WASTE DISPOSAL SITES & RECYCLING INTERNAL AUDIT REPORT. Duncan Wilkinson Head of Audit and Risk Management

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1 INTERNAL AUDIT REPORT WASTE DISPOSAL SITES & RECYCLING Duncan Wilkinson Head of Audit and Risk Management AUDIT REPORT - E271/06 FEBRUARY 2006

2 SECTION INTERACTIVE INDEX PAGE EXECUTIVE SUMMARY 1 INTRODUCTION 1 2 CONCLUSIONS 3 3 WAY FORWARD 3 FINDINGS SUMMARY 4 GOOD INTERNAL CONTROLS 4 5 RISKS AND CONTROL WEAKNESSES 5 6 MINOR CONSIDERATIONS 6 MANAGEMENT ACTION PLAN 7 CONTACTS & CIRCULATION 8 AUDIT REPORT - E271/06 FEBRUARY 2006

3 EXECUTIVE SUMMARY 1. INTRODUCTION 1.1 Background Milton Keynes Council is responsible for providing collection points for household waste which are known as Civic Amenity (CA) sites or 'Community Recycling Centres.' There are three sites in Milton Keynes, based at Bleak Hall, New Bradwell and Newport Pagnell. The sites are operated by Waste Recycling Group (WRG) under a contract, which will last until WRG have sublet the sites to Aaron Day Recycling (ADR). Milton Keynes Council also owns a Materials Recycling Facility 'MRF' based in Old Wolverton, which burnt down in April As a consequence the contract with operators 'Cutts Brothers' (Doncaster) was suspended. However, it was then decided by Cabinet in accordance with Rule 3(a) of the contracts Procedures Rules, exceptional circumstances would warrant the suspension of the normal tendering process, and allow the rapid rebuilding of the MRF by not seeking competitive tenders. Thus, Cutts Brothers were reawarded the tender to transfer/handle materials at the MRF and rebuild it. 1.2 Objectives and Scope The objectives of the audit were to ensure that: All contracts are awarded in accordance with MKC procedures. (Policies & Procedures) Payments are accurate, valid and complete. (Payments) There are Health & Safety controls and a risk assessment has been undertaken for the service. (Health & Safety) There is adequate management monitoring of the service. (Management Monitoring) The audit covered the period from April 2005 to December AUDIT REPORT - E271/06 1 FEBRUARY 2006

4 1.3 Volume Indicators (Recovery of Materials at CA sites, 2004/5) Material Tonnes GREEN WASTE 3,438 HARDCORE 2,419 CARDBOARD 333 NEWSPAPERS & MAGAZINES 226 RE-USE 1,007 WOOD 707 BATTERIES 101 SCRAP 2,880 OIL 35 TEXTILES 4 TOTAL RECOVERED 11,150 CA SITE RESIDUALS 22,411 TOTAL 33,561 % RECOVERY 33.2 The above volume indicators are noted in the Waste Strategy Report, which were presented to Cabinet in December The overall Waste & Energy budget is 15,253,180 and the total expenditure to date (January 2006) is 11,147,503. AUDIT REPORT - E271/06 2 FEBRUARY 2006

5 2. CONCLUSIONS 2.1 The audit findings demonstrate that the system of control is basically sound, although there are minor weaknesses, which may put some of the system objectives at risk. 2.2 The contract with WRG and Cutts is operating to a good standard with regular monitoring and meetings being undertaken with the contractors to highlight and action any problems. The only area identified with weaknesses related to payments, which could result in a possible financial loss to the Council if not resolved. 2.3 All Good Internal Controls identified are recorded (Section 4) and all Risks and Control Weaknesses identified that give rise to a recommendation are summarised in a table (Section 5). 3. WAY FORWARD 3.1 All the recommendations identified are included in the Management Action Plan (Page 7). However, the key recommendations are summarised below to provide a summary of those areas where management are required to focus their attention: 3.2 Ensure that there is adequate supporting documentation to confirm the accuracy of all invoices. AUDIT REPORT - E271/06 3 FEBRUARY 2006

6 FINDINGS SUMMARY 4. GOOD INTERNAL CONTROLS The following areas were tested and confirmed as having good internal controls with no problems to report: Management Monitoring The BVPI s for the MRF are improving annually towards Government expected targets Monthly meetings are held between the Chief Waste Management Engineer and the Accountancy Assistant (Environment) to review budgets. To date the overall Waste & Energy budget is under spent. 4.2 Policies & Procedures The contract with Cutts to rebuild the MRF was agreed and authorised by Cabinet. 4.3 Health & Safety All recommendations made in the Risk Management Evaluation for both the MRF and Civic Amenities are either implemented or in progress Assurance was provided that the recommendations made by the MKC Health & Safety Team in the Safety Inspection at the Civic Amenity Sites Report have been dealt with as part of weekly meetings with contractors. A capital scheme that will see two Civic Amenity sites change dramatically by making them safer and more efficient is also in progress. AUDIT REPORT - E271/06 4 FEBRUARY 2006

7 FINDINGS SUMMARY (continued) 5. RISKS AND CONTROL WEAKNESSES Ref Theme Findings Risks (Implications) 1 Payments 2 Payments 3 Payments There is insufficient evidence to confirm the complete accuracy of the Transport from Civic Amenity Site Invoice sent by WRG. Supporting documents are not available to verify the accuracy of the gate fee invoice from the Doncaster MRF. The weighbridge at the MKC MRF provides limited assurance because since the fire all tickets issued have been handwritten. Invoice may not reflect service received. Possibility of errors resulting in a financial loss to MKC. Possibility of errors resulting in a financial loss to MKC. Recommendation Ensure that WRG provide evidence to confirm the accuracy of the Transport from Civic Amenity Site Invoice. Ensure that the Doncaster MRF provides electronic weighbridge tickets to confirm invoice accuracy. Ensure that an electronic weighbridge ticket system is introduced at the MK MRF to confirm invoice accuracy. NB Any cost implications arising from implementation of the recommendations by HBS must be agreed in advance with the appropriate Client Officer and the Partnership Delivery Manager. AUDIT REPORT - E271/06 5 FEBRUARY 2006

8 FINDINGS SUMMARY (continued) 6. MINOR CONSIDERATIONS 6.1 Health & Safety Regular meetings are held with contractors to discuss Health & Safety issues and the MKC Health & Safety Team undertake general safety checks as part of an inspection programme. However the Waste & Energy Section do not retain up to date copies of operators Health & Safety Policies. This reduces assurance that operators Health & Safety Policies comply with MKC standards. It is suggested that the Waste Operations Manager obtains Health & Safety Polices from all future contractors and holds them within the Waste & Energy Section. AUDIT REPORT - E271/06 6 FEBRUARY 2006

9 MANAGEMENT ACTION PLAN The recommendations are categorised on the following basis: Essential - Implementation is required with immediate effect to address a weakness that fundamentally undermines the control of that system. Important - Implementation is required within a short period of time to address weaknesses that seriously undermine the control of that system. Standard - Management need to take recommended action within a reasonable period to address weaknesses that may undermine system control. Ref Recommendation Categorisation Management Comments Manager Responsible 1 Payments Ensure that WRG provide evidence to confirm the accuracy of the Transport from Civic Amenity Site Invoice. Important Agreed Waste Operations Manager Target Date 30/04/2006 Payments 2 Ensure that the Doncaster MRF provides electronic weighbridge tickets to confirm invoice accuracy. Important Agreed Waste Strategy Manager 30/04/ Payments Ensure that an electronic weighbridge ticket system is introduced at the MK MRF to confirm invoice accuracy. Important The Waste Strategy Manager confirmed that as part of the refurbishment electronic weighing will be re-instated. Waste Strategy Manager 30/04/2006 NB Any cost implications arising from implementation of the recommendations by HBS must be agreed in advance with the appropriate Client Officer and the Partnership Delivery Manager. AUDIT REPORT - E271/06 7 FEBRUARY 2006