Cambridgeshire and Peterborough Fire Authority. Internal Audit Progress Report Overview & Scrutiny Committee meeting 16 October 2014

Transcription

1 Cambridgeshire and Peterborough Fire Authority Internal Audit Progress Report Overview & Scrutiny Committee meeting 16 October 2014

2 Cambridgeshire & Peterborough Fire Authority 1 Introduction This report provides an update on progress against that plan and summarises the results of our work to date. We have finalised one report since the previous meeting. Summary of Progress against the 2014/15 Internal Audit Plan Assignment Reports considered today are shown in bold Status Opinion Actions Agreed (by priority) High Medium Low Fleet Management FINAL Fuel Cards DRAFT Draft report issued 18 August 2014 Communications 11 November 2014 Management of Key Suppliers 20 November 2014 Key Financial Controls 29 January 2015 Risk Management 03 February 2015 Succession Planning 16 February 2015 Follow up 24 February 2015 IT Shared Services Postponed until 2015/16 Other Matters Key Findings: The Overview & Scrutiny Committee should note that the assurances given in our audit assignments are included within our Annual Assurance report. In particular the Committee should note that any negative assurance opinions will need to be noted in the annual report and may result in a qualified or negative annual opinion. We have not identified any issues as a result of our work to date that will impact our annual report. Changes to audit plan We have been asked to delay the IT Shared Services to the 2014/15 plan. It is considered that management will obtain greater value from this review once the service had been fully established, with a longer period of operation. This was also agreed with Bedfordshire & Luton Fire and Rescue Service with whom this is a joint review. Information and Briefings: We have issued two updates electronically since the last meeting of the Overview and Scrutiny Committee these included areas on:

3 Cambridgeshire & Peterborough Fire Authority 2 Local Government News Briefing - July 2014 Collaboration - the bigger reward; Making savings from contract management; The National Fraud Initiative. Local Government News Briefing - June 2014 CIPFA Conference - Risk, Resilience, Reform: Creating a Sustainable Future; National Fraud Initiative, June 2014 report; Serious Crime Bill.

4 Cambridgeshire & Peterborough Fire Authority 3 Key Findings from Internal Audit Work Assignment: Title: Fleet Management (1.14/15) Opinion: Amber Red Headline Findings: Design of control framework. The following controls were effectively designed: Main front line vehicles, i.e. appliances, are acquired through a national Framework with Emergency One UK Ltd who acquires the main cab from Scania and then fit out the vehicle to the Services specification. Other fleet vehicles, i.e. vans and cars, are acquired through the Police Information and Technology Organisation (PITO) agreement led by the Police but extended to other emergency services. The current framework is with the Vindis Group from which VWs, Audis and Skodas can be acquired. Service Directors are eligible through approval from the Authority to but any car provided the overall cost is within a scheme limit. On an annual basis a capital budget for vehicle replacement is agreed between the Fleet Manager and the Head of Finance based on funding availability and vehicle expectations. The Service has an in-house developed Fleet Management database that it used to capture all vehicles and relevant information. Access to the database is allocated to nominated staff and user rights are applied. All front line vehicles, i.e. appliances, are serviced at intervals of 13 weeks by the in-house Fleet Technicians. In a few instances where specialist equipment is involved this has to be done by external parties. All fleet vans and cars are on long life service intervals, these being 18,000 miles. All such cars have a management system that will display a warning to the driver when a service is due and when this appears they are required to notify Fleet who will arrange for the service to be carried by the Vindis Group. The Technicians will also undertake minor repairs, defect corrections etc. where possible and practical. Cases outside of these will be sent to a relevant specialist company to action. Data on services due and works carried out are recorded on the Fleet Management database. The Service has documented Financial Regulations, Scheme of Budgetary Delegation and Contract Standing Orders, the latter including requirements to be followed to ensure that external works are subject to appropriate value for money scrutiny through the obtaining of quotes and or undertaking tenders. There is within the Contract Standing Orders the ability to obtain an exemption to the VFM requirements in certain circumstances. All fleet vehicles are insured through Zurich Municipal and there is a 1,000 excess for any claim. There is a consortium of nine Fire and Rescue Services that have negotiated the insurance cover. All accidents must be notified to Fleet by phone/text as soon as they have happened with a standard accident report form being completed and submitted as soon as possible thereafter. Once notified of an accident an inspection of the vehicle will be undertaken to determine if an insurance claim is going to be submitted. Minor works may be done by the Technicians with other repairs going to designated body repair shops or mechanical companies if required. Costs of accident repairs are recorded on the accident tabs within the Fleet Management database and also on a separate insurance database managed by the Finance Advisor who will deal with any claims to the insurance company. The Service s Contract Standing Orders detail the requirements on disposal of assets which should be either through public auction sale or through obtaining quotes and or a tender from invited sources. The Authority has approved a sale to staff scheme for cars and vans which is run along E-bay lines with staff being able to bid to buy the vehicle. In addition Operational Officers who have had a provided car can, in accordance with their contract, purchase their car when they retire or leave the service. In these later case the Fleet Manager will consult the Glass s Guide, which is the UK s leading motor vehicle guide, to identify a market price which will be set as the reserve for any sale.

5 Cambridgeshire & Peterborough Fire Authority 4 The following controls were not designed effectively and have resulted in recommendations being made; The Fleet Manager pulled together several years ago, from documents obtained from other Services, a Fleet and Transport Asset Management Plan that details the underlying functionality for fleet management and was to be used to gauge the Service s vehicle requirements over the coming years through an acquisition and disposal schedule. The Plan was never fully developed or approved, although the vehicle replacement requirements over coming years has been used to inform budget management. We have made a medium priority recommendation that the Plan requires formalising and approving. The Service has not sought to obtain any national information indicators around key fleet management data, which could then be used to inform and enhance the existing in-house information indicators that are still classed as being work in progress. We have made two low priority recommendations to address these issues. Application of and compliance with control framework. Controls were effectively applied and complied with the exception of the following where recommendations have been made: Due to the nature of works required to maintain the fleet use is made of specialist and or single supplier organisations, these being: Acquisition of spares for vehicles which would have to come from manufacturer concerned in order to protect any warranty. Mechanical repairs to appliances which would require the manufacturer to undertake these. Servicing of specialist equipment that can only be undertaken by limited parties. Whilst testing considered that the usage of these types of organisations was approved by the Fleet Department, the Department had not complied with Contract Standing Orders in that they, for works over 5,000, did not obtain the required quotes and did not seek the alternative exemption from the Director of Resources. We have made a medium priority recommendation to address this issue. Testing around fleet spend noted that in addition to above cases there were a few instances where total spend in a year has exceeded the 5k threshold at which point quotes should have been obtained, but had not, and again no exemptions had been sought. We have therefore made a medium priority recommendation that an exercise should be undertaken to identify total spend with any one organisation in excess of 5k and undertake some benchmarking exercise, where possible, to ensure that best value is being obtained. Any agreements falling out of the benchmarking should be formalised in writing or where no benchmarking is possible then a permanent exemption be sought from the Director of Resources in accordance with Contract Standing Orders. This exercise can also be used for on-going monitoring of spend against individual suppliers and anticipate the need for an exemption or to seek quotes or tenders. Testing in relation to accident management identified that in the majority of cases there were discrepancies behind information and costs contained in the accident section of the Fleet Management database and the insurance database managed by Finance. Additionally there were a large number of historic cases where we would have expected these to have been cleared and thus closed down on both systems. A medium priority recommendation to undertake some reconciliation work to bring the database up to date and accurate has been made. Testing around disposals of cars/vans noted that where they are not sold to staff use is made of an auction company based in Norwich. When a vehicle is identified the company is notified, they will collect it, clean it and then provide the Fleet Manager with an indication as to what they expect the vehicle will fetch in an auction. The Fleet Manager will consider the expected price and provided this meets any Service expectation, or is near, will instruct the auction company to proceed. If on the day of the auction the vehicle does not meet the anticipated price they will telephone the Fleet Manager to seek approval to sell at a lower figure. The above processes are all currently verbal arrangements and there is no formal agreement/contract in place that validates the processes being undertaken. We have made a medium priority recommendation to address this matter.

6 Cambridgeshire & Peterborough Fire Authority 5 Action Responsible Officer Date Rec 1.1a - Medium The Fleet and Transport Asset Management Plan should be reviewed in light of the findings of this review, including taking into account any recommendations that may need addressing within the Plan. Once revised the Plan should be submitted to the appropriate management/authority body to be formally approved. The Plan should then be reviewed on a regular basis and updated as required. Rec 1.1b - Low In light of any changes identified within this review the opportunity should be taken to develop and document simplified procedures, flow carts or guidance notes covering the key operations undertaken by the Fleet Department. (Low) Rec 1.2a Low G Wiggins February 2015 Authority meeting G Wiggins By J Fagg By The users and their role profiles with access to the Fleet Management database should be reviewed for completeness, accuracy and appropriateness. Annual reviews should be conducted in the future. Rec 1.2b Low Care should be taken to ensure that all details regarding service requirements, MOT due date and tax due dates are recorded on the fleet management database. Rec 1.3 Low A Jackson 2015 J Fagg By In line with the review of users/profiles to the Fleet Management database the opportunity should be taken to ensure that the list of technicians included in the database is up to date. Additionally the hourly rate for the technicians should be verified annually with the Director of Resources (or appropriate party) and adjusted where needed. A record of the rates to be applied should be retained. Rec 1.4a Medium Contract Standing Orders details the requirements to be followed via the obtaining of written quotes or doing tenders to ensure that the Service obtains best value for money. Within Contract Standing Orders there is the facility to obtain an exemption from the Director of Resources in cases where use has to be made of specialist suppliers for maintenance, parts etc. for the fleet. A review of such suppliers should be undertaken G Wiggins

7 Cambridgeshire & Peterborough Fire Authority 6 and the appropriate permanent exemption obtained from the Director of Resources and thereafter managed in accordance with requirements. Rec 1.4b Low Care should be taken to ensure that any spend against a vehicle is recorded on the fleet management database. More diligence is required to marry up orders raised to invoices received to database recording. G Wiggins ASAP Rec 1.4c Medium Contract Standing Orders state that where the total spend with a supplier is in excess of 4,999 the requirements for obtaining value for money through written quotes and or tenders should be followed. A review of the spend by supplier in excess of 5k should be undertaken with a view to: G Wiggins Consider undertaking value for money exercise with suitable other parties. Where specialism is involved arrange for permanent exemption waivers to be obtained. Establishment of formal agreements/contracts with the suppliers to be engaged with. Used for on-going monitoring of spend against individual suppliers. Rec 1.5 Low Service Administration and Management Order Section 4 Finance Part 6 Insurance Arrangements should be amended to reflect actual excesses operating under the current insurance policy. Rec 1.6 Medium In respect of vehicle accidents and subsequent management of repairs, including where appropriate insurance claims we would recommend: A Jackson G Wiggins A Jackson ASAP A review should be undertaken between the insurance database managed by Finance to the insurance section within the Fleet Management database to ensure completeness, accuracy of agreement of accident outcomes and associated accident costs. There is a need to establish more rigorous procedures to ensure that any repairs carried out following an accident are captured and the values recorded on the systems. A review to be undertaken to try to close done the number of open accident cases on both systems.

8 Cambridgeshire & Peterborough Fire Authority 7 Rec 1.7a Medium A formal agreement/contract should be established with the current auction company which includes the procedures and approval process to be employed for vehicle sales. Rec 1.7b Low Closer linkage with Finance around vehicle sales is needed to ensure that all sales are captured and the Fleet Management database updated as required. G Wiggins G Wiggins ASAP ASAP Rec 1.8 Low Benchmarking with other Services should be undertaken periodically in relation to key functions and costs to provide national performance indicators. Rec 1.9 Low Local performance indicators to be developed following collection of national indicators. The local indicators should be agreed with management and reported on a regular basis. M Moore M Moore As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at The matters raised in this report are only those which came to our attention during the course of our review and are not necessarily a comprehensive statement of all the weaknesses that exist or all improvements that might be made. Recommendations for improvements should be assessed by you for their full impact before they are implemented. This report, or our work, should not be taken as a substitute for management s responsibilities for the application of sound commercial practices. We emphasise that the responsibility for a sound system of internal controls rests with management and our work should not be relied upon to identify all strengths and weaknesses that may exist. Neither should our work be relied upon to identify all circumstances of fraud and irregularity should there be any. This report is supplied on the understanding that it is solely for the use of the persons to whom it is addressed and for the purposes set out herein. Our work has been undertaken solely to prepare this report and state those matters that we have agreed to state to them. This report should not therefore be regarded as suitable to be used or relied on by any other party wishing to acquire any rights from Baker Tilly Risk Advisory Services LLP for any purpose or in any context. Any party other than the Board which obtains access to this report or a copy and chooses to rely on this report (or any part of it) will do so at its own risk. To the fullest extent permitted by law, Baker Tilly Risk Advisory Services LLP will accept no responsibility or liability in respect of this report to any other party and shall not be liable for any loss, damage or expense of whatsoever nature which is caused by any person s reliance on representations in this report. This report is released to our Client on the basis that it shall not be copied, referred to or disclosed, in whole or in part (save as otherwise permitted by agreed written terms), without our prior written consent. We have no responsibility to update this report for events and circumstances occurring after the date of this report. Baker Tilly Risk Advisory Services LLP is a limited liability partnership registered in England and Wales no. OC at 6th floor, 25 Farringdon Street, London EC4A 4AB Baker Tilly Risk Advisory Services LLP