Appendix 2 FINAL REPORT AMBER ASSURANCE West London Waste Authority Cash / Receipts DATE: 30 October 2013 CLIENT: West London Waste Authority AUDITOR: Cher Covey, Auditor MANAGER: Susan Dixson Head of Internal Audit REPORT DISTRIBUTION LIST: Ian O Donnell - Treasurer Jim Brennan Director Diane Makepeace Interim Head of Finance Internal Audit
Executive Summary 1. The review forms part of the 2013/14 Internal Audit annual plan which has been developed from a risk assessment and consultation process. This review provides an independent and objective opinion on the system under review by evaluating its effectiveness in achieving the organisations objectives. 2. The objective is to ensure that robust financial processes and procedures are in place for the collection of income. 3. The scope (agreed key risk areas) is: Lack of appropriate procedures / training in place to safeguard funds Misappropriation / theft of income taken through the weighbridge Waste not going via the weighbridge and income not being collected Income not banked / reconciled 4. Recommendations made have been rated according to risk: High Risk: major issues that require action, key objectives will not be met and serious threat of fraud. Medium Risk: serious threat to the achievement of objectives and potential threat of fraud. Low Risk: best practice where there is a small effect on objectives. 5. All internal audit reports are given an assurance rating. Amber reports will indicate medium risk in need of attention to prevent them becoming high risk. 6. Arrangements for the collection of income will be changing in 2014 and Harrow Council will no longer be responsible for this. From January 2014 West London Waste Authority will also no longer be collecting trade income at the Victoria Road site, however will continue to collect trade and DIY income at Twyford Road and DIY income at Victoria Road. Audit Opinion 7. This is an Amber report. Overall 70% of the expected controls were found to be in place and operating effectively, 4% were substantially operating, 13% were partially in place with a further 13% not operating. Although the percentages indicate an amber/green assurance the report has been rated as amber due to the 3 high risk recommendations. Seven recommendations have been made to address the weaknesses identified, 3 were rated as high risk, 3 were rated as medium risk and 1 was rated as low risk. The most significant weaknesses relate to there being no formal / consistent procedures in place at the sites for collection of income through the weighbridge, taking cash payments and the potential for entries where a vehicle has only been weighed in which can be deleted without trace from the system. Agreed Actions 8. All recommendations have been agreed for implementation.
DETAILED REPORT Control Strengths 9. The following controls are in place and operating effectively to mitigate the key risks: LACK OF APPROPRIATE PROCEDURES / TRAINING IN PLACE TO SAFEGUARD FUNDS It was reported that there are procedures in place at Twyford Road Staff have been fully trained on income collection procedures MISAPPROPRIATION / THEFT OF INCOME TAKEN THROUGH THE WEIGHBRIDGE Vehicles are inspected before weighed to establish the type of waste to be disposed of Vehicles are weighed in before the waste is deposited Vehicles are weighed out after the waste has been deposited A weighbridge ticket is produced which includes relevant information e.g. weight and vehicle registration The amount payable has been recorded on the weighbridge ticket Income (cash / credit card payments) is processed through the till At the end of each day the till is cashed up (minus the float) Income is stored in a safe until ready for collection and banking Receipts of payment are issued and a copy retained WASTE NOT GOING VIA THE WEIGHBRIDGE AND INCOME NOT BEING COLLECTED The cost of disposing of waste has been set at a reasonable level There are CCTV cameras in place which cover the weighbridge and site Vehicles are inspected as they enter the site to determine the waste to be disposed of Vans and trailers are identified when they enter the site There are system restrictions in place which do not allow staff to alter completed weighbridge entries INCOME NOT BANKED / RECONCILED Banking is carried out on a regular basis and in accordance with insurance arrangement Transferring the money from the office safe to the Civic Centre Cashiers Section in undertaken by the Harrow Cash In Transit Team Amounts have been banked intact Where discrepancies are identified these are recorded on the documentation Regular reconciliation of income is undertaken
DETAILED REPORT / ACTION PLAN Ref Associated Risk Control Weakness Recommendation Risk Rating H/M/L 1. KEY RISK: LACK OF APPROPRIATE PROCEDURES / TRAINING IN PLACE TO SAFEGUARD FUNDS 1.1 Lack of There are no formal consistent Formal documented procedures H consistency in procedures in place for the collection should be compiled which cover processing of income through the weighbridge the collection and processing of income through at Victoria Road and Twyford Road. income through the weighbridge the weighbridge It was reported that Twyford Road and the handling of cash. Once have their own procedures. procedures have been compiled these should be distributed to the sites. 2. KEY RISK: MISAPPROPRIATION / THEFT OF INCOME TAKEN THROUGH THE WEIGHBRIDGE 2.1 Theft / Misappropriation of cash Lack of appropriate trail and identification of the method of payment Both sites currently take cash and debit/credit card payments. Where an individual pays by credit card a 1.5% transaction fee is applied which is paid by West Waste. For 2012/13 this equated to approximately 2,800. The weighbridge ticket which is produced from the system does not distinguish between cash and credit card payments. These are all recorded as cash payments on the ticket. (a) Consideration should be given to introducing a cashless system by only accepting card payments. If a decision is made to introduce this West Waste should consider making debit card payments the more desirable method of payment by passing on the credit card levy to the customer. (b) The system should be investigated to establish whether the weighbridge ticket can distinguish between cash and debit/credit card payments. If a decision is made to introduce a cashless system then this should be amended to distinguish between credit and debit card payments. H M Agreed Action / Responsible Officer / Implementation Date Documented procedures will be compiled and distributed to all sites. Head of Finance and Performance 1 Jan 2014 It is proposed to introduce cashless systems from April 2014, and consideration is being given to the charging for the use of credit cards. Director 1 April 2014 It is proposed to introduce cashless systems from April 2014., Operations April 2014
Ref Associated Risk 2.2 Inadequate trail of payments received Misappropriation of funds DETAILED REPORT / ACTION PLAN Control Weakness Recommendation Risk Rating H/M/L It was identified that for 1 of the days It should be ensured that all M takings inspected for Victoria Road 1 weighbridge tickets are processed weighbridge ticket was not recorded through the till formally and are not on the till receipt and 2 weighbridge handwritten on to the till receipt. ticket amounts had been handwritten on. However the total from the weighbridge tickets matched to the transaction printout from the system and all income had been banked. Agreed Action / Responsible Officer / Implementation Date Agreed. 1 December 2013 3. KEY RISK: WASTE NOT GOING VIA THE WEIGHBRIDGE AND INCOME NOT BEING COLLECTED 3.1 Customers not CCTV is not used as a spot checking Consideration should be given to paying to method to identify that vehicles have using CCTV to spot check vehicles dispose of waste not disposed of waste without going on a random basis to identify any through the weighbridge. vehicles that may not have disposed of waste via the weighbridge which should have done. L Random monthly checks to be performed by the Operations Manager Operations 1 December 2013
Ref Associated Risk 3.2 No trace of deleted weighbridge tickets DETAILED REPORT / ACTION PLAN Control Weakness Recommendation Risk Rating H/M/L It was reported that if a customer The admin supervisors at the sites H has their vehicle weighed in and should not have access to be able then change their mind before to delete entries from the system. If disposing of the waste, the admin a customer changes their mind this supervisor at the sites has access to should be voided on the system to be able to delete the entry on the provide an audit trail. system with no trace. However on occasions the admin supervisor may have to operate the weighbridge as cover. Therefore on those occasions there is no separation of duties in place. Agreed Action / Responsible Officer / Implementation Date To contact Infotech, software provider to establish whether this function can be restricted without limiting other system functionality that is required. I January 2014 4. KEY RISK: INCOME NOT BANKED / RECONCILED 4.1 Discrepancies It was reported that banking sheets with banking not are not checked by a second officer identified at the sites apart from if a discrepancy is found. Banking sheets should be checked by a second officer (where capacity allows) before banking and initialled to evidence they have been checked. M Banking sheets to be countersigned wherever possible. 1 December 2013