 FINAL Overall Opinion

2 Essex Fire Authority Fleet Management 4.12/13 CONTENTS Section Page Executive Summary 1 Action Plan 4 Findings and Recommendations 6 Debrief meeting 13 August 2012 Draft report issued Revised Draft issued Responses received 10 January August January December 2012 Auditors Mark Jones, Director Dan Harris, Associate Director Suzanne Lane, Senior Manager Andrew Pattison, Assistant Manager Sammy Olugboji, Auditor Final report issued 28 February 2013 Client sponsor Peter Warner, Engineering Manager, Fleet and Equipment Services. Distribution Peter Warner, Engineering Manager, Fleet and Equipment Services. This review has been performed using RSM Tenon s bespoke internal audit methodology, i-ris. The matters raised in this report are only those which came to our attention during our internal audit work and are not necessarily a comprehensive statement of all the weaknesses that exist, or of all the improvements that may be required. Whilst every care has been taken to ensure that the information provided in this report is as accurate as possible, based on the information provided and documentation reviewed, no complete guarantee or warranty can be given with regard to the advice and information contained herein. Our work does not provide absolute assurance that material errors, loss or fraud do not exist. This report is prepared solely for the use of Essex Fire Authority. Details may be made available to specified external agencies, including external auditors, but otherwise the report should not be quoted or referred to in whole or in part without prior consent. No responsibility to any third party is accepted as the report has not been prepared, and is not intended for any other purpose RSM Tenon Limited RSM Tenon Limited is a member of RSM Tenon Group RSM Tenon Limited is an independent member firm of RSM International an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity. RSM Tenon Limited (No ) is registered in England and Wales. Registered Office 66 Chiltern Street, London W1U 4GB. England

3 Essex Fire Authority 1 Fleet Management 4.12/13 1 EXECUTIVE SUMMARY 1.1 INTRODUCTION An audit of Fleet Management was undertaken as part of the approved internal audit periodic plan for 2012/13. Essex County Fire and Rescue Service (referred to as the Service hereafter) operate a fleet workshop at Lexden where maintenance and servicing is carried out on the Authority s vehicle and equipment fleet. The Service s fleet consists of 1040 in service items of equipment, operational appliances, and other vehicles. It has a total budget of 3.1m for fleet management for the year. The Service uses an Information Management system known as Sophtlogic MIS to maintain vehicle records including servicing and inspection carried out on its fleet and equipment. The Engineering Manager is in overall charge of fleet management, supported by an assistant, a Transport Manager and a Workshop Manager. A Vehicle and Equipment Asset Strategy has been established to set the direction of the Service in managing its fleet of vehicles and equipment. External legislation is set by Vehicle and Operator Services Agency (VOSA), Driver and Vehicle Licencing Agency (DVLA) and Department for Transport (DfT) as well as manufacturer s recommendations on service schedules and service content and the Chief Fire Officers Association Transport Officers Group Best Practice Manual are followed for the maintenance requirements for the different types of vehicles. The audit was designed to assess the controls in place to manage the following objective and risk: Objective Risk The Service manages its fleet to ensure both operational and support functions have access to vehicles and equipment that are fit for purpose, safety and legally compliant. The Service is unable to respond to emergencies appropriately due to an inadequate fleet of vehicles and is at risk from legal challenge if vehicles and equipment are not maintained and controlled in accordance with Road Traffic legislation. 1.2 CONCLUSION Taking account of the issues identified, the Auhority can take reasonable assurance that the controls upon which the organisation relies to manage this risk are suitably designed, consistently applied and effective. However we have identified issues that, if not addressed, increase the likelihood of the risk materialising. The above conclusions feeding into the overall assurance level are based on the evidence obtained during the review. The key findings from this review are as follows: Design of control framework We found that the following controls were designed adequately: The Service has established a Vehicle and Equipment Asset Strategy 2011 that has been communicated to relevant staff through surgery sessions. The Service has established fleet management system on which Vehicle records are adequately maintained. Sample testing confirmed that vehicles were appropriately procured through the National Framework agreement. Sample testing confirmed that scheduled inspections and services are completed as planned.

4 Essex Fire Authority 2 Fleet Management 4.12/13 Sample testing confirmed that monthly and quarterly inspections are conducted on the organisation s fleet of vehicles as planned. Sample testing confirmed that vehicles are appropriately insured. Daily and weekly checks are to be completed by the drivers of the vehicles. Records of this are maintained in the vehicle log book. Compliance issues with this control were identified and of which the Service were aware and were in the process of addressing through the Service Delivery department. Sample testing confirmed that Fleet Workshops are notified of all defects and defects are prioritised and the necessary works completed as per the timeframes of their priority. The Service monitors several Key Performance Indicators (KPIs) relating to vehicle maintenance on a monthly basis. These include completed jobs against planned maintenance. A stock taking programme exists to ensure the Fleet Services stock is regularly monitored for completeness. The Service has undertaken activities to benchmarked Fleet Management to ascertain whether it is providing value for money. A 2008 study found the workshops to be a beacon of best practice and the review demonstrates that an external market testing exercise is unlikely to generate any notable long-term operational or commercial benefit. In 2011/12 the Workshops carried out maintenance for a trial number of vehicles for Braintree District Council and were found to be cheaper and more effective than Braintree District Council s existing contractor. The only identified weaknesses in relation to the design of the controls resulted in a low priority recommendation detailed within the Action Plan. Application of and compliance with control framework We found that one of the controls identified above was not fully complied with which resulted in a medium priority recommendation: Three out of five vehicles sampled had not had daily and weekly checks evidenced. This could lead to a potential avoidable incident occurring with a vehicle which could have health and safety and reputational implications. We also made a further two low priority recommendations, which are detailed within the action plan that follows. 1.3 SCOPE OF THE REVIEW To evaluate the adequacy of risk management and control within the system and the extent to which controls have been applied, with a view to providing an opinion. Control activities are put in place to ensure that risks to the achievement of the organisation s objectives are managed effectively. When planning the audit, the following controls for review and limitations were agreed: Control activities relied upon: Framework for Fleet Management; Fleet management financial reviews; Maintenance programme; and Insurance for fleet vehicles. Limitations to the scope of the audit: The following limitations to the scope of the audit were agreed when planning the audit: Testing has been on a sample basis only; We have not provided an opinion as to whether the correct or appropriate vehicles have been purchased; We have not provided an opinion as to whether the vehicles are in a fit for purpose condition; In addition, our work does not provide any guarantee against material errors, loss or fraud or provide an absolute assurance that material error, loss or fraud does not exist. It should not, therefore, be considered as a comprehensive review of all aspects of noncompliance that may exist now or in the future.

5 Essex Fire Authority 3 Fleet Management 4.12/13 The approach taken for this audit was a Risk-Based Audit. 1.4 RECOMMENDATIONS SUMMARY The following tables highlight the number and categories of recommendations made. The Action Plan at Section 2 details the specific recommendations made as well as agreed management actions to implement them. Recommendations made during this audit: Our recommendations address the design and application of the control framework as follows: Priority High Medium Low Design of control framework Application of control framework Total ADDITIONAL FEEDBACK Good Practice Identified During the Audit We observed that Fleet Services had undertaken a number of exercises which have confirmed the value offered by this service. This includes a 2008 study which found the workshops to be a beacon of best practice and demonstrated that an external market testing exercise was unlikely to generate any notable long-term operational or commercial benefit to the Service. In 2011/12 the Workshops carried out maintenance for a trial number of vehicles for Braintree District Council and were found to be cheaper and more effective than the Council s existing contractor. We have also made a suggestion where we have identified good practice that the organisation may wish to consider: Suggestions Made During the Audit It would be beneficial for a next review date to be included on the Quality Manual to assist in identifying when the guidance becomes obsolete.

6 Essex Fire Authority 4 2 ACTION PLAN The priority of the recommendations made is as follows: Priority High Medium Low Description Recommendations are prioritised to reflect our assessment of risk associated with the control weaknesses. Ref Recommendation Categorisation Accepted (Y/N) Management Comment Implementation Date Manager Responsible 1 The disposal of vehicles and equipment should be documented, referring specifically to financial aspects and secure disposal within an appropriate policy / procedure. Low Y Clarification on the disposal process will be added to the Vehicle and Equipment Asset Strategy Manual. September 2013 Peter Warner, Engineering Manager, Fleet and Equipment Services 2 Local Station Managers should be required to verify that daily checks have been conducted and recorded within vehicle log books. Medium Y Agreed September 2013 Peter Warner, Engineering Manager, Fleet and Equipment Services 3 The Service should ensure that job cards take minimal time whilst being moved around departments for authorisation. Low Y Fleet services are aware of the possible causes to delays to processing job cards and are addressing these with suppliers and Fleet staff. Changes to the recording method of job dates will be implemented. Supervisors and Engineers will Completed Peter Warner, Engineering Manager, Fleet and Equipment Services

7 Essex Fire Authority 5 Ref Recommendation Categorisation Accepted (Y/N) Management Comment Implementation Date Manager Responsible receive instruction on the new processes in due course. 4 The stock checking programme should be delivered to an appropriate timeframe to ensure stock is regularly checked. Low Y Agreed September 2013 Peter Warner, Engineering Manager, Fleet and Equipment Services

8 Essex Fire Authority 6 3 FINDINGS AND RECOMMENDATIONS This report has been prepared by exception. Therefore, we have included in this section, only those areas of weakness in control or examples of lapses in control identified from our testing and not the outcome of all audit testing undertaken. Controls (actual and/or missing) Adequate Design (yes/no) Test Result / Implications Recommendation Categorisation Risk: The Service is unable to respond to emergencies appropriately due to an inadequate fleet of vehicles and is at risk from legal challenge if vehicles and equipment are not maintained and controlled in accordance with Road Traffic legislation. 1 The Vehicle and Equipment Asset Strategy nor any other written policies provide sufficient guidance on the process for disposals. No We noted that the Vehicle and Equipment Asset Strategy did not provide adequate guidance on vehicle disposal. Whilst we understand from the Engineering Manager that a clear process is in place a lack of adequate guidance regarding vehicle disposal increases the risk of it not being fit for purpose and not being effective in guiding staff in the conduct of fleet management tasks. If disposals are not conducted appropriately the organisation could incur financial loss if such assets are potentially disposed of at an inappropriate value or vehicles may be disposed of insecurely. The disposal of vehicles and equipment should be documented, referring specifically to financial aspects and secure disposal within an appropriate policy / procedure. Low 2 Daily and weekly checks are completed by the drivers of the vehicles. Records of this are maintained in the vehicle log book. Faults noted are escalated to the Reception Engineer who then makes arrangements for the Yes We reviewed the vehicle log books relating to five vehicles which were under servicing/repair at the workshop during the audit for evidence of daily and weekly checks as well as maintenance of service handbooks and operator manuals. We found that daily checks were not evidenced within the log book for three out of the five vehicles on a regular basis. A review of the vehicles Local Station Managers should be required to verify that daily checks have been conducted and recorded within vehicle log books. Medium

9 Essex Fire Authority 7 Controls (actual and/or missing) vehicle to be brought in for servicing/repair. Adequate Design (yes/no) Test Result / Implications Recommendation Categorisation servicing handbooks and operator manuals in the five vehicles revealed that in two cases, the servicing handbooks had not been stamped as evidence that the service due was carried out. We understand from the Engineering Manager that they receive regular notifications of issues identified during daily checks, therefore he has confidence that these are taking place, however, they are not being recorded. It was noted that the Engineering Manager was taking steps to address the need to evidence the check carried out with the operations department which we understand includes the production and issuing of a DVD explaining how a daily check should be undertaken. However, non-completion of daily and weekly checks could lead to vehicles having defects that are not picked up on time and could cause further damage to the vehicle. This could result in the malfunction of a vehicle which could impact on the health and safety of employees and members of the public. 3 It is a requirement for the service s fleet to receive a quarterly and annual inspection. The Reception Engineer raises the quarterly and annual inspection report on a monthly basis. Job cards are issued to the workshop for completion of the scheduled inspection. Yes We reviewed a sample of 10 cars in the authority's fleet for regular conduct of quarterly and annual inspection. We confirmed from records and the MIS system that inspections were completed as and when required. The job cards relating to the inspections were also fully completed and signed off by the workshop supervisor. Discussions with the Engineering Manager and Workshop Supervisor however revealed that the The Service should ensure that job cards take minimal time whilst being moved around departments.. Low

10 Essex Fire Authority 8 Controls (actual and/or missing) Inspections are then notified to the engineers by means of schedule sheets printed off the MIS system. The Workshop Manager signs off on the job card for completion of the inspection and passes the job cards to fleet department for input on the fleet management system. Adequate Design (yes/no) Test Result / Implications Recommendation Categorisation job cards report the time from when the job card is issued to when the job has been notified to the driver or keeper of the vehicle as complete. Job cards could however still be in the process of passing around several departments for recording purposes whilst the vehicle has already left the workshop. A report prepared by the Engineering Manager revealed several job cards still circulating among departments whereas the vehicle had already left the workshop. We were able to confirm that Jobs were completed within the expected time lines. 4 A stock of spares is maintained at the workshop. This is controlled by the Stock Supervisor who issues out stock for repairs based on need. Stocks of spares are placed in the stores by bin location, labelled with stock code and description as appropriate. Items subject to warranty claims are segregated and labelled with the claim details. A stock-taking programme is delivered to ensure Fleet Services maintain an appropriate level of stock. Yes A review and observation of the stockholding process revealed the following: Stocks were kept in a locked store next to the workshop. Access was by means of a locked door and keys were held by the Stores Supervisor and his Assistant. The engineers make verbal requests for parts needed to the stores officers. Stores Officers create the order on the MIS system putting details of the part and supplier code and details. They then send this off to the supplier by e- mail. The supplier delivers the part with a receipt. The receipt was signed and stamped by stores officers to confirm agreement with the order. The issue of stock is recorded on the system against the record for the job. Once entered, the stock for the item is updated. The stock checking programme should be delivered to an appropriate timeframe to ensure stock is regularly checked. Low We obtained the Stock Check Programmes for 2012 and not that a programme for checking the organisations stock existed. However, the programme did not demonstrate that any stock had

11 Essex Fire Authority 9 Controls (actual and/or missing) Adequate Design (yes/no) Test Result / Implications Recommendation Categorisation been checked since July We observed that some items of stock of small parts had not been labelled in the store and were informed that a stock check of these items was to be conducted in due course. If regular stock taking is not conducted it will be more difficult for the Service to identify any potential misuse of stock or be assured that all stock is accounted for.