data.bassetlaw.gov.ukdistrict council offices, potter street, worksop, notts. s80 2ah audit and risk...

District Council Offices, Potter Street, Worksop, Notts. S80 2AH

AUDIT AND RISK SCRUTINY COMMITTEE

AGENDA Meeting to be held in

The Ballroom,

Town Hall, Retford,

on

Thursday, 30th May 2013

at

6.30 p.m. (Please note time and venue)

(Please turn off mobile telephones during meetings. In case of emergency, Members/officers can be contacted on the Council's

mobile telephone: 07702 670209)

AUDIT AND RISK SCRUTINY COMMITTEE Membership 2013/14 Councillors A. Battey, R. B. Carrington-Wilde, D. Challinor , M. T. Gray, F. Hart,

C. Palmer, J. Sanger, Mrs. C. Troop and C. Wanless Substitute Members: Any Member except those appointed to the Cabinet Quorum: 3 Members Lead Officers for this Meeting Mr. M Hill - Ext. 3174 Mrs. R. Theakstone - Ext 3160 Administrator for this Meeting Miss C Crossland - Ext. 3254

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Thursday, 30th May 2013

INDEX OF AGENDA ITEMS

1. APOLOGIES FOR ABSENCE

2. DECLARATIONS OF INTEREST BY MEMBERS AND OFFICERS (Members and Officers' attention is drawn to the attached notes and form)

(a) Members (b) Officers

3. MINUTES OF THE MEETING HELD ON 7TH MARCH 2013 * (pages 7 - 10) 4. MINUTES FOR ACTION AND IMPLEMENTATION * (page 11) 5. OUTSTANDING MINUTES LIST * (page 13) SECTION A – ITEMS FOR DISCUSSION IN PUBLIC Key Decisions None. Other Decisions 6. REPORT(S) OF THE DIRECTOR OF RESOURCES AND INTERIM CHIEF EXECUTIVE*

(a) Annual Audit Progress Reports 2012/13 (pages 15 – 36) (b) Internal Audit Annual Report 2012/13 (pages 37 - 64) (c) Internal Audit Charter (pages 65 - 72) (d) Internal Audit Strategy and Plan 2013/14 (pages 73 - 112) (e) Internal and External Audit Protocol 2013/14 (pages 113 - 126) (f) Annual Audit Fee 2013/14 (pages 127 - 142) (g) Progress on the Annual Governance Statement Actions for 2012/13

(pages 143 - 146) (h) Budget Monitoring and Capital Programme Update Report to 31st March 2013

(pages 147 - 178) (i) Corporate Risk Management Quarter 4 2012/13 (pages 179 - 186)

Exempt Information Items The press and public are likely to be excluded from the meeting during the consideration of the following items in accordance with Section 100A(4) of the Local Government Act 1972. SECTION B - ITEMS FOR DISCUSSION IN PRIVATE Key Decisions None

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Other Decisions None 7. ANY OTHER BUSINESS WHICH THE CHAIRMAN CONSIDERS TO BE URGENT * Report attached NOTES: 1. The papers enclosed with this Agenda are available in large print if required. 2. Copies can be requested by contacting us on 01909-533254 or by e-mail

[email protected]

C:\Users\cc03\Desktop\PDF Agenda\Audit\Final\declaration of interest - approved June 2012.doc

Agenda Item No. 2

DECLARATION OF INTEREST

COMMITTEE ………………………………………………………………………………

DATE ……………………………………………………………………..

NAME OF MEMBER : ……………………………………………………………………………… Type of Interest 1. Disclosable Pecuniary 2. Non Pecuniary Agenda Item

No. REASON * Type of Interest

(1 or 2)

Signed

Dated

Note:

* When declaring an interest you must also state the nature of your interest. Completion of this form is to aid the accurate recording of your interest in the Minutes. The signed form should be provided to the Minuting Clerk at the end of the meeting. A nil return is not required. It is still your responsibility to disclose any interests which you may have at the commencement of the meeting and at the commencement of the appropriate Agenda item.

C:\Users\cc03\Desktop\PDF Agenda\Audit\Final\declaration of interest - approved June 2012.doc

DECLARATION OF INTERESTS

HOW TO USE THIS FORM

There are now only two types of Declaration of Interest: Disclosable Pecuniary Interests ) Details can be found in the Councillors ) Code of Conduct which is contained in ) the Council’s Constitution (a summary is Non Pecuniary Interests ) printed below) Upon receipt of the attached form you will need to enter the name and date of the Committee and your own name. By looking at the Agenda you will no doubt know immediately which Agenda Items will require you to make a Declaration of Interest. Fill in the Agenda Item number in the first column of the form. Enter the subject matter and any explanations you may wish to add in the second column. In the third column you will need to enter either if you are declaring a disclosable pecuniary interest, or a non pecuniary interest. The form must then be signed and dated. Please remember that if during the actual meeting you realise that you need to declare an interest on an additional Agenda Item number please simply amend the form during the meeting. The form must be handed into the Committee Administrator at the end of the meeting. NB. The following is a summary prepared to assist Members in deciding at the actual meetings their position on INTERESTS it is not a substitute for studying the full explanation regarding INTERESTS, which is contained in the Council’s Constitution and the Code of Conduct for Councillors, which is legally binding. Members and Officers are welcome to seek, PREFERABLY WELL IN ADVANCE of a meeting advice from the Council’s Monitoring Officer on INTERESTS.

Disclosable Pecuniary Interests Action to be Taken May relate to employment, office, trade, profession or vocation carried on for profit or gain May relate to sponsorship May relate to contracts May relate to interests in land May relate to licences to occupy land May relate to corporate tenancies May relate to securities

Must disclose to the meeting - existence of the interest - the nature of the interest - withdraw from the room - not seek improperly to influence a decision on the matter

Non Pecuniary Interests Action to be Taken May relate to any body of which you are a member or in a position of general control or management and to which you are appointed or nominated by the Council May relate to any person from whom you have received a gift or hospitality with an estimated value of at least £25 A Member may also have a non pecuniary interest where a decision in relation to that business might reasonably be regarded as affecting wellbeing or the wellbeing of other council tax payers, or ratepayers or inhabitants in the electoral division or ward, as the case may be, affected by the decision. . (Note – there are special provisions relating to “Sensitive Interests” which may exclude the above provisions in certain circumstances.)

Must disclose to the meeting - existence of the interest - the nature of the interest - not seek improperly to influence a decision on the matter.

DRAFT AUDIT AND RISK SCRUTINY COMMITTEE

Minutes of the Meeting held on Thursday, 7th March 2013 at Retford Town Hall Present: Councillor D Pidwell (Vice-Chairman in Chair)

Councillors B Barker, I J Campbell, C Entwistle, C Palmer, J Sanger, C Troop and C Wanless

Officers: C Crossland, J Foulger, M Hill, M Ladyman and D Watson Others present: R Barnett – Audit (RSM Tenon) (The Chairman welcomed all to the meeting and read out the Fire Alarm/Evacuation Procedure.) 64. APOLOGIES FOR ABSENCE Apologies for absence were received from Councillor R B Carrington-Wilde. 65. DECLARATIONS OF INTEREST BY MEMBERS AND OFFICERS (a) Members There were no declarations of interest by Members. (b) Officers There were no declarations of interest by officers. 66. MINUTES OF THE MEETING HELD ON 12TH FEBRUARY 2013 RESOLVED that the Minutes of the meeting held on 12th February 2013 be approved. 67. REPORTING MINUTES (a) Performance Sub-Committee – 29th November 2012 RESOLVED that the minutes of the meeting of the Performance Sub-Committee held on 29th November 2012 be received. (Councillor J Sanger entered the meeting) 68. MINUTES FOR ACTION AND IMPLEMENTATION RESOLVED that the Minutes for Action be received. 69. OUTSTANDING MINUTES LIST In response to questions raised in respect of Outstanding Minute No. 53(a), Retford Market Consultation, the Director of Community Services advised that he would provide an update for Members. RESOLVED that the Outstanding Minutes List be received.

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70. CHANGE OF AGENDA ORDER The Chairman advised a change in Agenda order so that Items No. 8(a) and 9(a) would be considered first, then the agenda order would resume. Other Decisions 71. REPORT(S) OF THE HEAD OF FINANCE AND PROPERTY

(a) Internal Audit Progress Reports 2012/13 Members were presented with a summary of the outcome of work completed, five reports relating to the 2012/13 audit plan have been finalised. Twenty recommendations have been raised in total, of which two recommendations were classified high risk, seven recommendations classified as medium risk and eleven recommendations have been classified as low risk. Members were updated on individual audit findings. Elected Members asked questions regarding the audit on CCTV, CCTV warning signs not being in place and the procurement audit. Members commented that a lot of work has been put into improving the procurement process and those involved should be congratulated. The Chairman thanked R Barnett for his report. RESOLVED that:

1. The Internal Audit Progress Report 2012/13 be received and actions taken or to be taken be noted.

2. Officers involved in improving the procurement process be congratulated. 72. REPORT(S) OF THE DIRECTOR OF COMMUNITY SERVICES (a) Bridge Street Project Management Members were advised that the Bridge Street Project aims to improve the environment and operation of Bridge Street and revitalise the Town Centre. D Watson, Economic Development Officer and Project Manager, presented a PowerPoint presentation to advise Members on: the project aims; objectives; development of the scheme; influences; the relocation of the market; key issues; and the plan of work. Members were advised that the project is still on track and within budget. The main work will be completed by the middle of April. Elected Members asked questions/ raised issues about: re-paving; consultation with disabled residents; penalties for not delivering on time; community safety; economic benefits from the project; relocation of the market; night time economy; and gateways to the Town Centre and Victoria Square. In response to questions raised Members were advised that the Disabilities and Access Officer was consulted and all materials are compliant with the requirements. Members were advised that there are no penalties for the contractors not completing on programme as this is often reflected in the contract price and the contract value involved would not warrant such charges. The Chairman thanked M Ladyman and D Watson for their update. RESOLVED that the presentation be received.

Key Decisions

73. REPORT(S) OF THE DIRECTOR OF RESOURCES (a) Budget Monitoring and Capital Programme Update Report to 31st December 2012 The Chairman welcomed J Foulger, Principal Management Accountant, to the meeting. Members were provided with information on: the spending position for the period 1st April to 31st Decmber 2012 for the General Fund, Housing Revenue and Capital Programme; any significant variances from the approved budgets; the proposed resourcing of the Capital Programme and the level of Council capital resources available, including capital receipts; updates on regeneration projects and sites that are not monitored through the Council’s Capital Programme; and updates on Treasury Management for the period ending 31st December 2012. Elected Members asked questions / raised issues about: under achievement in relation to fees and charges; market charges; encouraging traders to Retford Market; National Non Domestic Rates and write-offs; under-achievement of printing recharges; and Town Hall income and Barnsley Premier Leisure. Ideas to generate income included sponsorship and advertising. In response to concerns raised in relation to under-achievement on fees and charges, Members were advised that annual fees and charges are reviewed and decisions are made if it is feasible to increase fees. Officer’s try and set fees and charges to generate the most income. It is difficult to forecast some income, for example planning, which is dependent on the economy. The Head of Finance and Property advised that income generating ideas are needed and Directors are aware of the issue. In response to questions in relation to the difference in charges for Worksop and Retford Markets, Members were advised that it is intended to bring the charges in line with each other and the pricing structure needs simplifying. Members suggested that there should be some incentive for market traders to have a stall at Retford Market and that if Worksop market is full traders should be encouraged to take up a stall at Retford. In relation to issues raised about the under- achievement of printing recharges, Members were advised that internal printing has decreased and the Senior Support Services Manager is looking at the viability of the unit. The Chairman thanked J Foulger for the report. RESOLVED that:

1. The Budget Monitoring and Capital Programme Update Report to 31st December 2012 be noted

2. That information be provided to Members in relation to the market stall process. 3. An update be provided to a future meeting on printing recharges and the Print and Design

Unit. 4. An update be provided to a future meeting in relation to Officer ideas to generate income.

Other Decisions 74. REPORT(S) OF THE HEAD OF FINANCE AND PROPERTY (a) Corporate Risk Management Quarter 3 2012/13

Members were presented with Corporate Risk Management Quarter 3 2012/13 report, which updated Members on the current level of assurance that can be provided against each corporate risk. The report outlined actions taken by officers on the Council’s Corporate Risk Register. Elected Members asked questions regarding the timescale for the organisational review. Members were advised that this will commence as soon as possible. RESOLVED that progress of actions identified within the Corporate Risk Register be noted. (b) National Developments in Counter-Fraud Members were presented with two publications, Fighting Fraud Locally: The Local Government Fraud Strategy by the National Fraud Authority, and Protecting the Public Purse 2012 by the Audit Commission. ‘Protecting the Public Purse’ provides an opportunity to benchmark the Council’s own performance in detecting fraud, and to identify strengths, trends and areas for improvement including a checklist. Officers have completed the checklist for Bassetlaw; the Council is compliant with the majority of guidelines with the exceptions being due to a lack of staffing resource. Elected Members asked questions about housing tenancy fraud. RESOLVED that the two publications be received and the completed anti-fraud checklist for Bassetlaw be noted. SECTION B – ITEMS FOR DISCUSSION IN PRIVATE Key Decisions None. Other Decisions None. 74. ANY OTHER BUSINESS WHICH THE CHAIRMAN CONSIDERS TO BE URGENT As there was no other urgent business to consider, the Chairman closed the meeting.

Agenda Item No. 4

MINUTES FOR ACTION AND IMPLEMENTATION SHEET

AUDIT AND RISK SCRUTINY COMMITTEE 07/03/13

FROM: Democratic Services Officer TO: HFP = Head of Finance and Property DSO = Democratic Services Officer SMSS = Senior Manager Support Services TCM = Town Centre Manager The following decisions are brought to your attention for action by the appropriate officers within your Service:

71. REPORT(S) OF THE HEAD OF FINANCE AND PROPERTY

(a) Internal Audit Progress Reports 2012/13 RESOLVED that:

1. The Internal Audit Progress Report 2012/13 be received and actions taken or to be taken be noted.

2. Officers involved in improving the procurement process be congratulated. HFP _________________________________________________________________________________ 73. REPORT(S) OF THE DIRECTOR OF RESOURCES (a) Budget Monitoring and Capital Programme Update Report to 31st December 2012 RESOLVED that:

1. The Budget Monitoring and Capital Programme Update Report to 31st December 2012 be noted

2. That information be provided to Members in relation to the market stall process. TCM

3. An update be provided to a future meeting on printing recharges and the Print and Design Unit. SMSS

4. An update be provided to a future meeting in relation to Officer ideas to generate income HFP

Agenda Item No. 5


7th March 2013 OUTSTANDING MINUTES LIST Members please note that the updated positions are shown in bold type following each item. (DCommS = Director of Community Services, HFP = Head of Finance and Property, SMSS = Senior Manager Support Services) Min. No.

Date

Subject Decision

Officer Responsible

53(a)

7.02.12

General Fund Budget 2012/13

The outcome of the Retford Market consultation exercise be reported back to the Committee.

DCommS

Update to be given at a future meeting

73(a) 07.03.13 Budget Monitoring and

Capital Programme Update Report to 31st December 2012

2. An update be provided to a future meeting on printing recharges and the Print and Design Unit. 3. An update be provided to a future meeting in relation to Officer ideas to generate income

HFP/ SMSS

Updates to be given at a future meeting

Agenda Item No. 6(a) BASSETLAW DISTRICT COUNCIL

AUDIT & RISK SCRUTINY COMMITTEE

30th MAY 2013

REPORT OF THE DIRECTOR OF RESOURCES AND INTERIM CHIEF EXECUTIVE

INTERNAL AUDIT PROGRESS REPORTS 2012/13

Cabinet Member: Finance & Property Contact: R. Barnett Ext: 01159 489400 1. Public Interest Test 1.1 The author of this report, Rob Barnett, has determined that the report is not

confidential. 2. Purpose of the Report 2.1 To provide Members with information regarding the following internal audits:

1) Members Expenses Covalent AT – 39 2) Localism Act Covalent AT - 41 3) Safeguarding Children & CRB Checks Covalent AT - 38 4) Markets Covalent AT - 27 5) Parks and Open Spaces Covalent AT - 37 6) Contaminated Land Covalent AT - 40 7) Tax (PAYE) N/A 8) Follow-up (4) Covalent AT - 36

3. Background and Discussion 3.1 Internal Audit is an assurance function that primarily provides an independent and

objective opinion to the organisation on the control environment comprising risk management, control and governance by evaluating its effectiveness in achieving the organisation’s objectives. It objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economic, efficient and effective use of resources.

3.2 A progress report has been provided so that Members are aware of the work

undertaken by Internal Audit and can satisfy themselves that adequate reviews have been undertaken and that appropriate responses have been provided by Managers.

3.3 Recommendations made have been prioritised to identify their respective risk,

High, Medium or Low. Risk is a function of consequence and probability of occurrence.

3.4 For the eight internal audits outlined above, fifty-three recommendations have

been raised in total, of which two recommendations have been classified as High Risk, and twenty-three recommendations have been classified as Medium Risk.

There are also twenty-eight Low Risk recommendations that are not detailed within this report.

3.5 Just for clarity, the recommendations containing high risks are the ones that officers must give priority to addressing, as these represent a weakness in controls.

3.6 As a further internal control measure, the Chair of this Committee, the Leader of

the Council and the Head of Finance & Property will meet with the relevant Portfolio Holder and the Manager(s) of the service concerned for all reports that have received a ‘red’ (or in some circumstances a ‘red/amber’) audit assurance level. Just for clarity a ‘red’ assurance level is defined as “the Authority cannot take assurance that the controls upon which the organisation relies to manage this risk are suitably designed, consistently applied or effective. Action needs to be taken to ensure the risk is managed.”

3.7 Within this report there are no ‘red’ audits.

4. Implications

a) For Service Users As contained within the individual reports. b) Strategic & Policy As contained within the individual reports. c) Financial Ref: 14/945 As contained within the individual reports. d) Legal Ref: 148/05/13 Internal audit is an assurance function providing independent and objective

opinion to the organisation on internal control and effective use of resources.

e) Human Resources As contained within the individual reports. f) Community Safety, Equalities, Environmental As contained within the individual reports. g) Whether this is a key decision, and if so the reference number This is not a key decision.

5. Options, Risks and Reasons for Recommendations 5.1 The recommendations are contained within each individual report. Officers and

management have the option to not agree with the recommendation; however this must be because of a valid operational and practical reason. The risks can be varied and therefore it is important that weaknesses are addressed as soon as practically possible.

6. Recommendations 6.1 Members receive the Report and note actions taken or to be taken.

Background Papers Location Audit Files RSM Tenon Office, Nottingham

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CONTENTS SECTION

5

Appendix A Appendix B Appendix C

The matters raised inhat exist, or of all then the information poes not provide abs

This report is preparxternal auditors, buas not been prepare

© 2010 RSM Tenon

RSM Tenon Limited RSM Tenon Limited etwork of independ

RSM Tenon Limited

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4/01/13 17/01/13

4/01/13 18/01/13

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08/10/12 13/10/12

0/12/12 04/01/13

03/12/12 12/12/12

20/08/12 18/10/12

08/10/12 12/10/12

5/10/12 19/10/12

22/10/12 05/11/12

30/10/12 07/11/12

29/10/12 06/11/12

08/10/12 29/10/12

CIL

ttee

3 08/01/13 1

2 08/01/13 0

3 28/01/13 3

3 28/01/13 2

2 14/12/12 1

2 22/10/12 2

3 08/01/13 2

2 13/12/12 0

2 29/10/12 2

2 22/10/12 0

2 22/10/12 0

2 06/11/12 2

2 21/11/12 1

2 07/11/12 1

2 29/10/12 1

11/02/13 11/02/

06/02/13 11/02/

31/01/13 2/02/1

29/01/13 29/01/

12/02/13 12/02/

22/01/13 22/01/

22/01/13 22/01/

09/01/13 09/01/

23/11/12 26/11/

03/12/12 03/12/

06/11/12 9/11/1

28/11/12 29/11/

11/11/12 11/12/

19/11/12 20/11/

14/11/12 19/11/

5

13 March 2013

13 March 2013

13 March 2013

13 March 2013

13 March 2013

13 February 201

13 February 201

13 February 201

12 January 2012

12 January 2012

12 January 2012

12 January 2012

12 January 2012

12 January 2012

12 January 2012

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

3 Risk Based

3 Risk Based

3 Risk Based

2 Risk Based

2 Risk Based

2 Risk Based

2 Risk Based

2 Risk Based

2 Risk Based

2 Risk Based

Internal Aud

(7) GR

(12) GRAM

(10) GR

(6) GRAM

(7) GRAM

6 GR

5 GR

6 GR

6 GR

8 GR

8 GR

20 GR

8 AMGR

7 GR

5 RED-A

dit Progress Repo

REEN 0

REEN-MBER

1

REEN 0

REEN-MBER

1

REEN-MBER

0

REEN 0

REEN 0

REEN 0

REEN 0

REEN 0

REEN 0

REEN 0

BER-REEN

0

REEN 0

AMBER 1


1 0

1 5

1 1

2 1

2 4

0 2

0 4

1 2

1 3

0 1

1 2

1 3

1 5

0 3

2 4

13

1 1

7 7

2 2

4 4

6 6

2 2

4 4

3 3

4 4

1 1

3 3

4 4

6 6

3 3

7 7

Follow-

Council

TreasurManage

Mail Ro

Emerge& Busin

Follow

CustomOne Sto

Genera

Insuran

FacilitieManage

ComplaManage

Equality

Health

Recycli

Street Public C

Building

Homele

BASSETLAW D

up (3) 0

l Tax 1

ry ement

0

oom 2

ency Planning ness Continuity

2

Up (2) 1

mer Services & op Shop Areas

0

al Estates 0

nces 1

es ement

2

aints ement

1

y & Diversity 2

& Safety 0

ng 0

Cleansing & Conveniences

1

g Control 1

essness 3

DISTRICT COUNC

05/11/12 N/A

5/10/12 19/10/12

01/10/12 05/10/12

21/08/12 24/08/12

28/08/12 31/08/12

3/08/12 N/A

02/07/12 05/07/12

09/07/12 12/07/12

3/08/12 16/08/12

23/07/12 27/07/12

1/07/12 24/07/12

23/07/12 27/07/12

02/07/12 06/07/12

09/07/12 13/07/12

6/07/12 20/07/12

6/07/12 20/07/12

30/07/12 03/08/12

CIL

15/11/12 1

2 22/10/12 2

2 15/10/12 3

2 30/08/12 1

2 17/09/12 0

12/09/12 2

2 17/07/12 0

2 23/07/12 2

2 20/08/12 2

2 08/08/12 2

2 24/07/12 2

2 30/07/12 2

2 16/07/12 1

2 26/07/12 1

2 30/07/12 1

2 30/07/12 1

2 08/08/12 1

10/12/12 11/12/

22/10/12 22/10/

30/10/12 30/10/

16/10/12 17/10/

01/10/12 01/10/

29/10/12 29/10/

07/07/12 07/08/

21/08/12 23/08/

20/08/12 20/08/

21/08/12 23/08/

24/07/12 24/07/

24/08/12 24/08/

19/07/12 19/07/

13/08/12 20/08/

14/08/12 20/08/

15/08/12 23/08/

16/08/12 23/08/

6

12 January 2012

12 November

2012

12 November

2012

12 November

2012

12 November

2012

12 November

2012

12 September

2012

12 September

2012

12 September

2012

12 September

2012

12 September

2012

12 September

2012

12 September

2012

12 September

2012

12 September

2012

12 September

2012

12 September

2012

2 Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Internal Aud

5 ADEQ

8 GR

8 GR

6 AMGR

6 AMGR

5 ADEQ

8 AMGR

6 AMGR

8 GR

8 GR

5 GR

7 GR

6 GR

6 GR

7 AMGR

6 AMGR

6 GR

dit Progress Repo

QUATE 0

REEN 0

REEN 0

BER-REEN

0

BER-REEN

0

QUATE 0

BER-REEN

0

BER-REEN

0

REEN 0

REEN 0

REEN 0

REEN 0

REEN 0

REEN 0

BER-REEN

0

BER-REEN

1

REEN 0


3 6

0 1

0 2

3 3

1 2

6 7

1 5

3 1

0 0

2 0

0 0

0 5

1 2

2 2

3 4

1 3

1 2

13

9 9

1 1

2 2

6 5

3 3

13 13

6 6

4 4

0 0

2 2

0 0

5 5

3 3

4 4

7 7

5 5

3 3

Follow

RetfordCentre

Conting

Manage

BASSETLAW D

Up (1) 2

d Enterprise 2

gency

ement

DISTRICT COUNC

26/06/12 N/A

28/05/12 11/06/12

- -

- -

CIL

06/07/12 0

2 18/06/12 0

-

-

02/08/12 02/08/

02/07/12 04/07/

- -

- -

7

12 September

2012

12 July 2012

-

-

Risk Based

Risk Based

-

-

Subtotal

TOTAL

Internal Aud

5 ADEQ

6 AMBE

15

10

l 250

322

dit Progress Repo

QUATE 1

ER-RED 2

- -

- -

- 7


4 5

2 2

- -

- -

47 92

13

10 10

6 6

- -

- -

146 145

R

O

Hob

A

O

C

T

to

th

pi

A

Fth

BASSETLAW D

Recommendation

Our findings and re

igh (H): action ibjectives for the a

ASSURANCE OPI

Our opinion will be

Committee (or equiv

he Amber assurance

o those reports where

hat although a positive

icture of our findings s

Advisory Review

Follow Up – A rehe success of im

DISTRICT COUNC

n Categorisation

ecommendations a

is imperative to area under review

INIONS

graphically represe

alent) with some co

TaAcomco

Tathcomcoto

level is split into two s

we are highlighting th

e opinion, there is stil

so that there will be no

– A review desig

view of actions mplementation of

CIL

are categorised a

ensure that the are met.

ented as a speedo

ontext behind each o

aking account of thAuthority can take subsontrols upon which t

manage this risk onsistently applied and

aking account of thehe Authority can take ontrols upon which th

manage this risk aonsistently applied ano be taken to ensure th

so that we are able to

hat although not a neg

ll room for improveme

o surprises in our year

gned to provide a

taken to implemf agreed actions

as follows:

Medium (M): rsignificant risksarea under revi

ometer (see below)

of the ratings.

he issues identified,stantial assurance thathe organisation relieare suitably desigd effective.

issues identified, whsome assurance that he organisation reliesare suitably designnd effective, action neehis risk is managed.

give you a clear indic

gative opinion, the Aut

ent. During the year

r end annual opinion.

advice to the org

ment previous intto manage the r

8

requires action tos in achieving theiew.

. We have provide

the at the es to gned,

hilst the

s to ned, eds

cation of whether we c

thority does need to ta

our progress reports

ganisation and d

ternal audit recoisks identified.

o avoid exposure e objectives for t

d guidelines for ea

consider the assurance

ake action to ensure t

to Audit and Performa

oes not result in

ommendations. T

Internal Aud

to the

Low (L): aimprove ope

ach segment of the

Taking acctake reasonorganisationdesigned, cHowever wincrease the

Taking acccannot takeorganisationdesigned, cAction neemanaged.

e to be “above or belo

he risk is managed. S

ance Scrutiny Commi

n a formal assura

Testing will be p

dit Progress Repo

action advised toerational efficiency

e speedometer to p

count of the issues idnable assurance that tn relies to manage

consistently applied anwe have identified issue likelihood of the risk

count of the issues ide assurance that the cn relies to manage

consistently applied or eds to be taken to

ow the line”. We hope

Similarly the above the

ttee will reflect the op

ance opinion.

performed, as ap


o enhance contry.

provide the Audit &

dentified, the Authoritythe controls upon whice this risk are su

nd effective. ues that, if not addrematerialising.

dentified, the Authoritontrols upon which thethis risk are suitableffective. ensure this risk i

e this will help draw at

e line amber opinion r

pinions given and buil

ppropriate, to con

13

rol or

& Risk

y can ch the uitably

essed,

y e y

s

ttention

reflects

ld up a

nfirm

A

M

Aaoa

T

L

Aorem

BASSETLAW D

APPENDIX B

Members Expense

An audit of Membpproved internal a

one ‘Low’ Risk recccepted by mana

The Medium Risk

Periodic Membersown car vehicle in

Localism Act

An Advisory audit oof the approved intecommendations

management.

DISTRICT COUNC

B: REPOR

Summary of Au

es

bers Expenses waudit plan and rescommendation be

agement.

recommendation

checks should bs claiming mileage

on Council busnsurance in place.

of Members Expeternal audit plan abeing raised, both

CIL

RTS FINALIS

udit Findings

was undertaken asulted in one ‘Medeing raised, both

raised was:

be undertaken toe expenses for thsiness, have app

enses was undertaand resulted in twoh of which were a

ED – SUMM

as part of the dium’ Risk and of which were

o confirm that he use of their propriate motor

aken as part o ‘Low’ Risk

accepted by

9

ARY OF KEY

Assurance

Level

N/A - Advis

Y FINDINGS

e No

Recs.an

(Acce

2 (

sory 2 (

Internal Aud

S

. of

Made nd epted)

No. of RCategoris

High R

(2) 0

(2) 0

dit Progress Repo

Recs. sed As Risk

ImplementaDate

June 20

Octobe2013


ation Responsi

Officer (

013 CorporaAccounta

Manage

er DirectorCorporaService

13

ible

(s)

ate ancy er

r of ate es

S

Aa‘M

T

BASSETLAW D

Safeguarding Chi

An audit of Safegus part of the ap

Medium’ Risk and

The Medium Risk

The CouSafeguardRecruitmeProcedurechange in

The Councsafeguardiresponsibi

The Counchecks arincludes eDBS check

A discuss(Head of Developmeand implemaintaininSafeguard

A single cwhich is utraining unrefreshed w

To satisfy disposals policy anProtection not be kep

DISTRICT COUNC

ildren & CRB Ch

uarding Children pproved internal three ‘Low’ Risk

recommendations

uncil’s policies ing and safernt and Selection

es and Guidelines)employment chec

cil’s referral informing policy shouldlities relating to th

ncil should ensurre undertaken foensuring that all rek in line with on-gion between keyHR, Senior Manent Manager) is ement consistentg and monitoringing training.

central record shused to record dendertaken to ensuwhen required.

the general princiof CRB checks surrounding leAct 1998), all CR

pt on file for any lo

CIL

ecks

& CRB Checks waudit plan and rrecommendations

s raised were:

and procedurer recruitment Policy and the C

) should be updatcks from the CRB

mation in the spord be updated to he NSCB.

re that appropriaor all staff as nelevant staff comoing requirementsy staff involved nager Support S

required to devet procedures wit of records for C

hould be maintainetails of CRB / Dure these can be

iples relating to thoutlined in the C

egislation (includRB disclosure infoonger than six mon

was undertaken resulted in four s being raised.

e relating to (including the

Child Protection ted to reflect the to the DBS.

rts development reflect the new

ate employment necessary. This mpletes a CRB /

s. in the process ervices, Sports elop, document th regards the RB checks and

ned up to date BS checks and monitored and

he retention and CRB Disclosure ding the Data ormation should nths.

10

7 (

Internal Aud

(7) 0

dit Progress Repo

June 20

June 20

Decemb2013

June 20


13

13

ber

13

Senior ManSupport Ser

HR & OBusinesManage

HR & OBusinesManage

HR & OBusines

Manager/ SManager SuServices / SSports Devment Mana

HR & OBusinesManage

13

nager rvices

D ss er

D ss er

D ss Senior upport Senior velop-ager

D ss er

M

Aafonre

T

M

T

BASSETLAW D

Markets

An audit of Marketudit plan and res

our ‘Low’ Risk reot accepted theecommendations.

The High Risk reco

All Market TraInsurance to tcurrent and th

Managements state

“Whilst everypossible to obunannouncedadvance. Thereducing inco

The Medium Risk r

The Markets signed to conthe relevant w

Any additionaelectrical safe

To ensure timthe Market Tcompletion by

A formal projprocurement attention shorequirement system, to enare accurate aa fully docdocuments.

A target imptraining to be be run down.

DISTRICT COUNC

ts was undertakensulted in one ‘Highcommendations b

e High recomme.

ommendation rais

aders should provthe Markets Offic

hat its expiry date

ed that:-

y effort will be mbtain such details d meaning that we alternative is th

ome”.

recommendations

Inspection Reportnfirm that every Mweather and infras

al checks considety check, should

mely completion aTrader’s informatiy the Market Office

ject plan should and implementa

ould be paid to for testing and sure that all interfand complete. Thumented budge

plementation datecarried out and e

CIL

n as part of the aph’ Risk, three ‘Mebeing raised. Manendation, nor tw

sed was:

vide details of theicers, who should e

is recorded.

made to do this, i from casual trade

we don’t know what we turn trade

raised were:

t should be compMarket has beenstructure condition

dered necessarybe added to the c

and population ofon database, a ers should be set

be established ation of this pro

staff training isdual running wi

faces with the acche project should t, requirements

e should also bexiting stock of ma

pproved internal edium’ Risk and nagement have

wo of the Low

r Public Liability ensure that it is

t is not always ers who turn up

who they are in er’s away, thus

pleted in full and n inspected and ns recorded.

y, including the checklist.

f all details into target date for .

to manage the oject. Particular ssues and the th the present

counting system be initiated with

and scoping

e set, enabling anual receipts to

11

8 (

Internal Aud

(5) 1

dit Progress Repo

March2013

As abov

June 20


h

ve

013

MarkeSupervis– Retford

Workso

As abov

Town CeManage

13

et sors d & op

ve

ntre er

P

Aa‘MT

T

M

“Twn

T

BASSETLAW D

Parks and Open S

An audit of Parkspproved internal

Medium’ Risk andThe High Risk reco

The High Risk reco

EquipmentPlaygrouninspected particular report.

Management state

The recommendaweekly” and this is

ot appear to be o

The Medium Risk

Proceduremethod byincome is should be

Any considsports facsubject to detailed assessmen

It is suggefeasibility ousing its fa

Potential cof clubs, Cstatus.

DISTRICT COUNC

Spaces

and Open Spaceaudit plan and r

d two ‘Low’ Risk ommendation was

ommendation rais

t identified witd Inspection as rand remedial a

that which rema

ed that:

ation in the repos what is already utstanding”.

recommendations

es notes should y which the facil

collected and tmaintained.

derations to let thcilities and fields

thorough consultfinancial apprant.

ested that the Coof performing spo

acilities to ensure t

checks could be peCRB and safeguar

CIL

es was undertakeresulted in one ‘Hrecommendation

s not accepted by

sed was:

thin the annuarequiring urgent reaction taken as

ains outstanding

ort is to “inspect done, therefore t

s raised were:

be documented ities are managehe schedule of

he management oto external bod

tation and planninisal and risk

ouncil looks into tot checks on a sathat clubs are prop

erformed on the inrding arrangemen

n as part of the High’ Risk, two

ns being raised. y management.

al Independent epair should be

s a priority, in from the 2011

the equipment the matter does

to record the ed, the correct when grounds

of the Councils dies should be ng, including a

and liability

he legality and ample of clubs perly managed.

nsurance status nts, and charter

12

5 (

Internal Aud

(4) 1

dit Progress Repo

1st Septemb

2013

NA

15th Mar2013

1st Septemb

2013


ber

rch

ber

ParksDevelopm

Manage

Parks & OSpaces

Manage

ParksDevelopm

Manage

13

s ment er

Open s er

ment er

C

Aatwara

T

Aara

BASSETLAW D

Contaminated La

An audit of Contapproved internal

wo ‘Low’ Risk reccepted by manaised were:

All advice be passed

Any invesreferencedmodule pafor the areis maintain

Tax (PAYE)

An Advisory auditpproved internal aised as a result o

DISTRICT COUNC

nd

aminated Land waudit plan and re

ecommendations nagement. The M

given by the Co to the planning a

stigation work shd on the M3 articularly that whea of land to ensuned.

t of Tax (PAYE) audit plan. No

of the audit.

CIL

was undertaken esulted in two ‘Mebeing raised, all Medium Risk rec

ontaminated Landapplicant. ould be clearly Northgate Contaich has an effect

ure a full and com

was undertaken formal recomme

as part of the edium’ Risk and

of which were commendations

d Officer should

documented or aminated Land on a risk score

mplete audit trail

as part of the endations were

13

N/A Adviso

4 (

ory 0

Internal Aud

(4) 0

0 0

dit Progress Repo

31st Mar2014

N/A


rch

PrincipEnvironme

HealthManage

N/A

13

al ental h er

F

AuC

Tre

O

2‘MR

BASSETLAW D

FOLLOW-UP (4)

As part of the apndertaken the fo

Council to impleme

The audit conecommendations.

Our review confirm

2 55 2 3%

5 recommendatioMedium’ Risk, anRisk Recommenda

Elections

Multiple duduplications reports shouresolved.

The reports evidence of

Managementhat:-

“The implemnegate the checks will b

Rolling regindependentprocessed.

Museums

Security at account the in order toScheme.

DISTRICT COUNC

proved internal aourth review to foent previous intern

nsidered eight .

med the status of r

1% Implemented;5% Not Implemen1% Implementatio% not due.

ons were reiterad 14 ‘Low’ Risk rations were:-

plicate reports t should be produld be reviewed a

should be signethe check having

nt did not accept

mentation of Indivneed for this req

be undertaken du

istration applicatt check by a s

the museum sreport received fr

o meet the requ

CIL

audit plan for 201ollow up progressnal audit recomme

reviews consi

recommendations

; nted; on On-going; and

ted and these crecommendations

to identify systeuced on a montand any errors in

d and dated and taken place.

this recommenda

vidual Electoral Rquirement. In thering the canvass p

ions should be second member

hould be reviewrom the crime reduirements of the

12/13, we have s made by the endations.

isting of 33

s as follows:

consisted of 11 s. The ‘Medium’

em errors and thly basis. The vestigated and

kept on file as

ation and stated

Registration will e interim, these period”.

subject to an of staff when

wed taking into uction manager e Accreditation

14

POOR

PROGRE

SS

25 (

Internal Aud

(24) 0

dit Progress Repo

Implemen

31st Decemb

2013


nted

ber

ElectorServiceManage

Curato

13

ral es er

or

IT

In

BASSETLAW D

Follow Up (Fees

The CouncEnforcemenassessmentensure that collecting Plearned frompenalty noprocessing.

All of the lice

Mitigating cidentified an

A planned should be es

Licensing Oconfirm thainspected an

Risk assessout; identifyresource ca

A programmchecks on vcompiled.

T Service Manage

A set of forbe implemeManagemen

nventory Managem

a) The Faciall Council ofully up to da

DISTRICT COUNC

& Charges and L

cil ensures thant Partnership Agrt of the charging

the charges levPenalty Notices; m the operation oftices issued an

ensing risks shou

controls and/or mnd evaluated.

programme of mstablished and do

Officers should enat these inspectind the outcome of

sment of all licenying all high riskn then be directed

me of scheduledvehicles and mo

ement

mal procedures fented, based ant activities.

ment

ilities Officer shouoffices and ensureate.

CIL

Licensing)

at when renewreement for 2013base is carried oied on BDC for are reflective o

f the first contractnd the transact

ld be identified an

monitoring proces

monitoring visits aocumented.

nsure records areons take place,f the inspection.

sed premises shk premises. The d at the higher risk

d and unschedulnitoring of taxi ra

for Incident Manaaround the key

uld complete the e the central inve

wing the Civil onwards, a re-

out. This should processing and of the lessons t, the number of tional cost of

nd documented.

sses should be

and inspections

e maintained to the premises

ould be carried limited Officer

k areas.

led compliance anks should be

agement should ITIL Incident

inspections of entory record is

15 Internal Auddit Progress Repo

On-goin

1st Octob2013

1st Octo2013

31st Ju2013

30th Jun2013


ng

ber

ber

ly

ne

Town CenManage

PrincipSolicito

(LicensinRegulato

PrincipSolicito

(LicensinRegulato

Strategic Manage

ProcuremManage

13

ntres er

al or ng & ory)

al or ng & ory)

ICT er

ment er

F

BASSETLAW D

b) In line wOfficer frominventory renominated Finance and

a) A reconcinventory rediscrepancieb) IT shouequipment inventory rec

a) Once theresponsibilitcheck of thecompleted. nominated countersigne

b) Copies oHead of Fina

c) In additionperform ranyear to conf

Follow Up (Sustain

BassetlawStrategy wlabour pracommunityand suppli

DISTRICT COUNC

ith Financial Procm each departmeecords within theofficers should b

d Property by all D

ciliation should beecord and the res identified uld notify the Pis upgraded or cords are updated

e central inventoryties for nominatee inventory held wThis check shouofficer to con

ed by the Head of

f this annual cheance & Property (

n to this annual chdom spot checksirm the accuracy o

nability Manageme

w District Council which includes

actices, diversity, y issues and dealers.

CIL

cedure Rule 5.4.5ent should be aeir service areabe forwarded to

Directorates.

e performed betweecords maintaine

should be Procurement Tea

relocated in ordd.

y record has beened officers defin

within each departmld be signed and

nfirm the detaif Service.

eck should be for(Procurement Tea

heck the Facilitiess of departments of their inventory

ent and Integratio

should develop aprocurement, pohuman rights, he

ings with custome

5, a nominated ccountable for . A list of all

o the Head of

een the central ed by IT, any

investigated.am when any der to ensure

n compiled and ed an annual ment should be d dated by the ils held and

rwarded to the am).

s Officer should throughout the records.

on)

a Sustainability ollution control, ealth & safety, ers, contractors

16 Internal Auddit Progress Repo

30th Septemb

2013

30th Septemb

2013

30th Septemb

2013

March 20

March 20

March 20

In plac


ber

ber

ber

014

014

014

ce

Heads Servic

ProcuremManage

Strategic Manage

Strategic Manage

Heads Servic

Heads Servic

ProcuremManage

SustainabOffice

13

of e

ment er / ICT er

ICT er

of e

of e

ment er

bility r

A

DT

Auditab

Current Rep

Follow

Commu

Follow

ServiceAgreem

PerformManage

DebtorsRecove

ContracManage

Rent Ac

GeneraBudget

Informa

AssuraStockta

Insuran

BASSETLAW D

APPENDIX C

Detailed below is These reports have

ble Area SD

ports

Up (3) 04/

unity Centre 12/

Up (2) 08/

e Level ments

08/

mance ement

22/

s & Debt ery

08/

ct ement

20/

ccounting 03/

al Ledger & tary Control

17/

ation Security 19/

nce ake

18/

nce 18/

DISTRICT COUNC

C: A1 HOU

a summary of thee been presented

Start Date

Debrief date

/03/12 N/A

/11/12 16/11/12

/10/12 26/10/12

/10/12 22/10/12

/10/12 25/10/12

/10/12 19/10/12

/08/12 24/08/12

/09/12 07/09/12

/09/12 18/09/12

/07/12 23/07/12

/06/12 29/06/12

/06/12 22/06/12

CIL

USING OPER

e work undertaked at A1 Housing F

Draft report issued

Resrec

15/03/13 15

03/11/12 08

31/10/12 14

24/10/12 07

31/10/12 08

20/10/12 30

30/08/12 24

18/09/12

18/09/12 19

28/08/12 20

06/07/12 16

02/07/12 09

RATIONAL P

en in 2012/13 to dinance & Organis

sponses ceived

Final report issued

/03/13 16/03/13

/01/13 09/01/13

/11/12 15/11/12

/11/12 08/11/12

/11/12 08/11/12

/10/12 31/10/12

/09/12 24/09/12

N/A 18/09/12

/09/12 19/09/12

/09/12 20/09/12

/07/12 16/07/12

/08/12 09/08/12

17

PLAN PERFO

date, showing thesational Health Ch

Finance & Organisationa

Health ChampioGroup

3 March 2013

3 January 2013

2 January 2013

2 November

2012

2 November

2012

2 November

2012

2 November

2012

2 November

2012

2 November

2012

2 November

2012

2 September

2012

2 September

2012

ORMANCE 2

e levels of assurahampions Group m

al ons

Audit approach

Risk Based

3 Risk Based

3 Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Risk Based

Advisory

Advisory

Risk Based

Internal Aud

2012/13 – CU

ance given and thmeetings.

Audit Days

Assurag

4 G

6 G

4 G

5 RED

6 G

6 AMBER

7 G

7 G

6 G

5

7

5 GREEN

dit Progress Repo

URRENT REP

he number of reco

ance level given

Nu

High

GOOD 0

REEN 0

GOOD 0

- AMBER 2

REEN 0

R - GREEN 0

REEN 0

REEN 0

REEN 0

N/A 0

N/A 0

N – AMBER 0


PORTS

ommendations ar

umber of Recomme

Medium Low

0 0

0 4

1 3

1 1

0 2

4 1

2 1

0 0

0 2

2 0

3 5

3 1

13

rising.

ndations Made

In Total

Agreed

0 0

4 4

4 4

4 4

2 2

5 5

3 3

0 0

2 2

2 2

8 8

4 4

Auditab

Branch

Follow

Housing

Out Emerge

Code and DInterest

Waste

Gas InDecent

Conting

Manage

BASSETLAW D

ble Area SD

ing Out 18/

Up (1) 18/

g Allocations 23/

of Hours/ ency Service

30/

of Conduct eclaration of t

23/

Management 10/

nstallation – t Homes

10/

gency

ement

DISTRICT COUNC

Start Date

Debrief date

/06/12 02/07/12

/06/12 N/A

/07/12 27/07/12

/04/12 11/05/12

/05/12 25/05/12

/04/12 13/04/12

/04/12 13/04/12

- -

- -

CIL

Draft report issued

Resrec

04/07/12 16

06/07/12 26

31/07/12 17

16//05/12 28

29/05/12 30

13/04/12 26

24/04/12 01

-

-

sponses ceived

Final report issued

/07/12 18/07/12

/07/12 27/0712

/08/12 20/08/12

/05/12 28/05/12

/05/12 30/05/12

/04/12 26/04/12

/05/12 01/05/12

- -

- -

18

Finance & Organisationa

Health ChampioGroup

2 September

2012

2 September

2012

2 September

2012

2 July 2012

2 July 2012

2 May 2012

2 May 2012

-

-

al ons

Audit approach

Risk Based

Risk Based

Risk Based

Risk Based

Risk based

Risk Based

Risk Based

-

-

Total

Internal Aud

Audit Days

Assurag

6 GREEN

4 ADE

6 G

6 GREEN

4 G

6 AMBE

5 G

10

10

125

dit Progress Repo

ance level given

Nu

High

N – AMBER 0

EQUATE 0

REEN 0

N – AMBER 0

REEN 0

ER – RED 1

REEN 0

- -

- -

3


umber of Recomme

Medium Low

1 6

1 5

1 1

3 1

1 4

3 1

2 2

- -

- -

28 40

13

ndations Made

In Total

Agreed

7 7

6 6

2 2

4 4

5 5

5 5

4 4

- -

- -

71 71

Agenda Item No. 6(b) BASSETLAW DISTRICT COUNCIL

AUDIT & RISK SCRUTINY COMMITTEE

30th MAY 2013


INTERNAL AUDIT ANNUAL REPORT 2012/13 Cabinet Member: Finance & Property Contact: Rob Barnett Ext: 01159 489400 1. Public Interest Test 1.1 The author of this report, Rob Barnett, has determined that the report is not

confidential. 2. Purpose of the Report 2.1 To present to Members a formal report on the activities of Internal Audit during the

financial year 2012/13 that includes, amongst other matters, an opinion on the overall adequacy and effectiveness of the Council’s internal control environment.

3. Background and Discussion 3.1 The Role of Internal Audit

The role of internal audit is to provide management with an objective assessment of the adequacy and effectiveness of internal control, risk management and governance arrangements. Internal audit is therefore a key part of Bassetlaw District Council’s assurance cycle, and if used properly, can help to inform and update the organisation’s risk profile. Internal Audit is just one of the sources of assurance available to the Council and the Audit and Risk Scrutiny Committee.

3.2 Governance Statement

Under Regulation 4(3) of the Accounts and Audit (England) Regulations 2011, which amended the 2003 Regulations, authorities are required to publish a statement on internal control. From 2007/08, authorities have had to publish an Annual Governance Statement in line with the CIPFA/SOLACE Framework “Delivering Good Governance in Local Government”, to meet that statutory requirement.

3.3 As the Council’s appointed Internal Audit provider, the opinions issued by RSM Tenon form part of the framework of assurances that assist the Council in preparing an informed Annual Governance Statement.

3.4 The report includes, based on the work undertaken, an opinion regarding the adequacy and effectiveness of Bassetlaw District Council’s arrangements for governance, risk management and internal control.

3.5 This report summarises the work undertaken by Internal Audit during the financial year 2012/13 to formulate that opinion.

3.6 The overall opinion issued to Bassetlaw District Council for 2012/13 is as follows:

2012/13 2011/12 Governance Arrangements Green Green Risk Management Arrangements Green Amber Control Arrangements Green Amber

3.7 We undertook a specific review of Corporate Governance during 2012/13, which

focussed primarily on members’ responsibilities and the impact of the Localism Act 2011. We found that there is an up-to-date Constitution in place which contains clear reference to Members’ duties, roles and responsibilities. No significant recommendations were made as a result of the audit, and as a result (as was the case in 2011/12), we are able to award a ‘Green’ opinion overall for this area.

3.8 During the year we undertook a full review of the Council’s Risk Management

arrangements in 2012/13. We noted that the Council’s Risk Management Strategy has been put in place over the last two years and is designed to reflect current best practices in Local Authority Risk Management.

Although further work is required to ensure that the Risk Management processes are embedded and ownership of risks is devolved to the appropriate level of management, no significant recommendations were made as a result of the audit, and thus we were able to improve the Council’s rating in this area from ‘Amber’ in 2011/12 to ‘Green’.

3.9 The control arrangements have also improved from ‘Amber’ last year to ‘Green’ for

2012/13. This reflects the fact than no ‘red’ assurances were given during the year (as opposed to four in 2011/12), and that overall there were twenty-two reviews (61%) which resulted in a substantial assurance level being given and nine (25%) where reasonable assurance was given, which amounts to 86% of audits receiving a positive assurance level. Nonetheless, with five (14%) audits resulting in only some assurance being given, there continues to be room for further improvement.

3.10 In conclusion, the Council has made progress over previous years, and this is clearly

shown by the award of a ‘green’ opinion for all three areas of review. However, continued work will be required across the Council to ensure that the current healthy position is not allowed to slip.

4. Implications

a) For Service Users The work of Internal Audit impacts across all parts of the organisation and on all service users.

b) Strategic & Policy The Internal Audit Annual report gives an opinion regarding the adequacy and

effectiveness of Bassetlaw District Council’s arrangements for governance, risk management, and the control environment.

c) Financial Ref: 14/410

As contained within the individual reports. d) Legal Ref: 146/05/13 Regulation 4(3) of the Accounts and Audit (England) Regulations 2011,

requires authorities to publish a statement on internal control. e) Human Resources As contained within the individual reports. f) Community Safety, Equalities, Environmental As contained within the individual reports. g) Whether this is a key decision, and if so the reference number.

This is not a key decision. 5. Options, Risks and Reasons for Recommendations 5.1 Best practice, as outlined in the Code of Practice, recommends that a formal Annual

Report should be presented to the Audit Committee of the Council. In the past, the External Auditors (Audit Commission/KPMG) have requested this report as part of their assessment of the performance of Internal Audit and the contribution it makes to the Annual Governance Statement.

6. Recommendation 6.1 Members receive and accept the Report as presented. Background Papers

Location

Audit Files

The Poynt, 45 Wollaton Street, Nottingham, NG1 5FW T: +44 (0) 1159489400 Ext: 2699 F: +44 (0) 1159489401

Bassetlaw District Council

Internal Audit Annual Report

Year ended 31 March 2013

Presented at the Audit & Risk Scrutiny Committee meeting of: 30th May2013

Chris Williams Head of Internal Audit

1

1 INTERNAL AUDIT OPINION

1.1 Context

As the provider of the internal audit service to Bassetlaw District Council we are required to provide the Audit and Risk Scrutiny Committee an opinion on the adequacy and effectiveness of the organisation’s governance, risk management and control arrangements. In giving our opinion it should be noted that assurance can never be absolute. The most that the internal audit service can provide is a reasonable assurance that there are no major weaknesses in risk management, governance and control processes.

As part of the annual accounts process, Councils produce an Annual Governance Statement (AGS), which should include issues relating to risk management as well as control. As your internal audit provider, the assignment opinions that RSM Tenon provides to you during the year are part of the framework of assurances that assist in the preparation of an informed AGS.

1.2 Internal Audit Opinion 2012/2013

We are satisfied that sufficient internal audit work has been undertaken to allow us to draw a reasonable conclusion on the adequacy and effectiveness of Bassetlaw District Council’s arrangements.

For the 12 months ended 31 March 2013, based on the work we have undertaken, our opinion regarding the adequacy and effectiveness of Bassetlaw District Council’s arrangements for governance, risk management and control is as follows:

Red Amber Green

Direction of travel

Governance

We undertook a specific review of Corporate Governance during 2012/13, which focussed primarily on members’ responsibilities and the impact of the Localism Act 2011. There is an up-to-date Constitution in place which contains clear reference to Members’ duties, roles and responsibilities. No significant recommendations were made as a result of the audit.

Risk Management

We undertook a full review of the Council’s Risk Management arrangements in 2012/13. The Council’s Risk Management Strategy has been put in place over the last two years and is designed to reflect current best practices in Local Authority Risk Management.

Further work is required to ensure that the Risk Management processes are embedded and ownership of risks is devolved to the appropriate level of management. No significant recommendations were made as a result of the audit.

Control

We undertook forty-two internal audit reviews in 2012/13, and these included four follow-up reviews and two Advisory reviews. For the thirty-six reviews resulting in an assurance opinion, there were twenty-two reviews (61%) which resulted in a substantial assurance level being given; nine (25%) where reasonable assurance was given; and five (14%) which resulted in only some assurance being given.

Note: The direction of travel arrow indicates whether the change in our opinion related to the previous year is upward (improving), downward (adverse) or static.

2

1.3 The Basis of the Opinion

1.3.1 Governance

We undertook a specific review of Corporate Governance during 2012/13, which focussed primarily on members’ responsibilities and the impact of the Localism Act 2011. There is an up-to-date Constitution in place which contains clear reference to Members duties, roles and responsibilities, and which includes coverage of the current requirements in this area of the Localism Act 2011.

Members are provided with a wide-range of training courses to assist them in undertaking their responsibilities, and the Council has also prepared a comprehensive ‘Members Handbook’ to explain to Members how the Council operates, and the Members roles within the overall operational structure. The separate Code of Conduct guide is provided to Members to ensure that key requirements in that area are clearly explained. There is a Gifts and Hospitality Register in place.

We are also aware from our more general audit coverage, and from our attendance at Committee meetings that the Council has satisfactory Governance arrangements in place.

1.3.2 Risk Management

We undertook a full review of the Council’s Risk management arrangements in 2012/13. The Council adopted its new Risk Management Strategy in July 2010 and has established a Corporate Risk Register which is updated on a quarterly basis. A monitoring and reporting framework is defined which ensures that risks are identified and evaluated by the Risk Management Group. An escalation process ensures that corporate level risks are reported to and considered by, the Audit & Risk Scrutiny Committee.

The Council’s Risk Management Strategy has been put in place over the last two years and is designed to reflect current best practices in Local Authority Risk Management, and consultancy support was provided to assist in the development of the strategy.

However, the Risk Management processes of the Council were very much a work in progress at the time of audit, and further work is required to ensure that the Risk Management processes are embedded and ownership of risks is devolved to the appropriate level of management.

1.3.3 Control

We undertook forty-two internal audit reviews in 2012/13, and these included four follow-up reviews and two Advisory reviews. For the thirty-six reviews resulting in an assurance opinion, there were twenty-two reviews (61%) which resulted in a substantial assurance level being given; nine (25%) where reasonable assurance was given; and five (14%) which resulted in only some assurance being given. In addition, a pro-active advisory review of the Council’s fraud policies was undertaken by RSM Tenon, but this was outside our Audit Plan work, and did not result in either an assurance opinion or formal recommendations.

1.3.4 Acceptance of Recommendations

All but six of the 199 recommendations made during the year were accepted by management. Of these six, two were classed as ‘High’ Risk recommendations. The first of these related to the Mail Room audit, where the Council stated that it was not practicable to log all high value items as had been recommended; the second related to the Parks and Open Spaces audit, where the Council stated that weekly inspections of potentially faulty equipment in playgrounds was sufficient to control the potential risk, rather than repair of the equipment as had been recommended.

3

1.3.5 Comparison of Internal Audit Opinions (Assurance assignments) in 2012/2013 compared with 2011/2012

4

1.3.6 Comparison of Internal Audit recommendations made 2012/2013 compared with 2011/2012

1.3.7 Progress made with previous internal audit recommendations

Our follow up of the recommendations made in 2011/2012, including those that were outstanding from previous years, showed that overall the organisation had made little progress in implementing the agreed recommendations, as summarised below:

Recommendation Priority

Number made in 2011/2012

Of which:

Addressed Not implemented or still in

progress

High 17 13 4

Medium 77 44 33

Low 121 70 51

Totals 215 127 88

1.3.8 Reliance Placed Upon Work of Other Assurance Providers

In forming our opinion we have not placed any direct reliance on other assurance providers.

5

2 OUR PERFORMANCE

2.1 Conformance with Internal Audit Standards

RSM Tenon affirms that our internal audit services to Bassetlaw District Council are designed to comply with the International Standards published by the Global Institute of Internal Auditors (IIA).

Under the standards, internal audit services are required to have an external quality and review at least once every five years. During 2011 RSM Tenon commissioned an external independent review of our internal audit services to provide assurance whether our approach meets the requirements set out in the International Professional Practices Framework (IPPF) published by the IIA.

The external review concluded that “the design and implementation of systems for the delivery of internal audit provides substantial assurance that the standards established by the IIA in the IPPF will be delivered in an adequate and effective manner”.

2.2 Conflicts of Interest

We (RSM Tenon) have not undertaken any work or activity during 2012/2013 that would lead us to declare any conflict of interests.

6

APPENDIX A: INTERNAL AUDIT OPINIONS AND RECOMMENDATIONS 2012/2013

Audit

Link to risk or rationale for coverage

Opinion Actions Agreed (by priority)

High Medium Low

Audits to address specific risks

Retford Enterprise Centre (01.12/13)

Identified by Management Amber/Red 2 2 2

Pest Control (22.12/13) Identified by Management /

Internal Audit Amber/Red 1 2 4

Markets (27.12/13) Identified by Management / Internal Audit

Amber/Red 1 3 4

Parks and Open Spaces (37.12/13)

Identified by Management / Internal Audit

Amber/Red 1 2 2

Safeguarding Children & CRB Checks (38.12/13)

Identified by Management Amber/Red 0 4 3

Customer Services & One Stop Shop Areas (04.12/13)

Identified by Management Amber/Green 0 1 5

General Estates (05.12/13)


Street Cleansing & Public Conveniences (08.12/13)


Amber/Green 0 3 4

Building Control (09.12/13)


Mail Room (14.12/13) Identified by Management Amber/Green 0 3 3

Creditors (28.12/13) Identified by Management / Internal Audit

Amber/Green 0 1 5

Procurement (Contract Management) (30.12/13)


Third Party Data Security (31.12/13)


CCTV (35.12/13) Identified by Management Amber/Green 1 2 1

7

Audit



High Medium Low

Health & Safety (03.12/13)


Green 0 1 2

Complaints Management (06.12/13)

Identified by Management Green 0 0 0

Recycling (07.12/13) Identified by Management /

Internal Audit Green 0 2 2

Equality and Diversity (10.12/13)


Facilities Management (11.12/13)


Homelessness (12.12/13) Identified by Management Green 0 1 2

Insurances (13.12/13) Identified by Management /


Emergency Planning and Business Continuity (16.12/13)


Treasury Management (17.12/13)

Identified by Management/ Corporate Risk Register 9 /

Internal Audit/ External Audit Green 0 0 2

Right to Buy (18.12/13) Identified by Management Green 0 0 2

Payroll (19.12/13) Identified by Management /

Internal Audit / External Audit Green 0 0 1

NNDR (20.12/13) Identified by Management /


Council Tax (21.12/13) Identified by Management /


Redeployment, Recruitment and Retention (23.12/13)


8

Audit



High Medium Low

Housing Benefits (24.12/13)

Identified by Management / Internal Audit / External Audit

Green 0 1 3

Corporate Governance (25.12/13)


Green 0 0 3

Tourist Information Centres (29.12/13)


Allotments (32.12/13) Identified by Management / Internal Audit

Green 0 0 4

Risk Management (33.12/13)


Green 0 1 0

Car Parks (34.12/13) Identified by Management /


Members Expenses (39.12/13)


Contaminated Land (40.12/13)


Green 0 2 2

Localism

(41.12.13)

Identified by Management / Corporate Service Directorate

Risk 5b Advisory 0 0 2

Tax (PAYE) Identified by Management Advisory 0 0 0

Follow Up (1) of Previous Internal Audit Recommendations (02.12/13)

To meet internal auditing standards and to provide

management with on-going assurance regarding

implementation of recommendations.

Adequate Progress

1 4 5





Adequate Progress

0 6 7

9

Audit



High Medium Low





Adequate Progress

0 3 6

Follow-Up (4) of Previous Internal Audit Recommendations (36.12/13)




Poor Progress 0 11 14

Total 9 70 120

We use the following levels of opinion classification within our internal audit reports:

Red Amber / Red Amber / Green Green

Taking account of the issues identified, the Committee cannot take assurance that the controls upon which the organisation relies to manage this risk are suitably designed, consistently applied or effective.

Action needs to be taken to ensure this risk is managed.

Taking account of the issues identified, whilst the Committee can take some assurance that the controls upon which the organisation relies to manage this risk are suitably designed, consistently applied and effective, action needs to be taken to ensure this risk is managed.

Taking account of the issues identified, the Committee 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.

Taking account of the issues identified, the Committee can take substantial assurance that the controls upon which the organisation relies to manage this risk are suitably designed, consistently applied and effective.

10

APPENDIX B: KEY FINDINGS FROM INTERNAL AUDIT REVIEWS 2012/2013

Assignment: Retford Enterprise Centre Opinion: Amber/Red

Headline Findings:

A Rents Policy is not in place for the Retford Enterprise Centre. Evidence was not provided to demonstrate the methodology for the rent setting process or that this had been reviewed and approved by the Cabinet. The Retford Enterprise Manager is not provided with a detailed list of aged debtors on a regular basis, to ensure that repeat bookings are not accepted for customers that remain in arrears.

Charges for meeting rooms offered at the Retford Enterprise Centre have not been approved by Cabinet and are not included within the Council’s Fees and Charges schedule. Charges were found not to always be in line with published prices, and it was unclear that the authority of the Retford Enterprise Centre Manager to offer discounts has been formally delegated in the Constitution. Tenants have not been issued with a signed and sealed version of their lease.

Charges for other services offered at the Retford Enterprise Centre, including refreshments, printing and copying are not included within the Council’s Fees and Charges Schedule. We identified instances where orders for goods had been placed with the supplier prior to the requisition being raised and formally approved via the e-procurement system.

Assignment: Pest Control Opinion: Amber/Red

Headline Findings

An approved scale of fees document is in place and specific reference is made to Pest Control fees. Fees are reviewed as part of the Council’s annual fees and charges assessment process.

We noted that there is no Pest Control policy or supporting procedural documentation in place, and the Pest Control service has not been risk assessed. Monitoring of the results of customer satisfaction surveys has yet to be undertaken, although the Department is planning to report trends and information to Management and Members.

The Pest Control unit are not made aware of whether customers have paid for services, and the validity of claims of receipt of means-tested benefits is not currently checked.

Assignment: Markets Opinion: Red / Amber

Headline Findings:

Moving the Market at Worksop into Bridge Street has significantly increased activity, and Worksop Market operates at 100% of capacity on Wednesdays and Saturdays.

Market Management Regulations are clearly documented, maintained up-to-date and are issued to all licenced Traders, and all Traders on the Market must be registered with the Council and licenced. They must also provide details of their Public Liability Insurance, National Insurance Number and contact details as part of the registration process.

The audit found that a Markets Inspection Report is not always completed for every Market, and that not all Traders Public Liability Insurance details are maintained up-to-date. However, apart from Saturday Markets, all rental income is banked on day of receipt, and the use of mobile handheld devices is being considered. These will improve controls over the collection, receipting and accounting for stall rental income within the Market environment.

11

Assignment: Parks and Open Spaces

Opinion: Red / Amber

Headline Findings:

Members of the local communities are consulted to ensure parks and open spaces are meeting the requirements of local residents and facility users, and user satisfaction with Parks and Open Spaces is regularly monitored and reported on.

Parks and Open Spaces are represented by a Portfolio Member at Council meetings. Regular meetings are held between management and the Portfolio holder.

An annual, independent inspection of the Council's playgrounds (I.P.I) is undertaken to ensure all play equipment is safe to use, in compliance with RoSPA safety standards, and weekly internal playground inspections were completed for a sample of weeks, ensuring management is made aware of any defects or damage to play equipment.

However recommendations were made that equipment identified within the annual Independent Playground Inspection as requiring urgent repair should be inspected and remedial action taken as a priority. Also, potential checks could be performed on the insurance status of clubs, CRB and safeguarding arrangements, and charter status, and procedures notes should be documented to record the method by which the facilities are managed, the correct income is collected and the schedule of when grounds should be maintained.

Assignment: Safeguarding Children & CRB Checks Opinion: Red / Amber

Headline Findings:

A number of policies and guidelines are in place which relate to child protection and Safeguarding. These however have not been updated to reflect recent changes to the CRB and the introduction of the Disclosure and Barring Service. A Single Central Register is held in Human Resources, however this does not detail all relevant staff that have been CRB checked and does not include information relating to mandatory Safeguarding training.

Safeguarding training is provided to all staff within posts that have direct contact with children and vulnerable groups and is required to be completed within six months of employment commencement. Training is provided online by the Nottinghamshire Safeguarding Children’s Board. Staff members that have work within Departments that have potential exposure to children should receive Safeguarding training. Currently only staff in specific posts received training.

All staff members who come into direct contact with children should receive an Enhanced CRB check every three years. We identified a number of issues relating to such checks being carried out. CRB disclosure information was found to be held on file for periods over six months. CRB information should not be kept longer than necessary and should be disposed of in line with legislative requirements.

Assignment: Customer Services & One Stop Shop Areas

Opinion: Amber/Green

Headline Findings:

In the last six months only three complaints have been received pertaining to Customer Services and the One Stop Shops.

With the exception of providing feedback on the performance of the Council against the Customer Standards, the control framework was considered to be adequately designed. Five low recommendations were made relating to minor weaknesses or inconsistencies identified during the review.

12

Assignment: General Estates Opinion: Amber/Green

Headline Findings:

An Asset Management Strategy and Planned Maintenance Programme are in place and formal signed tenancy and lease agreements, drawn up with assistance from Legal Services, are in place with tenants.

We noted that the Planned Maintenance Programme should be updated to re-prioritise maintenance works that have been deferred as a result of budgetary cutbacks. Monitoring and enforcement of un-licensed access over the Council’s property and the unauthorised use of garage plots could be improved and Improved arrangements for responding to responsive repairs requested by tenants are required.

Assignment: Street Cleansing & Public Conveniences


Headline Findings:

Aims, objectives and key performance indicators have been defined for the Street Cleansing operations. A Service Delivery Plan for Community Services (which includes Street Cleansing) is in place.

The Council undertakes a benchmarking exercise to monitor and compare the performance of the Street Cleansing service area. The Service area does not send out any customer satisfaction surveys or questionnaires.

The current Service Delivery Plan was produced in 2009 and intended to cover the period 2009 to 2012. We noted that one of the main aims of the service area relating to Street Cleansing is to maintain a top quartile position in external benchmarking exercises. The Council did not maintain a top quartile position in 10 out of the 25 indicators measured and we noted that the current operational action plans do not include any actions relating to improving performance within these areas.

Inspections of the Council’s public conveniences are not undertaken on a regular basis and there is no defined schedule for completion of those inspections.

Assignment: Building Control Opinion: Amber/Green

Headline Findings:

Staff employed within the Building Control Unit have access to, and are aware of, the Building Act 1984, the latest Building Regulations and the Authority’s Financial Procedure Rules.

Building Control fees and charges are in place and approved, and information and guidance for applicants relating to Building Control is available on the Council’s Internet site. The Building Control Unit monitors the five week target from the receipt of applications and benchmarking against other Councils is performed on an annual basis.

System generated management reports are not being produced from the new Building Control database, Uniform; in order to monitor the date a decision is due for applications received.

The invoicing of inspection fees has not yet recommenced as there is no interface between Uniform and Task.

13

Assignment: Mail Room Opinion: Amber Green

Headline Findings:

Documented procedure notes are in place which details the expected working practices within the Mail Room. Access to the Mail Room is controlled, with a keypad code required to enter the room. The Support Services and Mail Room suite is covered by CCTV and also has restricted entry through a swipe card.

Activity reports are sent to the Head of Service each month.

We noted that no stock checks are performed on the controlled stationary and simple mathematical errors were found within the stock ledger, and no feedback on customer satisfaction is currently obtained.

There are still issues with departments not adequately separating their mail, meaning internal mail is being sent externally, rather than using the courier. No reconciliations are currently performed between the franking system software of mail sent and the invoices received. As a result, no recharges to departments have yet been made during 2012/13.

Assignment: Creditors Opinion: Amber/Green

Headline Findings:

At the time of the audit (November 2012), the monthly performance indicator requiring 95% of Trade Creditor invoices to be paid within 30 days of receipt of a valid invoice, has been met or exceeded.

The TASK financial system does not hold historical information and therefore is unable to produce exception reports on supplier data, and there is no documented accepted tolerance for discrepancies between Purchase Orders and invoices. Procedure notes for the E-Procurement system remain in draft format and are yet to be approved and disseminated to staff.

There are no delegated limits documented for the authorisation of Purchase Orders and Invoices are not always date stamped upon receipt, and instances were identified where delays in payments were due to departments not passing invoices to the Creditors Officer in a prompt manner.

Assignment: Procurement (Contract Management)


Headline Findings:

Contract Procedure Rules are included in part 5 of the Council’s Constitution. There is also a Corporate Procurement Policy and Strategy. This was last reviewed and approved in April 2011 and is due for review in 2014.

Training sessions have been provided to Contract Managers regarding tendering requirements, policies and processes, but there has been no training regarding contract monitoring requirements or best practices.

Information held on the Contracts Register is inaccurate and / or out-of-date. This is despite Contract Managers having a responsibility to review the information on a monthly basis. Communication regarding contract monitoring / the progress of contracts between contractors, Contract Managers and the Procurement Team is not formally organised. Although the Procurement Team have provided a template Contracts Register for use by Contracts Managers, this has not been used consistently.

There is a lack of formalised central control regarding the ‘roll-over’ of contracts, which could ultimately lead to the Council failing to maximise efficiency opportunities.

14

Assignment: Third Party Data Security Opinion: Amber/Green

Headline Findings:

Remote access for suppliers to BDC systems requires two-factor authentication using Vasco token PIN generation and a valid Active Directory account. Controls within the remote desktop prevent third parties from uploading files to servers. Authorised uploads, such as software upgrades, need to be scheduled through ICT and provided to the Council on physical media. As part of the remote logon process, third party users must acknowledge a detailed disclaimer before they can access any BDC resources.

We found no evidence of any of the identified suppliers having signed up to the BDC security policy or having provided evidence of having an adequate policy of their own which employees are required to sign up to. Security incident procedures are outlined in the Council’s IT Security Policy. However, the incident reporting procedures do not specifically apply to third parties.

Assignment: CCTV Opinion: Amber/Green

Headline Findings:

We noted that controls for the operation of CCTV were adequately designed, although the risks associated with operating the scheme need to be formally documented.

We found that controls were adequately applied and complied with for the control room operations, including the recording of footage viewed and taken as evidence, although there was a minor weakness identified relating to recording visitors to the control room.

However, signage around Worksop warning people that they are in an area subject to CCTV surveillance was difficult to find, and those that were found were out of date, giving the wrong details for the CCTV operator or damaged, and the Council’s Code of Conduct for CCTV did not fully represent the processes operated by Bassetlaw District Council.

Assignment: Health & Safety Opinion: Green

Headline Findings:

A Health & Safety information store has been established which holds all Health & Safety policy documents and Codes of Practice. The Council makes use of the SHE Health & Safety management software to hold risk assessments, training records and to facilitate the reporting of incidents in a consistent and structured manner.

Only minor recommendations were made relating to this area.

Assignment: Complaints Management Opinion: Green

Headline Findings:

There is a target in place for responding to 93% of complaints within 15 working days and this has been continuously met or exceeded each month since April 2011. To date in 2012/13, 21 out of 22 complaints were responded to within 15 working days and one response took 16 days.

An up-to-date, approved Complaints, Compliments and Suggestions Policy is in place and is publicly available. There are also documented procedures in place. All complainants are contacted on an annual basis so the Council can obtain their feedback on the process of handling complaints. The results of the survey are monitored, any trends investigated, and reported to the Performance Sub-Committee as part of the annual Complaints report.

15

Assignment: Recycling Opinion: Green

Headline Findings:

Although National Indicators are no longer used for this area, the Council has adopted NI 192, which measures the percentage of household waste sent for reuse or recycling / composting for internal performance monitoring purposes. The current annual target for NI 192 is 25%, although in 2011/12, this was only achieved by the Council’s recycling service for Quarter 4 (26.4%), and the overall annual rate was 22.6%.


Assignment: Equality and Diversity Opinion: Green

Headline Findings:

The outcome from the Diversity Peer Challenge determined that the Council was classified as ‘Achieving’ when measured against the requirements of the Equality Act 2010, which is in line with the Council’s Equality Objectives. The Council has a Single Equality Scheme (Valuing Diversity) in place that meets the needs of the Equalities Act 2010 and has been approved by Members.

The Council has a Group of Equality Champions made up of staff from all levels and departments around the Council. Equality is a standard item on the agenda for meetings of the Heads of Service Group., the Cabinet receives quarterly updates on the Equality Objectives, and Equality is recognised in the Council’s Corporate Plan & key policies. Information on the Council’s Equality and Diversity processes is available to staff on the Intranet (BDCNet) and the general public on the Council’s website. Each Year the Council publishes an Annual Report which outlines the progress that Bassetlaw District Council has made over the year in the area of Equality and Diversity.


Assignment: Facilities Management Opinion: Green

Headline Findings:

The Council has carried out a full disability access audit of all premises and has identified where improvements are required. And a space utilisation survey has been completed in order to match available space to departmental needs, to concentrate staff in fewer buildings and to identify potential surplus properties for disposal;

An Asset Management Strategy has been developed which sets out proposals for the future development of the Council’s operational properties.

Appropriately trained and experienced Facilities Officers are in place to ensure the on-going security and maintenance of the Council’s operational properties, together with document courier services and collection and reconciliation of the cash takings from the Council’s car park ticket machines.

All high priority disabled access works have been carried out in the main public buildings owned by the Council, and maintenance and/or servicing contracts have been entered into with appropriately qualified and competent contractors.


16

Assignment: Homelessness Opinion: Green

Headline Findings:

Between April and July 2012 94 applications for homelessness have been received by the Council, and of these, the Council deemed itself to have a duty to approximately 60 applicants. In addition, 90 applicants had approached the Housing Needs unit for advice over concerns for their future housing situation. A long term Homelessness Strategy is in place to ensure the Council complies with the relevant legislation.

Each application received is assessed against five criteria to determine the homelessness status of the applicant. Only applicants deemed to be in priority need are offered temporary emergency accommodation.

Expenditure against budget is closely monitored by the Housing Needs Manager. In addition, monthly meetings are held with the Management Accountant to discuss any variances from the budget, and three Performance Indicators are in place and monitored on a monthly basis.


Assignment: Insurances Opinion: Green

Headline Findings:

The arrangements in place are effective in ensuring the timely processing of all insurance claims received or made by the Council. All potential insurance claims received by the Council are promptly passed to the insurance provider for them to determine the best course of action. All claims are recorded in a register and are allocated a unique reference number.

No recommendations were made relating to this area.

Assignment: Emergency Planning and Business Continuity Opinion: Green

Headline Findings:

Roles and responsibilities with regards to emergency planning are clearly defined within the job descriptions of key staff and senior managers. There is an Emergency Plan and a Business Continuity Management Strategy and Policy in place, approved by the Safety Committee and Council. Key risks facing the Council have been assessed for their potential impact and likelihood of occurrence with the five highest rated being evaluated and a preferred mitigation plan documented. The Council is represented on the Nottingham and Nottinghamshire Local Resilience Forum, and there is a mutual aid agreement is in place between all local authorities in Nottinghamshire to share resources and provide assistance in an emergency situation.


17

Assignment: Treasury Management Opinion: Green

Headline Findings:

The Authority has in place up-to-date Financial Regulation and an approved Treasury Management Strategy. Investments and redemptions are authorised appropriately through the use of My Treasury software. There is an adequate segregation of duties demonstrated when; raising, checking and authorising investments and redemptions. Regular Budget Monitoring and Capital Programme Update Reports are produced for review by the Audit and Performance Scrutiny Committee, and a Treasury Management Outturn report is produced annually.

Monthly reconciliations are undertaken between the General Ledger and the Investment spreadsheet to ensure all income generated has been received.


Assignment: Right to Buy Opinion: Green

Headline Findings:

Although staff within the Council’s Legal, Estates, and Finance teams appear to be processing RTB sales correctly, there are no documented procedures in place to specifically cover this area. A1 Housing Bassetlaw Ltd. staff do operate to documented procedures for the areas under their responsibility.

There are provisions within the deeds for properties purchased from the Council to ensure that the Council is notified of re-sale within prescribed time limits (up to 10 years).

Although there is a lack of documented procedures in place, there was evidence to demonstrate that key controls had been applied in all cases reviewed, including tenant RTB eligibility; undertaking and approval of sale price valuation; timely communication with tenant and tenant’s legal representatives; appropriate treatment of outstanding monies owed; completion of legal process of sales; and receipt of sale income on date of completion. Only minor recommendations were made relating to this area.

Assignment: Payroll Opinion: Green

Headline Findings:

The testing conducted within our audit work confirmed that the Payroll Officer was processing all amendments received in a timely manner. We did not identify any instances where the Payroll had been processed after the scheduled dates.

Our audit work did not identify any areas of concern with the design of the control framework in place for the Payroll system. Only minor recommendations were made relating to this area.

18

Assignment: NNDR Opinion: Green

Headline Findings:

The 2011/12 annual target for collection rates was achieved, with 98.94% of all monies due being collected by the end of the year, against a target of 98.5%.

Policies and procedures have been documented, are up-to-date and are available on the shared network for reference, and formal notification of the non-domestic rating multipliers is received and set within the parameters of the revenues system in a timely manner, in preparation for the new financial year.

There is a debt recovery timetable and procedures have been documented for the recovery of outstanding debt, and all NNDR income is recorded and allocated to the correct account.


Assignment: Council Tax Opinion: Green

Headline Findings:

The Council is on target to achieve its objective of collecting at least 97.7% of Council Tax billed. The Council Tax base is established independently of the staff responsible for administering and collecting Council Tax. Segregation of duties is enforced at all stages in the administration of Council Tax.

Detailed reconciliations take place on a weekly basis, to ensure that the Council’s property database, including property bandings, is directly in line with the valuations assessed by the Valuation Office Agency. Continuing eligibility for Single Person Discount is confirmed by Datatank, who independently verify continuing entitlement, using a combination of occupancy surveys and data verification to Experian records of names associated with each address. This exercise has resulted in a number of claimants withdrawing their claims.


Assignment: Redeployment, Recruitment and Retention Opinion: Green

Headline Findings:

A comprehensive Recruitment & Selection Policy Statement and a Redeployment Policy are both in place. Where appropriate, these policies are supported by a standard template form to ensure consistency of approach. The Council has involved management staff in leadership courses to encourage them with personal development, and is also including staff from West Lindsey Council in these courses in order to share costs.


19

Assignment: Housing Benefits Opinion: Green

Headline Findings:

Staff employed within the Benefits department are required to complete an annual declaration identifying those claims where they have a personal interest; access to these accounts is then restricted to nominated employees, by use of usernames and passwords.

New claims and changes of circumstances are only processed following the receipt of adequate supporting documentation. Exception reports are produced and reviewed on a periodic basis. The Single Housing Benefit Extract (SHBE) is submitted in line with the DWP timetable. Performance indicators show that new claims and changes of circumstances are being processed and in a timely manner.

A record of appeals is maintained, with all documents relating to appeals being retained on the Civica system. Suspected frauds identified by Benefits staff are recorded and promptly passed to the investigation team. The Data Processing Registration with the Information Commissioner, had expired, and was not renewed until identified as part of audit testing.

Assignment: Audit Title: Corporate Governance Opinion: Green

Headline Findings:

There is an up-to-date Constitution in place which contains clear reference to Members duties, roles and responsibilities. The Constitution includes coverage of the current requirements in this area of the Localism Act 2011.

Members are provided with a wide-range of training courses to assist them in undertaking their responsibilities. Member’s attendance at training courses is logged. The Council has also prepared a comprehensive ‘Members Handbook’ to explain to Members how the Council operates, and the Members roles within the overall operational structure. The Handbook is currently being up-dated to reflect new requirements, but does refer Members to the Code of Conduct which is up-to date with regards to Localism Act requirements.

The separate Code of Conduct guide is provided to Members to ensure that key requirements in that area are clearly explained. There is a Gifts and Hospitality Register in place.


Assignment: Tourist Information Centres Opinion: Green

Headline Findings:

Relevant policies and procedures are in place regarding key aspects of the operation and these have been explained to staff. Key controls now require sign off by staff as evidence that these have been completed satisfactorily, and regular checks of stock are undertaken and reconciled against sales figures.

New stock is only purchased to replace items which sell out, and slow-moving items are not replaced. On a strategic level, the on-going performance of the TICs is monitored by management from a financial perspective.


20

Assignment: Allotments Opinion: Green

Headline Findings:

There is a Bassetlaw Allotments Strategy in place covering 2010-2015. This is a clear and comprehensive document, and lists five key Aims, nine Objectives and a number of Actions to guide progress towards achievement of the Strategy overall. Record systems for allotment tenancy, rental amounts, and overall usage are generally effective.


Assignment: Risk Management Opinion: Green

Headline Findings:

The Council’s Risk Management Strategy has been put in place over the last two years and is designed to reflect current best practices in Local Authority Risk Management, and consultancy support was provided to assist in the development of the strategy.

Risks faced by the Council are identified and are recorded in Corporate and Departmental Risk Registers and a monitoring and reporting framework is defined which ensures that risks are identified and evaluated by the Risk Management Group. An escalation process ensures that corporate level risks are reported to and considered by, the Audit & Risk Scrutiny Committee.

The Risk Management Strategy requires review and updating to reflect the lessons learned from the first phases of implementation of the revised Risk Management Strategy. The Risk Management processes of the Council were very much a work in progress at the time of audit, and further work is required to ensure that the Risk Management processes are embedded and ownership of risks is devolved to the appropriate level of management. However, only minor recommendations were made relating to this area.

Assignment: Car Parks Opinion: Green

Headline Findings:

The management of the car parks throughout the District will yield a net income to the Council of approximately £300k in the current financial year. Car parking income is reconciled to confirm that the actual cash received matches the expected income registered by each ticket machine.

All ticket machines are connected to the ASLAN network which enables continuous monitoring of the operational status of each machine. This enables faults to be identified promptly and reduces ticket machine downtime.

All car parking enforcement issues are managed by the Nottinghamshire Civil Enforcement Partnership. Improved application of day to day operational controls has resulted in improved supervision of the car parking operations, and for the majority of ticket machines, there are few discrepancies between the actual cash counted and the expected cash at time of cashing up.


21

Assignment: Members Expenses Opinion: Green

Headline Findings:

An appropriate procedure is in place to process and check Members expenses claims and ensure timely payment. A detailed checking process is in place to validate all expense claims received and every claim is checked by one member of staff and independently authorised by a second, and the Members Handbook contains full details of the allowances payable and the expenses that can be claimed by Councillors. This is reviewed, updated and issued to all Members.


Assignment: Contaminated Land Opinion: Green

Headline Findings

There is a clear Contaminated Land Strategy which identifies responsibility for dealing with inspection of potentially contaminated land, and documented procedural guidance is available for all activities relating to contaminated land. There is a clear information page dedicated to Contaminated Land on the Bassetlaw District Council webpage. The Contaminated Land public register is up to date and is available in both electronic and hard copy format.


Assignment: Tax Opinion: N/A ADVISORY

Headline Findings:

There are good procedures in place dealing with new starters. No problems were detected in the calculations of PAYE/NIC. No problems were discovered concerning termination payments. The Council has an electronic expenses system in place, for which clear policies and procedures are in place. A review of a sample of expenses forms revealed no irregularities. Problems encountered at other authorities, such as retention of receipts were not evident at the Council. The Council’s dispensation agreement with HMRC was updated in September 2011. Certain aspects of the original dispensation were not renewed, largely due to how HMRC invited the dispensation renewal in the first place. Up-dates which should now be included in an updated dispensation agreement with HMRC are medical check-ups VDU eye tests; working lunches; work related staff training; and use of council assets, such as laptops, at home.

22

Assignment: Localism Act Opinion: N/A ADVISORY

Headline Findings:

The review noted that the Council has implemented a series of measures across the organisation since the introduction of the Localism Act. These have included actions with regards to:

publication of an Annual Pay Policy Statement (and other financial transparency measures);

requirements for governance standards addressed (code of conduct; register of interests);

the initiation of projects in line with the ‘Community Right to Challenge’;

mapping of community assets and related issues regarding the ‘Community Right to Bid – Assets of Community Value’;

considerable progress with neighbourhood plans (15 plans have been discussed / progressed to date), with potential to lead to Neighbourhood Development Orders and Community Right to Build Orders;

agreement of an approach for the Community Infrastructure Levy (CIL); and

completion and approval of a Tenancy Strategy with regards to Housing matters.

Although some parts of the Act have yet to impact on the Council or to be used (e.g. General Powers of Competence; increase of Council Tax), there are no apparent requirements within the Act which have not been addressed.

Assignment: Pro-Active Review of Fraud Policies Opinion: N/A ADVISORY

Headline Findings:

A Fraud Management review was undertaken of the Council’s documented policies regarding Anti-Bribery; Gifts & Hospitality; and Whistleblowing. The review identified that the anti-fraud and anti-bribery measures are deficient in some key areas. It was advised that the policies reviewed are revised in line with recommendations in order for these documents to remain up to date and reflect changes in legislation and best practice.

Assignment: Follow-Up (1) Opinion: N/A ADEQUATE PROGRESSE

Headline Findings:

The 33 recommendations considered in this review comprised three ‘high’, 17 ‘medium’ and 13 ‘low’ recommendations. There is one high and four medium recommendations for which implementation is on-going and these recommendations were restated within this report.

Assignment: Follow-Up (2) Opinion: N/A ADEQUATE PROGRESS

Headline Findings:

The 29 recommendations considered in this review comprised 10 ‘medium’ and 19 ‘low’ recommendations. There were four medium risk recommendations that we considered to be receiving inadequate management attention. There are an additional two medium risk recommendations where the recommendation was not yet fully implemented.

Assignment: Follow-Up (3) Opinion: N/A ADEQUATE PROGRESS

Headline Findings:

The 20 recommendations considered in this review comprised five ‘medium’ and 15 ‘low’ recommendations. There were no high or medium recommendations that we considered to be receiving inadequate management attention.

23

Assignment: Follow-Up (4) Opinion: N/A POOR PROGRESS

Headline Findings:

The 33 recommendations considered in this review comprised 1 ‘high’, 13 ‘medium’ and 19 ‘low’ recommendations. There are no high recommendations that we consider to be receiving inadequate management attention. However, there are still 11 due medium recommendations and 14 low that have not yet been fully implemented. It is acknowledged that of these, 3 medium, and 7 low recommendations remain outstanding due to long term staff absence.

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, together with any attachments, is provided pursuant to the terms of our engagement. The use of the report is solely for internal purposes by the management and Board of our client and, pursuant to the terms of the engagement, it should not be copied or disclosed to any third party or otherwise quoted or referred to, in whole in part, without our written consent. No responsibility to any third party is accepted as the report has not been prepared, and is not intended for any other purpose.

© 2012 - 2013 RSM Tenon Limited

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RSM Tenon Limited is a subsidiary of RSM Tenon Group PLC. RSM Tenon Group PLC is an independent member of the RSM International network. The RSM International network is a network of independent accounting and consulting firms each of which practices in its own right. RSM International is the brand used by the network which is not itself a separate legal entity in any jurisdiction.

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Agenda Item No. 6(c) BASSETLAW DISTRICT COUNCIL

AUDIT & RISK SCRUTINY COMMITTEE 30TH MAY 2013


INTERNAL AUDIT CHARTER

Cabinet Member: Finance & Property Contact: Mike Hill Ext: 3174 1. Public Interest Test 1.1 The author of this report, Mike Hill, has determined that the report is not confidential. 2. Purpose of the Report 2.1 To provide Members with the Internal Audit Charter and to request the Chairman of

this Committee to approve it on behalf of the Council. 3. Background and Discussion 3.1 The Internal Audit Charter establishes the purpose, authority and responsibilities for

the Internal Audit Service for Bassetlaw District Council, and formulates a signed agreement between the Council and RSM Tenon for the remaining periods of the contract.

3.2 The existence of the Charter will ensure that an effective internal audit service will be

delivered, and it will meet the requirements of the Public Sector Internal Audit Standards and RSM Tenon’s own Internal Audit Manual.

3.3 The Internal Audit Charter is attached at Appendix 1. 4. Implications

a) For service users Verification by internal audit is important to Bassetlaw as it provides an independent assessment of progress and the standard of service provided for the council tax levied.

b) Strategic & Policy

The existence of the Charter will ensure that adequate testing has taken place on the Council’s accounts, systems and controls throughout the year to

enable RSM Tenon to give their audit opinions on the council’s governance, risk management, and control arrangements at the year end.

c) Financial - Ref: 14/887 There are no financial implications arising directly from this report. d) Legal – Ref: 147/05/13 The Public Sector Internal Audit Standards sets out the work of the internal

auditor and the expectations placed upon them in auditing local government bodies.

e) Human Resources None arising from this report. f) Community Safety, Equalities, Environmental None arising from this report. g) Whether this is a key decision, and if so the reference number.

This is not a key decision. 5. Options, Risks and Reasons for Recommendations 5.1 This report is provided to Members for information and consideration. 6. Recommendations 6.1 That the Audit & Risk Scrutiny Committee notes the Internal Audit Charter. 6.2 That the Chair of this Committee be authorised to sign the Charter on behalf of the

Council. Background Papers

Audit Papers Head of Finance & Property office

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5 Internal Audit Charter

Agenda Item No. 6(d) BASSETLAW DISTRICT COUNCIL



INTERNAL AUDIT STRATEGY AND PLAN 2013/14 Cabinet Member: Finance & Property Contact: Rob Barnett Ext: 01159 489400 1. Public Interest Test 1.1 The author of this report, Rob Barnett, has determined that the report is not

confidential. 2. Purpose of the Report 2.1 To inform Members of the proposed Internal Audit Strategy for the period 2013/14 to

2015/16, and the Internal Audit Plan for work to be undertaken during the financial year 2013/14.

3. Background and Discussion 3.1 “Internal Audit is an assurance function that provides an independent and objective

opinion to the organisation on the control environment, by evaluating its effectiveness in achieving the organisation’s objectives. It objectively examines, evaluates and reports on the adequacy of the control environment as a contribution to the proper, economic, efficient and effective use of resources.” – As per Code of Practice for Internal Audit in Local Government in the United Kingdom 2006.

3.2 Under the above Code of Practice, paragraph 7.2 Audit Planning, there is a

requirement for the Head of Internal Audit to prepare a risk based Audit Plan designed to implement the audit strategy. In order to compile the Plan, there must be a clear understanding of the organisation’s functions and the scale and breadth of potential audit areas. (Paragraphs 7.2.1 and 7.2.2 of Code of Practice)

3.3 The Audit Plan should be fixed for a period of no longer than one year. The Plan

should outline the assignments to be carried out, their respective priorities and the estimated resources needed. The Plan needs to be flexible to be able to reflect the

changing risks and priorities of the organisation. (Paragraph 7.2.3 of Code of Practice).

3.4 Once the planned work has been determined, this should be compared to resource

availability. Where there is an imbalance between the two, the Audit & Risk Scrutiny Committee should be informed of proposed solutions. (Paragraph 7.2.4 of Code of Practice).

3.5 The Head of Internal Audit is responsible for the delivery of the Audit Plan. Significant

matters that jeopardise the delivery of the Plan or require changes to the Plan should be identified, addressed and reported to the Audit & Risk Scrutiny Committee. (Paragraph 7.2.5 of Code of Practice).

Internal Audit Plan 2013/14 3.6 Bassetlaw District Council’s objectives are the starting point in the development of

the three-year strategy for Internal Audit. It is also key that the Council understands the risks to the achievement of those objectives. Wherever possible, the aim is to place reliance on the Council’s own understanding of the risk profile, and to map the assurances to those objectives and risks. Risk analysis is based on the fact that all risks are relative but can be compared by combining three key factors:

The size of the risk or exposure; The likelihood that the risk will materialise; The probability of the consequences being detected if the risk does

materialise.

Each of these three factors are given an equal overall weighting to reflect the fact that audit assessment is a combination of risk and control.

3.7 New areas have been included in the Plan, together with areas that have not

received any audit coverage during the past three years. The three-year Audit Strategy is attached at Appendix A, and the comprehensive Internal Audit Plan for 2013/14 is attached at Appendix B.

3.8 The introduction of the three-year contract with RSM Tenon has enabled the working

relationship to be developed and improved. This is reflected in the three-year Audit Strategy as discussed in the above paragraphs. It has enabled the Council’s approach to internal audit to be mapped out across the whole of the Council’s service areas and functions, with a modern approach to risk-based auditing being taken, which allows for a much more robust process to be instigated. It is anticipated that many of the control weaknesses currently being identified within individual audits will be addressed and embedded during the period of this Strategy. This should then allow the Council to take a much more strategic viewpoint on audit risk in future years.

3.9 The Head of Internal Audit and the Head of Finance & Property have agreed that the

number of audit days for 2013/14 will be reduced by 15 days to a total of 307 days. This is in recognition of the improvements that have been made in the internal control environment during 2012/13 as identified within the separate Internal Audit Annual Report (elsewhere on this agenda).

3.10 Internal Audit has a joint working protocol with the external auditors, KPMG. Where

appropriate, Internal Audit work is scheduled to maximise its usefulness to the external auditors, who will place reliance upon its findings, rather than disrupt staff by repeating work already covered. Liaison occurs between Internal Audit and the external auditors to ensure that such work is properly addressed for both internal and external audit needs. Discussions have been held with KPMG staff to identify the material systems for which they wish to use Internal Audit evidence for the 2013/14 Audit, and this work has been included in the Plan.

4. Implications

a) For Service Users The Plan impacts across all parts of the Organisation and on all Service Users.


None from this Report. c) Financial – Ref: 14/663

The contractual agreement was based on 337 days, with an inflationary factor each year. By negotiation, this has now been reduced to 307 days at a cost of £83,700, giving rise to an budget saving in 2013/14 of £7,400 being an 8% reduction in costs.

d) Legal – Ref: 142/05/13

As contained within the report. e) Human Resources None from this Report. f) Community Safety, Equalities, Environmental None from this Report. g) Whether this is a key decision, and if so the reference number

This is not a key decision. 5. Options, Risks and Reasons for Recommendations 5.1 RSM Tenon were awarded an initial three-year contract in October 2010, based on

337 audit days, including specialist reviews, management and follow-up. This has been extended by six months to ensure that the whole of 2013/14 is covered under this contract. By negotiation, the number of audit days has been reduced to 307 for 2013/14, and this is still deemed to be sufficient to deliver an internal audit opinion at the end of the financial year.

5.2 There is always an option to further reduce the number of audit days, however, this

will lead to a decline in coverage, and in turn, may expose the Council to a greater risk of financial loss and reputational damage by adverse comments from the External Auditor. Any future reductions in the number of audit days will be managed on a year-on-year basis and agreed by the Head of Finance & Property in conjunction with the Head of Internal Audit.

6. Recommendation 6.1 Members approve the Strategy for Internal Audit for the period 2013/14 to 2015/16,

and the detailed Internal Audit Plan for 2013/14. Background Papers Location Audit Files RSM Tenon Notts Office


Internal Audit Strategy

2013/2014 – 2015/2016

Presented at the Audit & Risk Scrutiny Committee meeting of: 30th May 2013

Chris Williams

Head of Internal Audit

1

1 INTRODUCTION

This document sets out the approach we have taken to develop your internal audit strategy for 2013/14 to 2015/16 and the annual plan for 2013/14.

1.1 Role of Internal Audit

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

(Definition of Internal Audit: Chartered Institute of Internal Auditors)

From 1 April 2013, internal auditors in the public sector are required to work to the Public Sector Internal

Audit Standards (PSIAS), which are based on the International Standards for the Professional Practice of

Internal Auditing published by the Institute of Internal Auditors and which also adopt the institute’s definition

of internal auditing and code of ethics.

In line with these requirements, we perform our internal audit work with a view to reviewing and evaluating the risk management, control and governance arrangements that the organisation has in place, focusing in particular on how these arrangements help Bassetlaw District Council to achieve its objectives. The opinion may also be used by the S151 Officer, to support their Annual Governance Statement. This is achieved through a risk-based plan of work, agreed with management and approved by the Audit & Risk Scrutiny Committee.

2 DEVELOPING THE INTERNAL AUDIT STRATEGY

2.1 Issues influencing Internal Audit coverage

The organisation’s objectives are the starting point in the development of our strategy for delivery of internal audit services.

We have considered our previous work and findings on your risk management processes and consider that we can place reliance on your risk registers / assurance framework to inform the internal audit strategy.

In preparing your strategy and more detailed operational plan we have met with:

Head of Finance and Property;

Director of Community Services;

Director of Corporate Services;

Head of Community Prosperity;

Senior Manager Support Services;

Principal Environmental Health Manager;

Corporate Development and Policy Manager.

The key areas are summarised below:

Key Areas discussed with Management and their impact on the 2013/2014 plan

11

In discussion with the Head of Finance and Property, it was agreed that we would introduce a series of audits to provide cross-Council strategic coverage of certain areas. These are to include Cash and Banking, Reconciliations and Enforcement.

2

Key Areas discussed with Management and their impact on the 2013/2014 plan

2.

In discussion with management at both A1 Housing Bassetlaw Ltd and Bassetlaw District Council it was agreed that a number of reviews should be introduced to cover shared service areas. These include such areas as Payroll and Fleet Management. In addition, it was noted that the organisation has merged the Aids and Adaptations team with the Council Officers responsible for Disabled Facility Grants, and that these areas should now be subject to a combined audit.

The strategy is set out in Appendix A, with the more detailed annual plan for 2013/14 set out at Appendix B.

As well as assignments designed to provide assurance or advisory input around specific risks, the strategy includes:

a contingency allocation, which will only be utilised should the need arise, for example, for unplanned and ad-hoc work and will be subject to prior approval by the Audit & Risk Scrutiny Committee;

a follow-up allocation, which will be utilised to assess the degree of implementation achieved in relation to recommendations agreed by management during the prior and current financial year and will serve to inform the adequacy of the organisation’s own recommendation tracking process; and

an RSM Tenon audit management allocation, used at Partner and Manager level for quality control, client and External Audit liaison and for preparation for and attendance at Audit & Risk Scrutiny Committee.

In addition, the Council employs an in-house auditor who acts as first point of liaison between the Council and RSM Tenon, and who also undertakes audit reviews and investigations as separately instructed by the Head of Finance and Property.

2.2 Working with other assurance providers

We intend to meet with the Council’s External Auditors to confirm the scope of the work in the areas of

financial control to ensure they can continue to place their planned level of reliance on our work for 2013/2014.

The Audit & Risk Scrutiny Committee are reminded that internal audit is only one source of assurance and through the delivery of our plan we will not, and do not, seek to cover all risks and processes at the Council. We will however seek to work closely with other assurance providers, such as External Audit to ensure that duplication is minimised and a suitable breadth of assurance obtained.

3 INTERNAL AUDIT RESOURCES

3.1 Your Internal Audit Team

Your internal audit team is led by Chris Williams as Head of Internal Audit.

Your Client Manager is Rob Barnett.

We are not aware of any relationships that may affect the independence and objectivity of the team, and which are required to be disclosed under auditing standards.

3.2 Internal Audit Fees

The fee for your internal audit service for 2013/14 is a daily rate of £267. Management time is charged at £411 per day.

3

4 CONSIDERATIONS FOR THE AUDIT & RISK SCRUTINY COMMITTEE

Does the Strategy for Internal Audit (as set out at Appendix A) cover the organisation’s key risks as they

are recognised by the Audit & Risk Scrutiny Committee?

Does the detailed internal audit plan for the coming financial year (as set out at Appendix B) reflect the areas that the Audit & Risk Scrutiny Committee believes should be covered as priority?

Is the Committee satisfied that sufficient assurances are being received by the Council to monitor the organisation’s risk profile effectively, including any emerging issues / key risks not included in our annual plan?

4

APPENDIX A: UPDATED STRATEGY FOR INTERNAL AUDIT 2013/14 – 2015/16

Risk Based Assurance

Auditable Areas Potential Risks and not Actual Risks

2013/14 2014/15 2015/16

CHIEF EXECUTIVE

Corporate Plan Failure to define the aims and objectives of the Council.

The current climate of change creates difficulties where the Council is unable to articulate clear long term priorities

(Risk Register – 4).

Shared Services Depends on activity. Will include areas of collaborative working with other local authorities.

DIRECTOR OF CORPORATE SERVICES

Corporate Governance (Yr1 - Decision making and Scheme of Delegation, Yr2 / 3 - tbc)

Failure to comply with Constitutional requirements; Lack of appropriate Terms of reference; Lack of clarity regarding Decision-making boundaries (Members / officers); Inappropriate Committee structure; Lack of transparency / explanation for decisions taken (e.g. Planning Committee decisions counter to advice received).

DIRECTOR OF RESOURCES

Anti-Fraud Thematic Review Failure to manage fraud to an acceptable level.

Risk Management The Council does not have a clear methodology in place for identifying objectives and identifying, assessing, prioritising, preventing or containing high priority risks. This may lead to inappropriate objectives being defined and risks not being identified or managed properly.

5


2013/14 2014/15 2015/16

Combined Service Areas – BDC and A1 Housing Ltd.

HR Management Failure to have the right skills and capacity in fundamental delivery areas. This loss of key knowledge and skills is already occurring (Risk register 1). Strategic “cradle to grave” review of

management of staff and human resources processes, from recruitment through employment to end of contract with the Council.

Payroll (To alternate with HR management) Payroll records not properly controlled resulting in financial loss to the Council.

Fleet Management (non-repairs) Lack of appropriate fleet strategy; Failure to use vehicle resources effectively. Non-compliance with statutory requirements (e.g. vehicle tax; driver documentation); Failure to manage fuel usage and stocks efficiently.

Disabled Facilities & Other Private Sector Grants (to be undertaken in conjunction with A1 Housing Ltd. Aids and Adaptations review)

Inappropriate requests for grants are made and accepted due to inaccurate records. Losses due to fraud or error or inappropriate activity. Grants are not made in line with regulations. Inaccurate, untimely grant payments are made. Incomplete works are not identified. Grant payments are not made or are misappropriated.

Appraisal of Governance arrangements between BDC and A1 Housing Ltd.

Governance arrangements are not clear, leading to uncertainty regarding roles and responsibilities for developing strategic direction at A1 Housing Bassetlaw Ltd.

6


2013/14 2014/15 2015/16

Community Safety & Anti-Social Behaviour

Safety issues raised by residents are not addressed in a timely and effective manner.

Council Housing – Right to Buy Failure to process Right to buy applications in line with Council guidelines and relevant statutory legislation.

Insurance Ineffective Insurance arrangements in place leading to financial and reputational loss. Value for money is not obtained with regards to insurance services. Lack of cover for assets on loan.

7

Strategic Coverage

Audit Area Potential Risks and not Actual Risks

2013/14 2014/15 2015/16

Cash & Banking Failure to maximise income revenues (Risk Register – 2); Misappropriation of funds due to monies not being recorded accurately upon receipt. Monies not being securely held prior to banking or when transferring to the bank. Banking not being completed in a timely manner or complete manner. To cover all Council operations that involve cash collection and banking processes:- Markets; Car parking; Licensing; Planning; Building Control; Land Charges; and Cemeteries.

Reconciliations The Council fails to ensure that all local and centralised financial systems are reconciled and verified at regular intervals. Wide ranging review of reconciliation processes throughout the Council.

Enforcement, including abandoned cars

The Council fails to ensure that decisions relating to:-

Planning Waste Litter Patrol; Graffiti & Fly posting Distribution of Literature Dog Fouling Licensing; Pollution Control; Food hygiene inspections are

adhered to in practice; and Abandoned cars.

8

Core Assurance

Audit Area Outline scope 2013/14 2014/15 2015/16

REVENUE AND CUSTOMER SERVICES

Housing Benefits Implementation and effects of Welfare reform – universal credits; Processing of claims; Statutory returns; Completeness of records.

Council Tax Implementation and effects of Welfare reform – universal credits; Compliance with procedures; Accuracy / completeness of Council Tax bills; Income collection.

NNDR Identification of premises. Timeliness of notification / Billing. Policies and procedures. NNDR Relief.

Debtors & Debt Recovery Identification of monies due. Debt analysis, monitoring and recovery. Write-offs. Management Information.

Financial Controls (including work allowing greater external audit reliance on our work)

Systems Source of Requirement 2013/14 2014/15 2015/16

Creditors For Management Assurance, and External Audit will place reliance on our work to inform their audit.

Main Accounting

Taxation (Yr1 - CIS, Yr2 - VAT, Yr3 - PAYE )

Treasury Management

9

Limited Assurance Reports

Activity Rationale 2013/14 2014/15 2015/16

Retford Enterprise Centre

2012/13 - Red-Amber rating

Markets 2012/13 - Red-Amber rating

Parks & Open Spaces 2012/13 - Red-Amber rating

Pest Control 2012/13 - Red-Amber rating

Safeguarding 2012/13 - Red-Amber rating

Service Specific Areas


2013/14 2014/15 2015/16

ECONOMIC DEVELOPMENT

Car Parks To be included in Council wide cash and banking review.

Bassetlaw Museum Lack of policies and procedures. Inaccurate records of items held at the museum. Losses due to fraud or error, inefficient processing or inappropriate activity. Failure to record and collect income. Sales items not priced in accordance with the organisation’s policy. Failure to monitor visitor numbers. Poor decision making due to inadequate information provided to management.

CCTV Inadequate control over CCTV operations.

Economic Development Grants & Loan (Incl. Enterprise Board)

Failure to achieve the Council’s

objectives. Lack of compliance with policies and procedures. Failure to monitor grants / loans.

10


2013/14 2014/15 2015/16

Shopmobility Risks associated with the Shopmobility scheme have not been identified. Lack of monitoring of membership and usage of the scheme. Membership / hire fees and sales of Radar keys are not accurately recorded and collected resulting in loss of income. Sales items not priced in accordance with the organisation’s policy. Inadequate insurance in place to cover Shopmobility scooters and their use. Lack of relevant staff background checks.

Tourism (including Tourist Information Centres)

Lack of information provided to the general public. Services provided have not been adequately costed. Failure to record and collect income. Stock is not held securely. Usage of Tourist Information Centres is not monitored.

ENVIRONMENT

Contaminated Land Failure to define responsibility over land contamination within the Council. Remedial action is not, or cases are not, dealt with appropriately leading to reputational and financial loss for the Council.

Allotments Formal agreements between the Council and Allotment holders are not in place. Incomplete information is held on allotment holders. Usage of allotments is not monitored. Fees are not charged in accordance with approved scale of fees. Failure to record and collect income. Poor service is not identified.

11


2013/14 2014/15 2015/16

Cemeteries & Churchyards Failure to identify all risks associated with the service. Insufficient resource to deal with the administration of burials, memorials and exhumations. Fees charged are not in accordance with the (new) approved scale of fees.

Dog Warden Lack of clarity regarding roles and responsibilities Incorrect payments to contractors Losses due to fraud or error, inefficient processing (including collection of reclaim fees) or inappropriate activity.

Emergency Planning & Business Continuity

Members and Senior Officers failing to realise their responsibilities in relation to emergency planning.

Environmental Health – Pollution Control

Failure to enforce laws and regulations relating to Pollution. Fees charged are not in accordance with the approved scale of charges. Failure to investigate / action complaints within set deadlines.

Grounds Maintenance Failure in operational performance. Consistent and prompt action is not taken when dealing with customer enquires/ complaints.

Health & Safety Serious breach of Health & Safety legislation.

Pest Control Risks associated with areas relating to pest control are not identified. Customer dissatisfaction; leading to excessive complaints. Income is misappropriated.

Recycling Market collapses for recycling materials. Failure to promote recycling in the District. Inadequate arrangements for disposal of glass.

12


2013/14 2014/15 2015/16

Statutory Duties (Public Health Act)

Failure to comply with statutory legislation regarding funeral arrangements for homeless persons / persons with no next of kin.

Refuse Collection & Bulky Items Risks associated with areas relating to refuse collection and bulky items are not identified. Performance is not monitored including missed bins and failure to collect bulky items. Failure to deal with customer complaints leading to dissatisfaction with the service. Fees for removal of bulky items are not charged in accordance with the approved scale of charges. Losses due to fraud or error, inefficient processing or inappropriate activity.

Street Cleansing & Public Conveniences

Failure in operational performance. Consistent and prompt action is not taken when dealing with customer enquires / complaints.

Trade Waste Collection Lack of clearly defined policy on trade refuse. Failure to ensure all premises receiving trade refuse removal services are making appropriate payments. Failure to comply with Health & Safety legislation.

Vehicle Garage Repairs & MOTs

Failure to ensure that repairs are completed efficiently and economically; Lack of compliance with statutory requirements (i.e. MOTs).

13


2013/14 2014/15 2015/16

FINANCE AND PROPERTY

Budgetary Control & Setting Avoiding Budget overheating once the Budget has been set Budget cuts lead to lack of resources (Risk Register – 10). Lack of compliance with the Council’s

budget setting, monitoring and reporting procedures due to lack of training or inadequate dissemination of policy and procedure.

Capital Accounting & Asset Register

Failure to record and account for capital expenditure. System for recording capital expenditure is not controlled or secure. All existing assets, additions, amendments and deletions are not identified and accurately recorded.

Energy & Sustainability Failure to monitor energy consumption. Lack of compliance with policies and procedures in relation to sustainability. Poor decision making due to inadequate information provided to management.

Estates – Investment Property Failure to comply with laws and regulations. Failure to control levels of rent arrears. Lack of management information relating to lettings, rent arrears and levels of income and expenditure.

General Estates / Facilities Management

Inappropriate decisions on the allocation of planned and unplanned maintenance work to either contractors or in-house staff, resulting in excessive expenditure, substandard work or disruptions. Repairs are not carried out in a timely manner to an appropriate standard resulting in injury to staff, visitors or tenants, costs, delays and

14


2013/14 2014/15 2015/16

disruptions. Inadequate disabled access to Council buildings Poor decision making, due to poor quality or timeliness of information provided to management. Failure to comply with current legislation.

Grant Management (European & Other Grants)

Failure to comply with grant criteria. Failure to record and account for grant expenditure.

Inventory Management Failure to maintain an up-to-date record of inventory held.

Officer Expenses Lack of procedural documentation. The Council’s policy for car mileage and subsistence is not cost efficient. Expenses claims are not made on official forms or approved prior to processing. Lack of management information to monitor expenses being paid.

Procurement – Contract Management

Supply chain failure e.g. I.T provider, financial institution or critical supply such as fuel (Risk register – 7). Failure to ensure most efficient and effective selection of contractors suppliers for Council goods and services. Scope to select a number of contracts and processes from Pre-Contract, Currency of Contract and Post Contract. Also to include coverage of contracts managed by A1 Housing Bassetlaw.

Town Hall Management Usage is not properly organised, marketed or monitored. Lack of appropriate income generation. Losses due to fraud or error, inefficient processing or inappropriate activity. Room usage is not monitored and/or the ordering is inadequate. Poor decision making, due to poor quality or timeliness of information provided.

15


2013/14 2014/15 2015/16

HOUSING

Strategic Housing (including Homelessness)

Lack of appropriate Housing Strategy, including coverage of regeneration and area renewal;

Lack of control over Partnership arrangements with other agencies;

Failure to undertake appropriate Benchmarking / Strategic Housing Market Assessment;

Failure to undertake monitoring of contracts/ housing procurement;

Lack of appropriate Housing research, policy development and service improvement

Failure to deliver affordable housing

Lack of private sector housing advice and enforcement

Lack of empty properties advice and enforcement

Failure to combat fuel poverty.

LEISURE

Sports Development Staff do not know what they are responsible for, or how they should carry out their duties, leading to non-compliance with legislation, laws or organisational policy and procedures. Failure in operational performance. Losses due to fraud or error, inefficient processing or inappropriate activity. Poor decision making, due to poor quality or timeliness of information provided to management.

Leisure Management Contract Failure to review contract arrangements. Contract monitoring is not undertaken. Value for money is not achieved. Lack of Customer Satisfaction with service.

16


2013/14 2014/15 2015/16

COMMUNITY PROSPERITY

Building Control Failure to deal with effect of competition and economic situation on workload and income. Inability to deliver service standards expected in a competitive market. Non-compliance with Building Regulations.

Development Control & LDF Planning applications and inspections are not processed correctly or accurately or in accordance with planning legislation. Poor decision making, due to poor quality or timeliness of information provided to management.

S106 Agreement / Community Infrastructure Levy

Loss of opportunity provided by Section 106 agreements. Failure to apply Community Infrastructure Levy (CIL).

POLICY AND COMMUNITY ENGAGEMENT

Communications / Events Management

Ineffective means of communicating with staff, residents and other stakeholders. Inefficient management of Council related events. Lack of centralised control over marketing; use of corporate branding, use of events / promotional suppliers.

Complaints Management Failure to deal with complaints leads to lack of confidence in Council services.

Elections Electoral register is inaccurate or incomplete. Election notifications are not advertised appropriately. Those requiring postal voting are not identified. Staff resources are not managed appropriately during elections. Elections turnout is not monitored and recorded.

17


2013/14 2014/15 2015/16

Members Expenses Lack of compliance with Council policy and procedures in relation to Members Expenses. Failure to publish Member Expenses in accordance with legislation. Failure to monitor and control expenditure.

Partnerships & Voluntary Sector Grant Aid

Partnership Agreements not in place. Inaccurate records of grants maintained. Losses due to fraud or error or inappropriate activity. Grants are not made in line with agreed criteria.

REVENUES AND CUSTOMER SERVICES

Benefits Investigation Team Staff are not adequately trained. Failure to investigate allegations of potential fraud. Joint working with key partners is not utilised to detect and prevent fraud. Failure to impose sanctions on benefit claimants who have committed an offence.

Customer Services & One Stop Shop Areas

Risks regarding customer complaints and dissatisfaction are not identified and managed as far as practical. Failure to obtain feedback from customers on a regular basis.

Payment Card Industry (PCI) Compliance

Non-compliance with statutory requirements

SUPPORT SERVICES

Data Protection Act / Freedom of Information Act

Data loss or privacy incident (risk Register – 8). Failure to comply with Data Protection Act. Lack of appropriate publication scheme is in place in line with the requirements of freedom of information legislation. Freedom of information requests are dealt with in an appropriate and timely manner.

18


2013/14 2014/15 2015/16

Equality & Diversity Reputational / financial loss attributed to failure to identify and monitor risks associated with Equality & Diversity.

GIS System GIS system is incomplete or not up to date. Loss or failure of the system resulting in the inability to process customer requests for information.

IT Reviews Unauthorised access to IT equipment, systems and data. The system processes inaccurate or incomplete data leading to data corruption, fraud or the integrity of the system being threatened. Loss or failure of the system resulting in the inability to continue processing and potential data corruption (Failure to effectively respond to a significant BCP related event e.g. weather, strike or loss of utility – Risk Register – 5). System outputs are not available when required, are incomplete or inaccurate.

Land Charges, Street Naming & Numbering

Applications are not readily identified or incomplete applications are accepted. Local Land Charges register is incomplete or not up to date. Fees are not charged in accordance with approved rates. Failure to comply with legislation in relation to street naming and numbering. Failure to ensure payments received for all applications.

Licensing Laws and regulations relating to granting of licenses are being breached, placing the Council in a position of facing legal action. Licenses are issued without appropriate authorisation. Expired licenses are not promptly detected.

19


2013/14 2014/15 2015/16

Print and Design Unit The Council does not receive value for money from print and design services. Use of services is not properly controlled / limited. Usage is not monitored.

Mail Room Inadequate staffing resources for the mail room. Failure to document procedures. Insufficient security over the mail room. Lack of performance monitoring to ensure there is internal customer satisfaction.

The Regulation of Investigatory Powers Act 2000 (RIPA)

Non-compliance with statutory requirements.

Other Internal Audit Activity

Activity Rationale 2013/14 2014/15 2015/16

Follow Up To meet internal auditing standards and to provide management with on-going assurance regarding implementation of recommendations.

Enterprise Centre

Contingency To allow for additional audits to be undertaken at the request of the Audit & Risk Scrutiny Committee or management based on changes in assurance needs as they may arise during the year.

Audit Management This will include: Annual planning Preparation for, and attendance at,

Audit & Risk Scrutiny Committee meetings

Regular liaison and progress updates Liaison with external audit Preparation of the annual internal audit

opinion

20

APPENDIX B: INTERNAL AUDIT PLAN 2013/2014

Audit Internal Audit Coverage Internal Audit Approach

Audit Days

Proposed Timing

Audit Committee

Assurance and Advisory Work to Address Specific Risks

Corporate Plan High level review of the Council’s Corporate Plan and supporting processes. Effect on Corporate Planning of

Council elections May 2013; Use of Key Performance Indicators

for planning purposes; Planning timetable. Business Planning processes

including:- Headline target parameters; Links to risk register; Use of budgetary information; Planning assumptions and checks; Use of data; External comparisons (benchmarking; market research).

Risk Based 7 TBC TBC

Corporate Governance (Yr1 - Decision making and Scheme of Delegation)

Roles and responsibilities for decision-making (Scheme of Delegation);

Recording and approval of decisions; Committee structure Terms of reference Constitution Monitoring of performance

Key Controls 5 TBC TBC

Risk Management

Risk methodology; Identification of risks; Departments approach to risk; Risks linked to objectives; Departmental service plans; Risk management policy approval

and review; Corporate/ Strategic risk register; Departmental risk registers; Risk reporting; Management of risks; Review and update of risk registers;

and Reporting to Senior Management and

Committees.


21


Audit Days

Proposed Timing

Audit Committee


HR Management

HR Policy Review – process and dissemination to staff;

Job Evaluation; Redeployment, Recruitment &

Retention; Sickness & Absence Monitoring; Appraisals; Training & Development; Succession Planning; Attendance and absence

management; Flexible working and Home working;

Consistency across departments.

Risk-based 12

BDC 7

A1 5

TBC TBC

Fleet Management (non-repairs)

Fleet Management Policy; Operational procedures relating to

Fleet Management; Vehicle users and responsibilities

(including employee signed agreements);

MOT and Road tax compliance; Appropriate Insurance cover in place; Monitoring and analysis of vehicle

usage; Fuel provision / usage / security;

reconciliations; Staff hold valid driving licence/checks

in place relating to this.

Risk-based 15

BDC 8

A1 7

TBC TBC

22


Audit Days

Proposed Timing

Audit Committee


Disabled Facilities & Other Private Sector Grants (in conjunction with A1 Housing Ltd. Aids and Adaptations review)

Staff responsibilities Policies and procedures Use of contractors Monitoring of works / budgets Eligibility for works Assessment of applications Timescales Tenant communications Management Information

Key Controls 8

BDC 3

A1 5

TBC TBC

Appraisal of Governance arrangements between BDC and A1 Housing Ltd.

Documented agreements in place; Review and monitoring by BDC of A1

Housing Ltd strategic planning;

Risk-based 8

BDC 3

A1 5

TBC TBC

23


Audit Days

Proposed Timing

Audit Committee


Cash & Banking To cover all Council operations that involve cash collection and banking processes:- Markets; Car parking; Licensing; Planning; Building Control; Land Charges; Cemeteries Structure for cash collection / Cash

points; Process for the receipt of income

through the post; Financial Regulations / Procedures; Records of cash and cheques

collected; Checks carried out of income

collected to income due; Issue of receipts; Process of recording the income in

the income system and ensuring cash and cheques are posted onto the right customers’ accounts / linked to correct applications etc.;

Income received direct onto the Authority’s bank account and

recording / allocation of that income; Physical cash and cheques are

held/transported/transferred safely before being banked;

Banking of cash and cheques; Reconciliation of income collected to

income banked; Reconciliation to the financial

system/main ledger; Segregation of duties; Access to the cash receipting system

/ access levels. Late payments.


24


Audit Days

Proposed Timing

Audit Committee


Enforcement To cover all Council operations where enforcement of legislation is involved:- Planning; Waste Litter Patrol; Graffiti and Fly posting Distribution of Literature Dog Fouling Licensing; Pollution Control; Food hygiene inspections. Records of all enforceable decisions

are maintained. All enforceable decisions are

monitored for key delivery dates. Checks are undertaken in a timely

manner of compliance with decisions. Non-compliance is reported to

appropriate management levels. Enforcement action is approved and

undertaken in line with documented procedure.

Progress of enforcement action / case histories is monitored on a regular basis.

Effectiveness of enforcement action is included, including benchmarking where applicable, and use of performance indicators.

Risk-based 15 TBC TBC

Reconciliations Wide ranging review of reconciliation processes throughout the Council. Documented procedures; Segregation of duties; Roles & Responsibilities; Completion of reconciliations; Review and authorisation; Investigation of any un-reconciled

items; and Management Information.


25


Audit Days

Proposed Timing

Audit Committee


Housing Benefits

Policies and procedures; staff training; segregation of duties; staff declaration of interests; live claims and supporting evidence; KPI accuracy and reporting (including

external requirements); dangerous persons arrangements; discretionary HB awards; overpayments; out-of-date cheques; write-offs; claims monitoring / management; reconciliations and review; subsidy claim arrangements.


Council Tax System procedure notes; Staff training; Identification and recording of

persons liable for Council Tax; Billing methods and payment

collection; Reliefs Accounting for payments received; Recovery and write off policy; Segregation of duties; working arrangements with outside

agencies such as CAB and debt advice given to customers.;

Liability accuracy; new / amended / deleted properties; relief exemptions;

b/f year end (2012/13) accounts; suspense accounts; refunds; Performance monitoring and

reporting; System back-ups / disaster recovery; Security of documentation; Conflicts / declarations of interest

(staff); Homeworking issues.


26


Audit Days

Proposed Timing

Audit Committee


NNDR System procedure notes; Staff training; Identification and recording of

persons liable for Council Tax; Billing methods and payment

collection; Accounting for payments received; Recovery and write off policy; Segregation of duties; working arrangements with outside

agencies such as CAB and debt advice given to customers.;

Liability accuracy; new / amended / deleted properties; relief exemptions;

b/f year end (2012/13) accounts; suspense accounts; refunds; Performance monitoring and

reporting; System back-ups / disaster recovery; Security of documentation; Conflicts / declarations of interest

(staff); Homeworking issues. Inspections of void properties Small Business Rate Relief (SBRR).


Debtors & Debt Recovery

Efficiency of control systems; Completeness of debtor records; Reconciliations to GL systems; Debt control policy and use of

alternative recovery options (Sundry Debtors, Council Tax and NNDR).

Write-offs.


Main Accounting

Data input to the main accounting system from feeder systems;

Control accounts; Journal transfers - explanation and

approval; User access to systems; Suspense accounts. Balance Sheet reconciliations


27


Audit Days

Proposed Timing

Audit Committee


Taxation (Yr1 – CIS)

Compliance with CIS legislation; Tax implications of payments to

contractors.

Advisory 6 TBC TBC

Retford Enterprise Centre

Implementation of recommendations from 2012/13 audit; Policies and procedures; Roles and responsibilities; Financial Regulations; Expenditure approval and authorised

signatory list; Files/ Documentation of expenditure

incurred; Compliance with grant funding terms

and conditions; Fees and charges, collection of

income Payment monitoring; and Management information / reporting.


Markets Implementation of recommendations from 2012/13 audit; Trading rules clearly defined; Roles and responsibilities; Formal agreements in place between

the Council and market traders; Completed applications; Trader insurances; Market stall usage; Management information / reporting.


Parks and Open Spaces

Implementation of recommendations from 2012/13 audit; Arrangements with Clubs (e.g. bowling

greens, fishing rights, visitor parking); Parks and Open Spaces Strategy; Roles and responsibilities; Collection and banking of income

streams;


28


Audit Days

Proposed Timing

Audit Committee


Security arrangements for staff and stock; and

Performance monitoring.

Pest Control Implementation of recommendations from 2012/13 audit;

Risk assessments of service area;

Compliance with legislation;

Approval / review of fees and charges;

Fees charged for service;

Prioritising of requests received;

Raising of debtor invoices;

Concessionary charges including proof of entitlement;

Monitoring of income received compared to service requests;

Monitoring of satisfaction levels;

Monitoring of response times and information; and

Reports to management / committees.


Safeguarding Implementation of recommendations from 2012/13 audit; Relevant policies and procedures; Roles and responsibilities; Staff training; Compliance with legislation; Robustness of recruitment and

selection processes; Records for tracking DBS checks; and Management reporting.


Bassetlaw Museum

Roles and responsibilities; Purchasing (including display items) Receipt and banking of income Stock records; Usage monitoring; Marketing; Management Information.


29


Audit Days

Proposed Timing

Audit Committee


Dog Wardens Roles and responsibilities Contractor payments Market testing of service Risk assessment of service is

undertaken. Fees and charges are set out and

accurately applied / New arrangements satisfactory

Satisfaction surveys; Management reporting.


Economic Development Grants & Loan (Incl. Enterprise Board)

Bassetlaw Enterprise Board Grant applications; Monitoring of income and

expenditure; Grant criteria; Management information and

reporting.


Cemeteries & Churchyards

Risk Assessments;

Staffing levels;

Roles and Responsibilities;

Monument assessment – progress in line with statutory requirements;

Approval and review of scale of fees;

Burial and income records;

Reconciliation of income to burial register;

Policies and procedures;

Income and expenditure monitoring and reporting;

Management information.


30


Audit Days

Proposed Timing

Audit Committee


Environmental Health – Pollution Control (Pre enforcement)

Policies and procedures. Roles and responsibilities. Investigation and enforcement of

legislation to the point of any enforcement notice.

Monitoring and recording of incidents relating to Pollution Control.

Dealing with enquiries/ complaints. Advice and information provided to

residents. Working arrangements with other

Council departments/ sections (Planning, Emergency Planning, Legal Services and Housing) and external bodies.


Trade Waste Strategic direction; Policies and procedures; Operational efficiency and

effectiveness; Income collection and reconciliation; Competitive pricing; Compliance with Health & Safety

legislation.


Capital Accounting & Asset Register

Completeness and accuracy of Asset register;

The valuation, depreciation and capital charges on assets.

Additions, disposals and other adjustments;

Reconciliation of the Fixed Asset Register to the financial system.

Information flows.


31


Audit Days

Proposed Timing

Audit Committee


Officer Expenses

Policies and procedures; Compliance and authorisation; Accuracy of claims and supporting

information; Cost effectiveness; Management information and

monitoring.


Procurement – Contract Management

To select a number of contracts and audit processes from Pre-Contract, Currency of Contract and Post Contract. to include A1 Housing Bassetlaw Ltd

contracts


Town Hall Management

Bar management. Usage of available space. Bookings system (contract

monitoring); Income generation. Fees and charges in accordance with

approved charges Collection of income Financial controls.


Strategic Housing (including homelessness)

Housing Strategy; Partnership arrangements with other

agencies; Benchmarking/Strategic Housing

Market Assessment; Monitoring of contracts/ housing

procurement; Housing research Policy development and service

improvement Delivery of affordable housing Private sector housing advice and

enforcement Regeneration and area renewal Empty properties advice and

enforcement Fuel poverty


32


Audit Days

Proposed Timing

Audit Committee


Sports Development

Staff responsibilities; Performance monitoring; Fees and charges Receipting and banking of income Financial controls; Management information.


S106 Agreements / CIL

Section 106 agreements; Application of Community Infrastructure Levy (CIL). Policies and procedures. Agreement before / after planning

permission granted, in relation to: Open Space Contribution Open Space and Education

Contribution National Forest Contributions Affordable Housing Highway Works Unilateral obligation to apply terms of

previous agreement to current planning permission.

Management reporting.


Communications / Events Management

Communications strategy Management of Council related

events; Centralised control over marketing; Use of corporate branding, Efficient use of suppliers for events /

promotional materials.


Partnerships & Voluntary Sector Grant Aid

Partnership Agreements; Grant Applications; Grant approvals; Segregation of duties; Monitoring of expenditure; and Management and reporting.

Review to cover - Councillor grants.


33


Audit Days

Proposed Timing

Audit Committee

PCI Compliance Use of Payment Cards across the Authority, including Revenues, Environment and Planning. Compliance with PCI (Payment

Card Industry) requirements. Building and maintaining a secure

network Protecting cardholder data Maintaining a vulnerability

management program Implementing strong access

control measures Regularly monitoring and testing

networks Maintaining a policy that

addresses information security


Data Protection Act / FOI Act

Review of the Council's Freedom of Information and Data Protection processes against key statutory requirements and selected best practice points. Compliance with the Data Protection

Act; Publication scheme; Processing of FOI applications.


GIS System Completeness of GIS system Continued operation of GIS system


IT Reviews Specific areas of coverage to be confirmed. Programme to include:- ICT Strategy; ICT Security Policy inc ISO27001 ICT Governance inc Information

Technology Infrastructure Library (ITIL)

IT Disaster Recovery & Contingency Back up Arrangements ICT Support Third Party Contract Management ICT Procurement Security and Control over ICT

Function Network Infrastructure & security


34


Audit Days

Proposed Timing

Audit Committee

Wireless Security Virus Protection/Spyware Wide Area Network/Remote Access Telecoms/ voice over Internet

Protocols (VoIP) Use of mobile devices (Phones / USB

etc.) Internet and Email PC End User Controls Laptop Security Asset Management File and software Controls.

Land Charges, Street Naming & Numbering

Processing and recording of applications

Completeness of local Land Charges register

Fees are charged in accordance with approved rates.

Compliance with legislation in relation to street naming and numbering.

Audit trail exists to ensure that payment has been received for all applications.


Licensing Compliance with statutory legislation. Authorisation of licenses; Monitoring of licence expiries.


RIPA Disclosure of data; Staff roles and responsibilities; Knowledge of Act; Reporting requirements.


35

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, together with any attachments, is provided pursuant to the terms of our engagement. The use of the report is solely for internal purposes by the management and Board of our client and, pursuant to the terms of the engagement, it should not be copied or disclosed to any third party or otherwise quoted or referred to, in whole in part, without our written consent. No responsibility to any third party is accepted as the report has not been prepared, and is not intended for any other purpose.

© 2012 - 2013 RSM Tenon Limited

The term "partner" is a title for senior employees, none of whom provide any services on their own behalf.

RSM Tenon Limited is a subsidiary of RSM Tenon Group PLC. RSM Tenon Group PLC is an independent member of the RSM International network. The RSM International network is a network of independent accounting and consulting firms each of which practices in its own right. RSM International is the brand used by the network which is not itself a separate legal entity in any jurisdiction.

RSM Tenon Limited (No 4066924) is registered in England and Wales. Registered Office 66 Chiltern Street, London W1U 4GB. England

U 4GB. England


Audit Days

Proposed Timing

Audit Committee

Other Internal Audit Coverage

Follow Up To meet internal auditing standards and to provide management with ongoing assurance regarding implementation of recommendations.

Follow up review

15 Ongoing Delivered to each Audit & Risk Scrunity Committee

Management This will include: Annual planning. Preparation for, and attendance at,

Audit Committee meetings. Regular liaison and progress

updates. Liaison with external audit. Preparation of the annual internal

audit opinion.

- 12 Ongoing Ongoing

Total (excluding Contingency) 299

Contingency For coverage of risks and changes in assurance needs as these arise during the year. To be agreed in advance with Management.

- 8 As required

As used

Agenda Item No. 6(e) BASSETLAW DISTRICT COUNCIL



INTERNAL AND EXTERNAL AUDIT PROTOCOL 2013/14

Cabinet Member: Finance & Property Contact: Mike Hill Ext: 3174 1. Public Interest Test 1.1 The author of this report, Mike Hill, has determined that the report is not confidential. 2. Purpose of the Report 2.1 To provide Members with the Internal and External Audit Protocol 2013/14 as agreed

by both KPMG and RSM Tenon. 3. Background and Discussion 3.1 The Protocol defines the working relationship between the KPMG external audit team

and RSM Tenon when providing internal audit services for the Council. The reasons for documenting this relationship are that KPMG will seek to place reliance on the work of internal audit where this is relevant to their work, and to formalise areas for co-operation that can assist in reducing any unnecessary overlap of audit effort.

3.2 The document also sets out:

The principles and arrangements that are required to implement the joint managed audit approach;

The specific arrangements that are required to support the accounts, systems work, VFM work, grants certification and fraud requirements of the Council;

Details of KPMG’s approach to controls testing. 3.3 KPMG’s Internal and External Audit Protocol 2013/14 is attached at Appendix A. 4. Implications

a) For service users Verification by both internal and external audit is important to Bassetlaw as it provides an independent assessment of progress and the standard of service provided for the council tax levied.


The existence of the Protocol will ensure that adequate testing has taken place on the Council’s accounts, systems and controls throughout the year to enable a smooth delivery of the year end audit of the accounts and supporting statements.

c) Financial - Ref: 14/214 There are no financial implications arising directly from this report. d) Legal – Ref: 145/05/13 The Audit Commission Act 1998 sets out the work of the external auditor and

the expectations placed upon the Council in terms of its Accounting Statements and Value for Money conclusion.


This is not a key decision. 5. Options, Risks and Reasons for Recommendations 5.1 This report is provided to Members for information and consideration. 6. Recommendations 6.1 That the Audit & Risk Scrutiny Committee notes the Internal and External Audit

Protocol for 2013/14. Background Papers


Internal and external auditexternal audit protocol 2013/14


April 2013

Content

The contacts at KPMG

in connection with this

report are:

Sue Sunderland

Director

KPMG LLP (UK)

Page

Introduction 2

General arrangements 3

Specific arrangements 4

Tel: 0115 945 4490

[email protected]

Lee Towers

Manager

KPMG LLP (UK)

Tel: 0115 935 3428

[email protected]

Approach to controls testing 6

Appendix

1. Key control schedules 8

@ p g

Jon Machej

Assistant Manager

KPMG LLP (UK)

Tel: 0115 935 3530

[email protected]

This report is addressed to the Authority and has been prepared for the sole use of the Authority. We take no responsibility to any member of staff acting in their individual capacities, or to third parties. The Audit

Commission has issued a document entitled Statement of Responsibilities of Auditors and Audited Bodies. This summarises where the responsibilities of auditors begin and end and what is expected from the audited body. We draw your attention to this document which is available on the Audit Commission’s

website at www.auditcommission.gov.uk.

External auditors do not act as a substitute for the audited body’s own responsibility for putting in place proper arrangements to ensure that public business is conducted in accordance with the law and proper

standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively.

If you have any concerns or are dissatisfied with any part of KPMG’s work, in the first instance you should contact Sue Sunderland, the appointed engagement lead to the Authority, who will try to resolve your complaint. If you are dissatisfied with your response please contact Trevor Rees on 0161 246 4000, or by email to [email protected], who is the national contact partner for all of KPMG’s work with the Audit Commission. After this, if you are still dissatisfied with how your complaint has been handled

© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

1

the Audit Commission. After this, if you are still dissatisfied with how your complaint has been handled you can access the Audit Commission’s complaints procedure. Put your complaint in writing to the

Complaints Unit Manager, Audit Commission, Westward House, Lime Kiln Close, Stoke Gifford, Bristol, BS34 8SR or by email to [email protected]. Their telephone number is 0844 798 3131,

textphone (minicom) 020 7630 0421.

Section oneIntroduction

Purpose and structure of this document

This document clarifies the working relationship between RSM Tenon (“Internal Audit”) and the KPMG LLP audit team (“KPMG”) responsible for the audit of Bassetlaw District Council (“the Authority”). Reasons for documenting the relationship are:

■ As part of the delivery of a managed audit, KPMG seek to place reliance on the work of Internal Audit where this is relevant to their work, particularly when appraising the controls operated by management over financial systems; andy ;

■ To formalise areas of co-operation and assistance that can help to reduce any unnecessary overlap of audit effort.

The remainder of this document presents:

■ The principles and general arrangements that are put in place to ensure that Internal Audit and KPMG are able to implement the managed audit approach (section two).

■ The specific arrangements that are required to support the managed audit approach for the accounts and systems work at the Authority VFM work grants certification and fraud requirements (sectionand systems work at the Authority, VFM work, grants certification and fraud requirements (section three).

■ Details of KPMG’s approach to controls testing, including detailed schedules setting out the key controls for relevant systems (section four supported by appendix one).

Key contacts

For the purpose of clarity, the key contacts between Internal Audit and KPMG will be as follows:

I t l A ditInternal Audit

Chris Williams Head of Internal Audit : 07753 584993 : [email protected]

Rob Barnett Manager : 07791 237658 : [email protected]

John Baker Fraud lead : 07753 584973 : [email protected]

KPMG

Lee Towers Manager : 0115 935 3428 : [email protected]

The way forward

This document formalises the process, as it exists now. Regular reviews of these arrangements should ensure that the protocol remains current and accurately reflects the control environment of the Authority

ll KPMG’ i i hi

Jon Machej Assistant Manager : 0155 935 3430 : [email protected]

as well as KPMG’s requirements in response to this.


2

Section twoGeneral arrangements

Respective responsibilities

KPMG’s responsibility as external auditors are set out in the Audit Commission Act 1998 and the Audit Commission’s Code of Audit Practice.

The Code of Audit Practice summarises KPMG’s responsibilities into two objectives, requiring KPMG to review and report on the Authority’s:

■ financial statements (including the Annual Governance Statement): providing an opinion on the Authority’s accounts; and;

■ use of resources: concluding on the arrangements in place for securing economy, efficiency and effectiveness in the Authority’s use of resources (the value for money conclusion).

A professional, independent and objective internal audit service is one of the key elements of good governance, as recognised throughout the UK public sector.

From April 2013, the United Kingdom Public Sector Internal Audit Standards (PSIAS) apply across the whole of the public sector, including local government. These standards are intended to promote further improvement in the professionalism, quality, consistency and effectiveness of internal audit across the public sector. The p q y y pPSIAS replace the Code of Practice for Internal Audit in Local Government in the United Kingdom, last revised in 2006. Additional guidance for local authorities is included in the Local Government Application Note on the PSIAS.

KPMG expect Internal Audit to comply with the requirements of the PSIAS.

Working together

On an annual basis KPMG and Internal Audit will discuss the risk assessment underlying the Internal AuditOn an annual basis, KPMG and Internal Audit will discuss the risk assessment underlying the Internal Audit Plan, to determine areas of common interest and therefore reduce any unnecessary overlap of audit effort.

Where KPMG have identified the opportunity to rely on work performed by Internal Audit, KPMG will consider the findings of their report and, if necessary, review the supporting audit files.

The timescales for these reviews will be subject to agreement with Internal Audit at the time. KPMG plan to complete control evaluation work in April each year in preparation for the audit of accounts and therefore expect all of Internal Audit’s work on key financial systems to be completed by March.

Final Internal Audit reports for all areas should be sent electronically to KPMG and specifically to DeniseFinal Internal Audit reports for all areas should be sent electronically to KPMG, and specifically to Denise Campbell ([email protected]) who will collate these as necessary.

Any detailed review of the audit files will be conducted on site, with files kept either in the external audit office or the offices of Internal Audit at all times.

KPMG will share copies of their final reports with Internal Audit as a matter of course to ensure they are aware of the findings from the external audit work.


3

Section threeSpecific arrangements

Systems of internal financial control

KPMG are required under the Code of Audit Practice to form an opinion as to whether the Authority’s financial statements and transactions give a true and fair view of the financial position and the transactions of the Authority.

To support this opinion, it is desirable to place reliance on the Authority’s core financial systems. The work of Internal Audit is important in building up an understanding of the systems and controls to achieve this.

I li ith th PSIAS i t l diti i i d d t bj ti d lti ti itIn line with the PSIAS, internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

The PSIAS require Internal Audit to prepare a risk-based audit plan that takes into account the Authority’s risk management framework, as well as changes in the Authority’s business, risks, operations, programmes, systems, and controls. KPMG therefore expect that this covers all of the Authority’s key risk areas, including those related to the financial systems. y

KPMG will review the outcome from Internal Audit’s work on the financial systems to influence their annual assessment of the overall control environment, which is a key factor when determining the external audit strategy.

Subject to the Authority’s financial systems having been assessed as effective by Internal Audit, KPMG have defined only a small number of key systems and key controls which they would expect Internal Audit to cover on an annual basis to support the external audit work on the financial statements. The required scope for these encompasses both assessment of the design and implementation of controls, with walkthroughs of the system where applicable (testing of a single case to verify the documentation of systems and controls), and testing of the effective operation of the controls.

Appendix 1 lists those controls and walkthroughs that Internal Audit should seek to perform as a minimum for external audit purposes as part of the delivery of its Internal Audit Plan.

KPMG’s audit strategy is continually revisited, so there may be instances where they do not specifically review and seek to rely on Internal Audit’s work on the controls for specific systems in any given audit, depending on our audit strategy at the time. This document therefore sets out the systems and controls where reliance is

lik l b h hi h KPMG ill k l li i di id l illmost likely, but the extent to which KPMG will seek to place reliance on individual areas will vary.

KPMG’s fee for the external audit is set on the presumption that KPMG can place reliance on the work of Internal Audit and the core financial systems themselves. If this is not the case, additional work may be required in order to support the audit opinion, which will increase the external audit fee.

Fraud and corruption

Internal Audit’s responsibilities over fraud and corruption comprises two main areas:Internal Audit s responsibilities over fraud and corruption comprises two main areas:

■ Proactive work to assess the quality of controls which prevent and detect fraud and corruption; and

■ Investigation of specific allegations.

KPMG’s responsibilities under auditing standards are limited to:

■ Identifying and assessing the risks of material misstatement of the financial statements due to fraud and designing and implementing appropriate responses to the risks identified; and


4

■ Responding appropriately to fraud or suspected fraud identified during the audit.

As part of their periodic meetings, Internal Audit and KPMG will discuss any significant fraud and corruption cases reported to or investigated by Internal Audit.

Section threeSpecific arrangements (cont.)

In addition, there is an Audit Commission requirement for investigating auditors to complete the Audit Commission’s AF70 form for proven financial losses exceeding £10,000 and all cases of tenancy fraud.

KPMG have provided a proforma AF70 form for the Authority , in conjunction with Internal Audit, to capture the key details of these cases for onward submission to the Audit Commission. The Head of Finance for the Authority will forward completed AF70 forms for all relevant cases in the period to KPMG on a quarterly basis.

Only one submission needs to be made when there are large numbers of:

h i b fit d il t b fit f d th t i l f il t d l t i f il t■ housing benefit and council tax benefit frauds that involve a failure to declare correct income or a failure to notify a change of circumstance; or

■ tenancy frauds.

Grant certification

The Audit Commission may, at the request of grant paying bodies, make arrangements for claims to be certified by the external auditor. To assist in this certification and help ensure national consistency, the y p y,approach auditors must take is specified in Certification Instructions produced by the Audit Commission.

The Audit Commission has set an indicative fixed fee for the certification of grant claims and returns. This fee is based on the expectation that the Authority is able to provide KPMG with complete and accurate claims and returns, with supporting working papers, within agreed timeframes, and that there is an effective control environment in place over the preparation of the claim or return. This may include work completed by Internal Audit. It further assumes that any previous arrangements for completion of specific elements of the Certification Instruction work, eg Housing Benefit module completion, will continue.

I t l A dit’ k th t t t l i d t i l llInternal Audit’s work on the management arrangements over grant claims and returns in general, as well as on specific schemes, is an important factor and Internal Audit can add value to the certification process by reviewing the Authority’s arrangements to ensure that these are effective.

VFM work

The Code of Audit Practice requires KPMG to conclude on the arrangements in place for securing economy, efficiency and effectiveness in the Authority’s use of resources (the VFM conclusion).

As part of the risk based approach set out by the Audit Commission, KPMG consider the relevance and significance of the potential business risks faced by all local authorities, and other risks that apply specifically to the Authority. These are the significant operational and financial risks in achieving statutory functions and objectives, which are relevant to auditors’ responsibilities under the Code of Audit Practice.

In doing so, KPMG consider the Authority’s own assessment of the risks it faces, and its arrangements to manage and address its risks. Assurance that a risk is managed effectively can come from a range of sources, including the work of Internal Audit.

KPMG consider that an effective Internal Audit Plan should address any key business risks where gaps in the assurance framework have been identified.

KPMG’s external audit fee assumes that they are not required to complete significant detailed audit work to provide sufficient coverage of the VFM criteria. Any significant VFM risks not sufficiently mitigated by the Authority, may therefore result in additional fees.


5

Section fourApproach to controls testing

Systems and controls in scope

Internal Audit will document and test the key financial systems and controls KPMG have specified. These systems are:

■ Financial reporting: covering maintenance of the general ledger and central processes relating to management and year-end reporting;

■ IT control environment: with a specific focus on the access to the network, key financial systems and data d fi t ti i l t ti d i i t f th k fi i l tand first time implementation and ongoing maintenance of the key financial systems;

■ Cash and cash equivalents: covering cash receipting, cash book maintenance and reconciliations of the caskbook and bank to the general ledger;

■ Property, plant and equipment: with a specific focus on the maintenance of the asset register, updating of asset values and reconciliations with the general ledger; and

■ Pensions asset/liability: covering the validity of data provided to the actuary in support of the IAS19 valuation with a specific focus on managements procedures to confirm its accuracy.p g p y

The key control schedules for each of these are set out in appendix one.

Sample sizes

To ensure KPMG can place reliance on the work, sample sizes are taken from throughout the financial year although they do not need to cover the entire financial year and are of the following minimum size:

Frequency the control activity

Minimum sample size

If the control has a HIGH Risk of Failure

If the control has a LOW Risk of Failure

Annual 1 1

Quarterly 2 2

M thl 3 2Monthly 3 2

Weekly 8 5

Daily 25 15

More than daily 40 25

The Risk of Failure is a matter of judgement. Factors to consider include:

■ The nature of the control, including the complexity of it;

■ Whether the control relies on performance by an individual or is automated;

■ The significance of the judgments that must be made in connection with its operation;

■ The competence of the individual who performs the control;

■ Whether there have been any changes; and

Wh th th i hi t f


6

■ Whether there is a history of errors.

Sample size requirements relate to sets of controls, e.g. five of each type of exception report for a weekly payment run, not five exception reports in total. For some controls, such as reconciliations, we will test the final control for the year as part of the year-end audit.

Section fourApproach to controls testing (cont.)

Many controls are now either automated or have a significant IT component. Automated controls may include activities such as calculations, posting to accounts, system-generated reports, and edit and control routines performed within applications. KPMG are required to test these on a cyclical basis, every 3 years, using a sample size of one, alongside a detailed walkthrough.

Internal Audit, however, may consider it necessary to increase sample sizes to meet their own objectives.

Testing approach for common types of controls

Reconciliations

■ Confirm that all reconciliations that should have been produced in the year to date have been produced;

■ Review system parameters for any reports used to complete the reconciliation and confirm that their design is

Testing approach for common types of controls

The approach to testing three of the main types of controls, reconciliations, exception reports, and access controls, is set out below.

y p y p p gsuitable to achieve the control objectives; and

■ Review the appropriate number of reconciliations (in line with sample sizes on the previous page), confirming that:

- System balances agree to the systems that are being reconciled;

- All significant reconciling items are explained and supported; and

- The reconciliation casts, has been signed by preparer and reviewer and was performed in a timely fashion.

Exception reportsp p

■ Scan review exception reports produced in the year to date to verify that they have been produced with the frequency required by the Authority's financial procedures;

■ Review system parameters for any reports used to confirm that their design is suitable to achieve the control objectives; and

■ Review the appropriate number of exception reports (in line with sample sizes on the previous page), confirming that:

- There is evidence, such as formal sign off, that exceptions were reviewed and, if appropriate, investigated; andand

- For any errors identified confirm that these were subsequently corrected.

Access controls

■ Obtain a list of access rights to the network / system;

■ For a sample of system users, confirm that their system access:

- has been appropriately authorised;

- is suitable to the post held by the member of staff; and

- complies with the Authority’s financial regulations and scheme of delegation; and

■ Obtain a list of leavers during the year and test a sample of leavers to ensure that access has been disabled.


7

Appendix oneKey control schedules

Financial reporting

System notes, walkthroughs and testing of the following key controls, or compensating controls where these are not in place:

■ Budgetary control: senior management and member review of revenue income and expenditure against budget;

■ Ledger mapping: annual update and review of the general ledger mapping to SERCOP headings;

J l t t i ti t i tti id d j l■ Journals: system restrictions to inputting one-sided journals;

■ Journal authorisation: periodic production and independent review of journal exception reports – or – Independent preparation, authorisation and input of journals;

■ Suspense accounts: periodic review and clearance of suspense and control accounts.; and

■ Feeder system reconciliations: periodic reconciliation of the cash receipting system to the general ledger.

Access to systems and data


■ Maintaining and publicising a comprehensive IT security policy;

■ Adequate password-based access restrictions to the network;

■ Adequate password-based access restrictions to the general ledger and cash receipting system;

■ Regular evidenced, independent review of user access rights to these systems, including user roles to ensure segregation of duties as set out in financial procedures; andg g p ;

■ Regular evidenced, independent review of the appropriateness of access rights of ‘super users’ (ie. those with administrator system access).

System changes


For the general ledger, fixed asset register, payroll and cash receipting systems:

■ Authorisation and documentation / review of changes to the system configuration and report parameters.

Where a new system has been implemented in year:

■ Approval of the business case and go live decision for the new system;

■ Evidenced and reviewed reconciliation of data transferred from old to the new system; and

■ Authorisation and documentation / review of the initial system configuration and report parameters.


8

Appendix oneKey control schedules (cont.)

Cash and cash equivalents

System notes and walkthrough to cover the following aspects:

■ Cash receipting;

■ Interface between cash receipting system and general ledger;

■ Identification and posting of banking transactions including miscellaneous income and expenditure amounts; and

■ Reconciliation and independent review of the cashbook and bank accounts to the ledger.

Testing of the following key controls, or compensating controls where these are not in place:

■ Periodic reconciliation of the cash receipting system to the general ledger;

■ Posting of receipts to correct funds;

■ Posting of miscellaneous income and expenditure to correct ledger codes; and

■ Periodic reconciliation of the bank accounts and cashbook to the general ledger and associated review by management.

Property, plant and equipment

System notes and walkthrough to cover the following aspects:

■ Additions: approval of capital scheme, contract monitoring procedures, recording of capital expenditure, determining the accounting treatment, review of capital expenditure for revenue items, updating of the fixed asset register;

■ Disposals: identifying surplus assets, valuation, disposal, capital receipt, accounting treatment, updating of the fixed t i tasset register;

■ Revaluations; identification of assets to be revalued, engaging valuer(s) and terms of engagement, updating of the fixed asset register;

■ Impairments; identification of impaired assets, updating of the fixed asset register;

■ Depreciation; calculation of depreciation charges; and

■ Interface between the fixed asset register and general ledger.

Testing of the following key controls or compensating controls where these are not in place:Testing of the following key controls, or compensating controls where these are not in place:

■ Periodic reconciliation of fixed asset register to the general ledger;

■ Revaluation of assets within required period, application of correct valuation basis to assets and correct updating of the fixed asset register; and

■ Annual impairment review of assets.

Pensions asset/liability

S stem notes and alkthro gh to co er the follo ing aspectsSystem notes and walkthrough to cover the following aspects:

■ Accuracy of source data provided to the actuary.

Testing of the following key controls, or compensating controls where these are not in place:

■ Agreement of data to underling systems and reports; and

■ Management procedures undertaken to establish the sufficiency, relevance and reliability of source data.


9

© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reservedreserved.

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG InternationalCooperative (KPMG International).

Agenda Item No. 6(f) BASSETLAW DISTRICT COUNCIL



ANNUAL AUDIT FEE 2013/14

Cabinet Member: Finance & Property Contact: Mike Hill Ext: 3174 1. Public Interest Test 1.1 The author of this report, Mike Hill, has determined that the report is not confidential. 2. Purpose of the Report 2.1 To provide Members with the Audit Commission’s Work Programme and Scale of

Audit Fees for 2013/14. 3. Background and Discussion 3.1 The statutory responsibilities and powers of appointed auditors are set out in the

Audit Commission Act 1998. In discharging these specific statutory responsibilities and powers, auditors are required to carry out their work in accordance with the Commission’s Code of Audit Practice 2010.

3.2 The Audit Fee reflects the risk-based approach to audit planning as set out in the

Code of Audit Practice and work mandated by the Audit Commission for 2013/14. The audit fee covers the audit of the Accounting Statements, reporting on the Whole of Government Accounts return, and the Value for Money conclusion.

3.3 Under Section 7 of the Audit Commission Act 1998, the Commission has a statutory

duty to prescribe scales of fees for the audit of accounts, and this amount is to be paid to the appointed external auditor, KPMG, as outlined in their letter dated 28th March 2013 (Appendix A). The Audit Commission’s Work Programme and Scales of Fees report is attached at Appendix B.

4. Implications

a) For service users External verification is important to Bassetlaw as it provides an independent assessment of progress and the standard of service provided for the council tax levied.


The Audit Commission work programme supports the Council’s corporate governance arrangements.

c) Financial - Ref: 14/497 The basic audit fee for 2013/14 is £75,400, and this is unchanged from the

previous year. The budget for 2013/14 is set at £82,500, providing a small contingency sum against further work required by KPMG whilst undertaking the annual audit.

The cost of certifying grant claims and returns has reduced by £650 to £8,400

for 2013/14. This is a reduction of 7% but is mainly due to the fact that the number of grant claim forms to be certified has reduced.

d) Legal – Ref: 144/05/13 The Audit Commission Act 1998 sets out the work of the external auditor and

the expectations placed upon the Council in terms of its Accounting Statements and Value for Money conclusion.


This is not a key decision. 5. Options, Risks and Reasons for Recommendations 5.1 This report is provided to Members for information and consideration. 6. Recommendations 6.1 That the Audit & Risk Scrutiny Committee notes the Annual Audit Fee for 2013/14,

and recommends the report to full Council on 27th June 2013. Background Papers


Work programme and scales of fees 2013/14 Local government and police bodies

March 2013

The Audit Commission’s role is to protect the public

purse.

We do this by appointing auditors to a range of local

public bodies in England. We set the standards we

expect auditors to meet and oversee their work. Our

aim is to secure high-quality auditors at the best price

possible.

We use information from auditors and published data

to provide authoritative, evidence-based analysis. This

helps local public services to learn from one another

and manage the financial challenges they face.

We also compare data across the public sector to

identify where services could be open to abuse and

help organisations fight fraud.

Contents

Introduction ........................................................................................................2

Background...................................................................................................2

Scales of fees for 2013/14 ............................................................................2

Fees beyond 2013/14 ...................................................................................3

Work programme 2013/14 .................................................................................4

Audit..............................................................................................................4

Auditors’ local value for money work ............................................................4

Certification work ..........................................................................................5

Assessment and inspection work .................................................................5

‘Auditing the Accounts’ report .......................................................................5

Scales of fees for 2013/14 .................................................................................6

Scales of audit fees for local government, police and fire and rescue bodies ...........................................................................................................6

Pension fund audits ......................................................................................7

Certification work ..........................................................................................7

Inspection and assessment ..........................................................................7

Value added tax............................................................................................7

Audit Commission Work programme and scales of fees 2013/14 1


Introduction

1 This document sets out the work the Audit Commission plans to undertake at local government and police audited bodies during 2013/14, with the associated scales of audit fees. Separate documents cover the Commission’s work in the NHS and at small bodies.

Background

2 The work of the Commission and its appointed auditors is carried out under the Audit Commission Act 1998 and the Code of Audit Practice 2010 (the Code). Copies of the Code and the associated Statement of Responsibilities of Auditors and Audited Bodies are on the Commission's website. Responsibility for the conduct of the audit remains, always, that of the appointed auditor.

3 Under section 7 of the Audit Commission Act 1998, the Commission has a statutory duty to prescribe scales of fees for the audit of accounts. Before prescribing any scales of fees, we consult audited bodies in local government, their representative associations, the Department for Communities and Local Government and the accountancy profession.

4 Fees are the principal way the Commission finances its activities. In law, audit fees are not a fee for audit services, but a levy to fund the costs of the Commission, out of which it meets the costs of audits and its other statutory functions. It has a statutory duty to cover its costs, taking one year with another.

5 The Commission publishes the scale fees for individual bodies each year on its website, to support transparency and to help audited bodies compare their fees with those of similar bodies. A fee comparator tool is also available on the website.

6 Section 28 of the Audit Commission Act 1998 requires the Commission to charge fees for certification work that cover the full cost of the work we undertake. The Commission also publishes indicative certification fees for individual bodies each year on its website.

Scales of fees for 2013/14

7 In March 2012 the Commission announced significant reductions of up to 40 per cent in audit and indicative certification fees from 2012/13 onwards. These fee reductions were achieved as a combined result of the Commission’s bulk purchasing power and internal efficiency savings.

8 We expect the lower fees to apply for the length of the five-year contracts awarded to our audit suppliers, subject to annual review.

http://www.audit-commission.gov.uk/audit-regime/audit-fees/201314-fees-and-work-programme

http://www.audit-commission.gov.uk/audit-regime/audit-fees/small-bodies-fees

http://www.audit-commission.gov.uk/audit-regime/codes-of-audit-practice/pages/default.aspx

http://www.audit-commission.gov.uk/audit-regime/codes-of-audit-practice/statement-of-responsibilities-of-auditors-and-audited-bodies

http://www.audit-commission.gov.uk/audit-regime/codes-of-audit-practice/statement-of-responsibilities-of-auditors-and-audited-bodies


http://auditfeecomparator.audit-commission.gov.uk/

http://www.audit-commission.gov.uk/audit-regime/audit-fees/201314-fees-and-work-programme/individual-certification-fees/


9 We do not plan to make any changes to the work programme for local government and police audited bodies for 2013/14. Following consultation, we have therefore set scale audit fees for local government bodies at the same level as the fees applicable for 2012/13.

10 For police and crime commissioners, we have made a further reduction in fees for 2013/14 from the fees applicable for 2012/13. This reduction reflects the element included in 2012/13 scale fees relating to auditors’ work on financial reporting requirements for the transition from police authorities.

11 We received a very limited response to our consultation on the 2013/14 work programme and scales of fees, with a 2.6 per cent response rate across all our sectors. A summary of the consultation response is available on our website.

Fees beyond 2013/14

12 We have made a commitment to review scales of audit fees and indicative certification fees each year, with the expectation that the significant fee reductions introduced from 2012/13 will apply going forward. We consult on the work programme and scales of fees before confirming scale fees.

13 The Commission has reduced significantly in size and cost, and this is reflected in the scales of fees. The Commission will continue to oversee the contracts with audit suppliers and make auditor appointments until its closure.

14 Draft legislation published by the government proposes closing the Commission by April 2015. The Commission’s contracts with audit suppliers run until 2016/17, with a possibility of extension for up to three years. The responsibility for overseeing these contracts is expected to pass to a transitional body from April 2015.



Work programme 2013/14

Audit

15 Auditors tailor their work to reflect local circumstances and their assessment of audit risk. They do this by assessing the significant financial and operational risks facing an audited body, and the arrangements it has put in place to manage those risks.

16 Under the Code, the Commission may specify additional audit work to supplement the local risk-based approach to planning the audit. The Commission does not plan to specify additional work for 2013/14.

Auditors’ local value for money work

17 Under the Audit Commission Act 1998, auditors must satisfy themselves that the audited body has put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

18 Auditors of single-tier, county and district councils, fire and rescue authorities and police bodies will apply a focused approach resulting in a positive conclusion – the value for money (VFM) conclusion – on the bodies’ arrangements. This approach is based on two criteria, specified by the Commission, about audited bodies’ arrangements for: ■ securing financial resilience; and ■ prioritising resources.

19 Auditors will apply a tailored approach to their VFM work at other local government bodies designated as larger relevant bodies in the Accounts and Audit (England) Regulations 2011 (the Regulations). These bodies include: national parks authorities, waste disposal authorities, integrated transport authorities, passenger transport executives, pension fund authorities and larger joint committees.

20 The tailored approach is based primarily on a review of the annual governance statement. Auditors are required to conclude whether or not there are any matters arising from their VFM work that they need to report. This is included in their formal audit report issued at the end of the audit.

21 Auditors of smaller relevant bodies, as defined by the Regulations, which opt to prepare accounts as if they were a larger relevant body will also apply the tailored VFM approach for other local government bodies designated as larger relevant bodies.


Certification work

22 As well as their work under the Code, appointed auditors, as agents of the Commission, certify certain claims and returns.

23 From 2012/13, we replaced the previous schedule of maximum hourly rates with an indicative fee for certification work for each body, incorporating the reduction of 40 per cent made to scale audit fees. The indicative certification fee is based on the latest available information on actual certification fees, adjusted where any schemes no longer require auditor certification. Indicative certification fees for 2013/14 are based on actual fees for 2011/12.

24 Auditors do not certify claims and returns below £125,000. The threshold below which auditors undertake only limited tests will remain at £500,000. Above this threshold, certification work takes account of the audited body’s control environment for preparing the claim or return.

Assessment and inspection work

25 Following the end of Comprehensive Area Assessment in May 2010, there is no longer any programme of mandatory inspection work. We do not envisage carrying out any inspections in 2013/14, unless specifically directed to do so.

‘Auditing the Accounts’ report

26 The Commission will publish its annual Auditing the Accounts report covering local authorities, fire and rescue authorities, police bodies and other local government bodies. The report will cover the results of auditors’ work on the 2013/14 accounts.


Scales of fees for 2013/14

Scales of audit fees for local government, police and fire and rescue bodies

27 The scales of fees for 2013/14 reflect the cost of the work programme outlined above. The scale fee for individual audited bodies is available on our website.

28 The Commission has the power to determine the fee above or below the scale fee where it considers that substantially more or less work was required than envisaged by the scale fee. The scale fees are based on the expectation that audited bodies are able to provide the auditor with complete and materially accurate financial statements, with supporting working papers, within agreed timeframes.

29 As the 2013/14 scale fees for individual bodies are based on the fees for previous years, they already reflect the auditor’s assessment of audit risk and complexity. Therefore, we expect variations from the scale fee to occur only where these factors are significantly different from those identified and reflected in the 2012/13 fee.

30 It is a matter for the auditor to decide the work necessary to complete the audit. Where an auditor considers more or less work is required than is represented in the scale fee, they must, subject to prior approval by the Commission, seek to agree a variation to the scale fee with the audited body.

31 Information must be submitted by auditors to the Commission for any proposed variations to scale fees. The Commission has a process based on quarterly returns to manage requests for fee variations.

32 The Commission will review the explanations for the proposed fee variations and inform the firm whether or not they are acceptable. Only proposed fee variations for which the Commission has accepted the explanation can be invoiced or refunded to audited bodies.

33 The Commission will charge fees to cover the costs of considering objections, from the point at which auditors accept an objection as valid, as a variation to the scale fee. This also applies to costs incurred on any special investigations, such as those arising from disclosures under the Public Interest Disclosure Act 1998.



Pension fund audits

34 The scale fees for 2013/14 pension fund audits are the scale fees applicable for 2012/13. The 2013/14 pension fund audit scale fee for each relevant audited body is available on our website.

Certification work

35 The indicative fee for certification work at individual audited bodies is available on our website.

36 The indicative fees are based on the expectation that audited bodies are able to provide the auditor with complete and materially accurate claims and returns, with supporting working papers, within agreed timeframes.

37 It is a matter for the auditor to decide the work necessary to certify the claim or return and to seek to agree any proposed variation to the indicative fee with the audited body.

38 As 2013/14 indicative fees for individual bodies are based on the latest 2011/12 certification fees, they already reflect the auditor’s assessment of the work required. We expect variations from the indicative fee to occur only where issues arise that are significantly different from those identified and reflected in the actual 2011/12 fee.

39 Fee variation information must be submitted by auditors to the Commission for any proposed variations to indicative certification fees. The Commission has established a process based on quarterly returns to manage requests for fee variations.

Inspection and assessment

40 The Commission will charge fees for any risk-based inspections we are specifically directed to undertake at a level that covers the full cost of the work we undertake.

Value added tax

41 All the 2013/14 fee scales exclude value added tax, which will be charged at the prevailing rate of 20 per cent on all work done.

http://www.audit-commission.gov.uk/audit-regime/audit-fees/201314-fees-and-work-programme/proposed-individual-scale-fees-for-pension-funds

http://www.audit-commission.gov.uk/audit-regime/audit-fees/201314-fees-and-work-programme/proposed-individual-scale-fees-for-pension-funds

http://www.audit-commission.gov.uk/audit-regime/audit-fees/201314-fees-and-work-programme/individual-certification-fees/

Agenda Item No. 6(g) BASSETLAW DISTRICT COUNCIL

AUDIT AND RISK SCRUTINY COMMITTEE 30th MAY 2013

REPORT OF DIRECTOR OF RESOURCES AND INTERIM CHIEF EXECUTIVE PROGRESS ON THE ANNUAL GOVERNANCE STATEMENT

ACTIONS FOR 2012/13 Cabinet Member: Finance & Property Contact: Mike Hill Ext: 3174 1. Public Interest Test 1.1 The author of this report, Mike Hill, has determined that the report is not confidential. 2. Purpose of the Report 2.1 To update Members on the achievement of specific actions outlined within the

Annual Governance Statement for 2012/13. 3. Background and Discussion

3.1 The Audit & Risk Scrutiny Committee held on the 21st June 2012 received a report on

the Annual Governance Statement, which included specific improvement actions to be addressed during 2012/13.

3.2 There were a total of five specific actions approved for 2012/13, and the progress

made on these throughout the year is as follows:

Constitution – Completed - the Corporate Governance Working Group have been proactive during the year on a number of varied topics, including the new Standards regime and resulting amendments to the Constitution, and parts of it were updated during the year as a consequence. However a full review of the entire Constitution has been undertaken to support a review and revision of the Council’s committees and meetings framework. Amendments were presented to full Council at its AGM on 15th May to ensure the new arrangements are in place for the new Municipal Year.

Constitutional Training – Completed - the Corporate Governance Working Group

delivered training to managers and other senior officers in June 2012. Prevention of Fraud – Completed - the Corporate Governance Working Group

completed its review of the Anti-Bribery, Gifts and Hospitality, and the Whistle-blowing Policies during the year, and they were approved by full Council in

December 2012. An external fraud specialist delivered anti-fraud and anti-corruption training in June 2012. Further internal training for the Gifts & Hospitality and Whistleblowing Policies was delivered during May 2013 to all staff.

Risk Management – Partially Completed – The majority of service and

departmental risks have been captured and work is ongoing to monitor these risk actions centrally. This will be completed by June 2013.

Document Retention Policy – Partially Completed – The Policy has been updated

in year but the specific retention periods for each service still need to be defined in some service areas. This will be completed by March 2014.

4. Implications

a) For service users:

The achievement of these specific actions will improve the services provided to our customers.

b) Strategic & Policy:

Relevant aspects of these actions are included in the Annual Governance Statement. It is essential that these specific actions are delivered, otherwise they may have a detrimental impact on future external audit assessments.

c) Financial - Ref: 14/234

There are no direct financial implications arising from this report as all of the updating and training will be delivered internally by the Corporate Governance Working Group.

d) Legal – Ref: 150/05/13

The report notes the enhancements to governance arrangements.

e) Human Resources: None. f) Community Safety, Equalities, Environmental:

None.

g) Whether this is a key decision, and if so the reference number.

This is not a key decision.

5. Options, Risks and Reasons for Recommendations 5.1 If these specific actions are not delivered they may have a detrimental impact on any

future external audit assessments.

6. Recommendations 6.1 That Members note the progress to date in achieving the actions contained within the

Annual Governance Statement for 2012/13. Background Papers Location Finance Files Head of Finance & Property’s Office

Agenda Item No. 6(h) BASSETLAW DISTRICT COUNCIL



BUDGET MONITORING AND CAPITAL PROGRAMME UPDATE REPORT TO 31ST MARCH 2013

Cabinet Member: Finance & Property Contact: Mike Hill Ext: 3174

1. Public Interest Test 1.1 The author of this report, Mike Hill, has determined that the report is not confidential. 2. Purpose of the Report 2.1 To inform Members of the spending position for the period 1st April to 31st March

2013 for the Council’s General Fund, Housing Revenue, and Capital Programme, and update them of any significant variances from the approved budgets.

2.2 To provide information on the proposed resourcing of the capital programme and the

level of Council capital resources available, including capital receipts. 2.3 To provide updates on regeneration projects and sites that are not monitored through

the Council’s Capital Programme. 2.4 To update Members on Treasury Management Budget issues. 2.5 To provide Members with the regular quarterly update on performance against the

approved Treasury Management Prudential Indicators for the period ending 31st March 2013.

3. Background and Discussion 3.1 The Council’s initial budget for the 2012/13 financial year (1st April 2012 to 31st March

2013) was approved on 5th March 2012.

3.2 This report is the quarter four position and not the final outturn. There are a significant number of year-end adjustments that need to be actioned by the Accountants before a final year-end position is known. All forecasted outturn revenue variances of a significant nature for each portfolio are detailed in the Appendices.

3.3 The Council’s initial budget for 2012/13 has been amended to take account of Carry-

Forwards and virements, and the budget as at 31st March 2013 was as follows:

Budget Gross Expenditure

£m

Net Expenditure

£m General Fund 80.737 15.958 Housing Revenue 26.695 0.499 Capital 17.747 17.747

3.4 All forecasted outturn revenue variances of a significant nature for each portfolio are

detailed in the Appendices. Fees and Charges 3.5 This is a key area of attention for Bassetlaw, and it is necessary to recognise how

important locally generated income is to balancing the Council’s budget. The table below monitors how the current year’s income compares to that for 2011/12, and provides a year-end variance as at 31st March 2013. This table shows that the actual outturn for 2012/13 was an under-achievement of income targets by £0.162m (the equivalent of a 2.9% council tax increase).

CumulativeQuarter 4

Actual 2011/12

£m

CumulativeQuarter 4

Actual2012/13

£m

Deterioration/(Improve

ment)

£m

ActualUnder-

achievement 2012/13

£mCar Parking (incl. Season tickets) (0.561) (0.650)

(0.089) 0.023

Retford Enterprise Centre (0.083) (0.123) (0.040) 0.035Retford Market (0.197) (0.179) 0.018 0.030Planning Development Control (0.598) (0.497) 0.101 (0.039)Planning S106 Admin Contributions and Other Income

(0.006) (0.015) (0.009) 0.019

Building Control (0.192) (0.190) 0.002 0.057Land Charges (0.095) (0.103) (0.008) (0.001)Licensing (0.180) (0.177) 0.003 0.010Town Halls (0.027) (0.020) 0.007 0.028

Total (£1.939m) (£1.954m)

(0.015m) £0.162m

General Fund Revenue 3.6 The Table below summarises the fourth quarter position analysed over the different

portfolio areas. The current projections are that despite the forecasted shortfall in income from the table above, an underspend of (£0.047m) on the overall General Fund budget is still expected to occur.

3.7 The forecasted overspends are summarised in the table below and are detailed in

Appendix 1.

Portfolio Estimated

Outturn Variance £m

Community Prosperity - Economic Regeneration 0.283Community Prosperity – Planning & Building Control 0.026Corporate Management 0.006Chief Executive Department (0.053)Environment 0.133Finance & Property (0.028)Housing 0.029Leisure 0.019Policy & Community Engagement (0.021)Revenues & Customer Services 0.005Support Services 0.042Other Budgets / Movement from Reserves (0.488)TOTAL (0.047)

3.8 The impact of this forecasted underspend will be to increase estimated balances at

31st March 2013 from £1.007m to £1.054m. 3.9 In November, Bassetlaw has recently been notified that Municipal Mutual Insurance

(MMI) has been forced to go into liquidation. The Council, like many local authorities, insured with MMI in the 1990’s under an agreement whereby under default, the Council would be asked for a contribution towards any outstanding claims dating back to the period of insurance. For Bassetlaw the figure is approximately £0.340m and this liability becomes immediately payable when requested by the administrators. The most recent correspondence suggests an initial levy of 15% from each authority, and this payment will be accounted for in the outturn figures on a 30:70 basis in respect of General Fund and Housing Revenue Account.

3.10 One of the key factors the District Auditor assesses the Council on is its ‘Financial

Resilience’. Bassetlaw therefore needs to demonstrate it can manage emerging issues, like those seen in earlier budget monitoring reports, and can also maintain its declared level of minimum reserves, which are an important measure of financial management. Therefore the Minimum Working Balance will be maintained at £1.0m in the final outturn report, by reviewing the levels of provisions and reserves held at 31st March 2013 and making appropriate movements in the accounts.

3.11 The forecasted underspend has reduced between quarter 3 and quarter 4, and it is

important to review and understand the reasons for this small deterioration between subsequent budget monitoring reports. Quarter 3 (to 31st December 2012) was reported to Cabinet on 14th February 2013, with a forecasted General Fund underspend of (£0.049m). This has now slightly reduced to an underspend of (£0.047m), the main reasons for which are:

£m Overspend reported at Quarter 3 (0.049)Decrease in under-achievement in income (as identified in the table above) (0.090)Increase in Housing benefit subsidy grant (0.262)Increase in provisions for bad debts and other areas 0.202Transfers between General Fund and HRA 0.066Payments into Treasury Management Reserve 0.106Other (0.020)

Underspend reported at Quarter 4 (0.047)

Housing Revenue Account

3.12 The table below summarises the fourth quarter position for the Housing Revenue

Account. The current projections are that an underspend of (£0.574m) on the Housing Revenue Account budget will accrue. This is due to a reduction in the forecast depreciation of (£228k) for property revaluations and vehicles, a reduction in interest charges on borrowing of (£345k), and other transactions netting off to (£1k). The key variances are analysed further at Appendix 2.

Estimated Outturn

Variance £m

A1 Management Fee 0 Expenditure (0.455) Income 0.080 Net Cost of Services (0.375) Other Budgets (0.199)

TOTAL (0.574)

3.13 This means that the estimated HRA balance at 31st March 2013 will increase from

£0.893m (balance at 1st April 2012 of £1.392m, less budgeted overspend in year of £0.499m) to £1.467m.

Capital Programme Expenditure 3.14 The table below summarises the fourth quarter position for the Capital Programme,

and is split between General Fund and Housing Services.

Quarter 4Actual Spend

£m

Approved Annual Budget

£m

Percentage Spend

%

ActualOutturn

Variance£m

General Fund 4.300 6.180 69.6% 1.880Housing 11.299 11.567 97.7% 0.268Total 15.599 17.747 87.9% 2.148

3.15 The Capital Programme changes during the year as projects are developed and spending commitments are made. It is a requirement that the Cabinet approves all variations to the Capital Programme, for which the budget approved at the 14th February 2013 Cabinet for 2012/13 was £17.747m.

3.16 As the year-end has already passed, there are no requests in this quarter for further

amendments to the capital programme budget for 2012/13. A more detailed breakdown of the current Capital Programme is provided at Appendix 3.

3.17 The Property & Regeneration Group undertake monthly capital monitoring of the projects within the General Fund, and the A1 Board monitor the expenditure within the Housing Services capital schemes. The A1 Housing capital scheme monitoring is appended to this report at Appendices 4A and 4B.

Capital Programme Resourcing

3.18 The capital resources available to the Council are not static. Capital receipts are generated throughout the year, additional grants and contributions are paid to the Council, and borrowing may be increased to fund some types of project.

3.19 In summary, the outturn of £15.599m will be financed as follows, minimising the impact on the Council’s revenue budgets.

Capital Financing £m General Fund: Unsupported Borrowing 0.387 External Grants and Contributions 1.595 Capital Receipts 2.318 Housing: Unsupported Borrowing 1.500 MRR-Decent Homes Grant 3.500 MRR-Major Repairs Allowance 5.000 MRR-Revenue Contributions 0.757 Capital Receipts 0.057 External Grants and Contributions 0.485 Total: £15.599m

Capital Receipts 3.20 The Council has been successful in securing a number of capital receipts for both

General Fund and Housing land and property in the last few years. These were taken into account when developing the current Capital Programme for 2012/13 to 2016/17. The current level of capital receipts is detailed in the table below:

General Fund

£m

HRA for DFGs

£m

HRA for Housing

£m

Retained Right to

Buys £m

Total

£mBalance @ 1 Apr 2012 6.284 0 0.218 0 6.502Received to 31 March 2013 (net of costs of disposal and pooling)

0.538 0.145 0.546 0.120 1.349

Used to fund schemes in 2012/13

(2.318) 0 (0.031) (0.026) (2.375)

Currently Unspent Receipts

4.504 0.145 0.733 0.094 5.476

Funding for approved schemes in future years 2013/14 to 2017/18

(5.628) 0 (1.251) (0.044) (6.923)

(Shortfall) in available Capital Receipts @ 31 March 2013

(1.124) 0.145 (0.518) 0.050 (1.447)

Receipts to be generated in 2013/14

1.290 0 0.550 0 1.840

Unallocated Capital Receipts estimated Balance @ 31 March 2014

£0.166m £0.145m £0.032m £0.050m £0.393m

Note: the four individual categories are explained within the Capital Investment Strategy.

Updates on Key External Regeneration Sites (Not Included on the Council’s Capital Programme)

3.21 The success of the delivery of Key Regeneration Sites are dependent on the Council

working in partnership with both the public and private sectors to achieve successful outcomes. The key sites that are managed by the Council are included in the Capital Programme already discussed. There is currently only one other major external regeneration scheme as follows:

Langold Lake – The Compulsory Purchase Order linked to the grant of Planning Permission with associated Section 106 agreement, has been agreed. A capital allocation has been agreed for improved play equipment and splash pool and following a recent consultation with local Members, parishes and residents, procurement of these works will shortly commence with work anticipated to be completed by May 2014.

Treasury Management

3.22 The interest payable on borrowing budgets is based on the projected cashflow for the

year, borrowing need and forecasted future borrowing rates. The original estimates assumed that the Council would borrow £4.5m during 2012/13, in part relating to supported borrowing of £3.5m for the Decent Homes Programme. This is no longer required as this amount has been paid as a HCA grant. However, £1.5m of HRA borrowing was required to fund, amongst other things, the purchase of a new fleet of vehicles for A1 Housing, and this was borrowed on 28th March 2013.

3.23 The borrowing position is closely monitored, as the Council needs to ensure that any long-term borrowing is undertaken at the lowest market or PWLB interest rate. In this

quarter, £1.5m of long-term borrowing (as per above) has taken place for a period of 4.5 years at a rate of 1.61%. There are also a number of short term loans (repayable in less than 1 year) totalling £5.0m, which may be replaced upon maturity in future months by long term borrowing, dependant on market forecasts and cashflow requirements.

3.24 Similarly, investment income is monitored for performance, as it is directly affected by changes in the base rate. The Bank of England has maintained national interest rates at 0.5% throughout this quarter.

3.25 Investments are also affected by slippage in the Capital Programme, and by any

long-term borrowing the Council may make. A considered approach to long-term borrowing must be made because it is illegal to borrow to invest, and must be borrowed against planned capital expenditure.

3.26 For the two UK registered Icelandic bank investments, the Council has received no further dividends this quarter in respect of Kaupthing Singer & Friedlander bank, and £0.055m this quarter in respect of Heritable bank. This takes the total amount of recoveries at 31st March 2013 against the £3.0m (plus interest) investment to £2.360m (76.0% for KSF and 77.3% for Heritable bank).

3.27 For the two national Icelandic bank investments, the Council has received no further

dividends this quarter in respect of Landsbanki bank, and no further dividends this quarter in respect of Glitner bank. This leaves the total amount of recoveries at 31st March 2013 against the £5.0m (plus interest) investment at £3.163m (80.0% for Glitner and 47.2% for Landsbanki bank).

3.28 The Director of Resources and Interim Chief Executive maintains close contact with

the Local Government Association, and Members are circulated with the latest briefings on a prompt basis.

3.29 Appendix 5 details the Prudential Indicators that the Council is required to report and

monitor. There are no issues to highlight to Members on these indicators. 3.30 Appendix 6 provides a graphical summary of the weekly investment balances made

throughout the fourth quarter of the financial year, in conjunction with relevant benchmarking data for the Council.

4. Implications

a) For service users

The existence of a stringent budget monitoring process ensures that resources are available to deliver the Medium Term Financial Plan, and appropriate early interventions take place if a service is forecasted to significantly overspend. The ongoing capital expenditure will ensure that existing services improve with a number of new initiatives. The bids have been developed appropriately according to legislation, national guidance, and the Council’s own objectives.


This report (and earlier budget monitoring reports) are in line with best practice, and provides confidence in the financial management process, and has raised at the earliest opportunity the need for savings during 2012/13.

All of the capital projects detailed within this report are in line with the

strategic objectives of the Council, as contained within the Corporate Plan. c) Financial – Ref: 14/481

These are contained within the main body of the report. The following highlights areas that can have a significant impact on the current budget position: General Fund Revenue Budget:

An amount of £1.231m was removed from the 2012/13 General Fund

revenue base budget as efficiency savings from the Star Chamber process. The achievement of these savings is monitored as part of the normal budget processes highlighted within this report. In some cases this has resulted in minor pressures this year, and these are highlighted in Appendix 1.

A vacancy factor of 2.5% was built into the employees’ base budget.

The overall position at the end of quarter four is an over-achievement of this target by £0.185m. In real terms this is equivalent to a 1.6% saving on employee budgets.

Housing Revenue Account:

The new HRA self-financing regime commenced in April 2012 which enables the Council to retain all of the rent that it collects, and utilise this to pay for the day-to-day revenue running costs, and make localised investment into the council housing stock. Officers from A1 Housing and the Council have now updated the detailed 30-year business plan, which shows that the HRA is sustainable into the future.

Capital Programme:

Capital expenditure is not year-specific, and progress on schemes will continue to be monitored by the Property & Regeneration Group on a monthly basis. There may be changes to the way the Capital Programme is financed as the closedown process is finalised.

Treasury Management:

The Prudential Indicators for quarter four are within approved limits and present no implications for the budget.

d) Legal - Ref: 156/05/13

Budget monitoring is conducted by the Chief Financial Officer under the provisions of Section 151 of the Local Government Act 1972.

e) Human Resources

None from this report. f) Community Safety, Environmental, Equalities Some of the Capital Schemes do have positive implications on community

safety, equalities, and the environment, and these have been considered at the project appraisal stage, prior to approval to the Capital Programme.

The budget for 2012/13 received an Equalities Impact Assessment in

February 2012. g) This is not a key decision.

5. Options, Risks and Reasons for Recommendations 5.1 The budget monitoring section of this report provides Managers’ forecasts and is for

information only. There are always some risks that the actual outturn variance could be substantially different from that currently shown, for example the finalisation of the audited housing benefit figures.

5.2 The Council has responsibility for delivering its Capital Programme on time and not

doing so could undermine the achievement of its objectives. The Property & Regeneration Group will continue to monitor future programmes on a monthly basis.

5.3 There may be changes to the way the Capital Programme is financed as Officers

review the most appropriate methodology as part of the closedown process for 2012/13.

6. Conclusions 6.1 2012/13 has been a difficult financial year with income figures once again not

meeting budget expectations. The latest indications are that there will be an overall budget underspend of (£0.047m) in year, but this is primarily as a result of changes to borrowing interest, housing benefit subsidy grant, and movements in reserves, rather than improvements made through actions being taken in service areas.

7. Recommendations 7.1 That the position with regard to revenue and capital budget monitoring is noted.

7.2 That the proposed resourcing of the Capital Programme and the level of capital

receipts currently available to fund any further capital expenditure is noted (paragraphs 3.19 and 3.20).

7.3 That the update on the Langold Lake key regeneration project be noted (paragraph 3.21).

7.4 That Members note the quarterly update on performance against the approved

Treasury Management Prudential Indicators for the period ending 31st March 2013 (Appendix 5).

7.5 That Members note the weekly investment balances made throughout the fourth quarter of the financial year, in conjunction with the Security, Liquidity and Yield benchmarking data for the Council (Appendix 6).

Background Papers Location Budget Reports TASK Reports Capital programme working papers Treasury Management data

Accountancy, Queen’s buildings

APPENDIX 1

Description Comments Estimated Outturn Variance

£'000Town Centres £33k overspend on other contracted services in

relation to Christmas lighting; (£18k) underspend on equipment.

15

Markets and Fairs £38k overspend on employee costs for Worksop Market; £30k income pressure at Retford market.

68

Parking Services £32k pressure due to provisions for insurance claims;£25k for on-street parking; £23k under-achievement ofseason ticket sales; (£26k) saving on the cinemaparking contract.

54

Economic Development £54k contribution required for the Turbine InnovationCentre; £35k under-achievement of rental income atthe Retford Enterprise Centre.

89

CCTV Schemes £43k pressure on maintenance agreements, £23k due to additional telecoms costs.

66

Other Minor Variances (9)TOTAL VARIANCES 283


£'000Planning Development Control £21k overspend on other contracted services; (£39k)

over-achievement of income.(18)

Planning - Service Management & Support £19k under-achievement of income. 19

Building Control / Dangerous Structures £57k under-achievement on income; (£15k) saving on employees.

42


Corporate Management


£'000Corporate & Democratic Core (£49k) savings on External Audit fees; £66k under-

achievement of HRA recharges re Corporate &Democratic Core.

17



£'000

Chief Executive Department

SIGNIFICANT GENERAL FUND REVENUE VARIANCES

Community Prosperity - Planning & Building Control

Community Prosperity - Economic Regeneration

APPENDIX 1

Human Resources (£31k) Human Resources salary underspend due toMaternity leave; (£36k) Human Resources additionalincome forecast relating to delivery of managementdevelopment training to another Council.

(67)

Corporate Training (£16k) underspend on corporate training. (16)Corporate Management £42k overspend on Pension Strain. 42Other Minor Variances (12)TOTAL VARIANCES (53)


£'000Street Cleansing £38k overspend on Street Cleansing due to provisions

for insurance claims.38

Waste Collection £22k overspend on employee costs mainly due to the vacancy factor and superannuation.

22

Env Public Health £15k overspend on overtime for Pest Control. 15

Transport (£23k) saving on employees; £17k under-achievement of income; £53k overspend on Spares & Materials.

47

Other Minor Variances 11

TOTAL VARIANCES 133


£'000Corporate Accountancy (£11k) saving generated on retender for new insurance

provider.(11)

Estates (£32k) saving on General Repairs; (£15k) insurance reimbursement.

(51)

Engineers & Building Maintenance £15k overspend on the depot as delays in implementing the corporate cctv contract has meant the expected security modernisations at Carlton Forest have not yet been implemented.

15

Town Halls £28k under-achievement of room hire income at both Retford and Worksop Town Halls.

28

Other Minor Variances (9)TOTAL VARIANCES (28)


£'000Private Sector Housing Renewal £23k under-achievement of income due to lower spend

on DFGs.23

Homelessness Housing needs Team - £15k overspend on overtime/call out.

15

Other Minor Variances (9)

TOTAL VARIANCES 29

Housing

Environment

Finance & Property

APPENDIX 1


£'000Other Minor Variances 19TOTAL VARIANCES 19


£'000Other Minor Variances (21)TOTAL VARIANCES (21)


£'000Housing Benefits (£91k) Benefits Final Claim; (£171k) Benefits

Overpayments; £16k pension strain.(246)

Revenues and Customer Service Management and Support

£47k pressure on I.T. Maintenance. 47

Local Tax Collection £39k under-recovery of Court Costs; £202k provisions for bad debts arising from Council Tax and Business Rates; (£49k) Benefits (Council Tax) Final Claim.

192

Other Minor Variances 12TOTAL VARIANCES 5


£'000Land Charges £52k pressure due to a provision for EIR. 52ICT (£17k) saving on ICT software costs. (17)General Administration & Support (£12k) saving on Hire of Equipment; £25k under-

achievement of income on Print & Design Unit. 13



£'000Interest borrowing costs (£39k) saving on Minimum Revenue Provision; (£184k)

savings on borrowing interest due to the impact of HRA Self Financing; (£22k) over-achievement of investment interest.

(245)

Leisure

Support Services

Other Budgets / Movement from Reserves

Policy & Community Engagement

Revenues & Customer Services

APPENDIX 1

Provisions (£70k) pay award provision not required as pay award was not agreed nationally; (£15k) saving on corporate contingency; (£52k) savings on bad debt provisions.

(137)

Transfers (£73k) transfer from Manton reserve (expenditure to be funded via capital receipts); (£27k) transfer from Treasury Management reserve.

(100)

Other Minor Variances (6)TOTAL VARIANCES (488)

NET IMPACT ON APPROVED BUDGET FOR 2012/13 (47)

APPENDIX 2


£'000Income Rent debit income overall is (£35k) overachieved due to

marginally less voids than was budgeted for on dwelling rent, (£14k) overachieved income on Community Centre Lets, (£29k) Management Recharges Income. £20k under achieved income from the Heating and Utility Service Charges, £7k under achieved income from shop lets, £129k pressure due to the provision for A1 vehicles not required in year, this nets off with a declared saving in HRA expenditure and £2k other minor variances.

80

Expenditure An increase in insurance charges of £36k, depreciation for council dwellings and other assets has been revised to adjust for Right to Buy enquiries and revaluations of community centres, forecasting a saving of (£415k). Depreciation for A1 Vehicles has reduced, giving a saving of (£112k). (£86k) underspend on repairs and maintenance, (£19k) additional income from the final Housing Subsidy claim 2011/12. £299k charge for the downward revaluation of non current assets, £20k costs of disturbance allowance issue in year, (£103k) saving on the debt management charged from the General Fund, £30k lease in relation to Exchange Street flats, (£104k) provision not required for the debtors impairment provision, plus a (£1k) minor variance.

(455)

Other Budgets Minimum Revenue Provision in relation to expenditure for A1 vehicles is not required until next year, resulting in a saving of (£113k). The interest charge payable on HRA borrowing has been revised, forecasting a saving of (£345k), revenue contribution to capital has reduced by (£330k), these have been off set by a £590k repayment of principal, plus other minor variance of (£1k).

(199)

TOTAL VARIANCES (574)

SIGNIFICANT HOUSING REVENUE ACCOUNT VARIANCES

APPENDIX 3

Cost Centre

CAPITAL SCHEMECapital

Programme Approved

Reprofiling Approved

Revised Capital

Programme ReprofiledQ4 Expected Q4 achievements

05 March 2012

28 June 2012 2012/13 Expected Actual Variance 2012/13

£'000 £'000 £'000 £'000 £'000 £'000 £'000ENVIRONMENT AND LEISURE -COUNCILLOR JULIE LEIGH

7052 Replacement Vehicles & Plant P Jones 1,433 139 932 932 880 -52 -52 All vehicles to have been delivered and in use. 2 vehicles still to be delivered will require a carry forward.

7103 / 7100 / 7062 / 7423

Play Areas D Linley 75 153 241 241 54 -187 -187

Refurbs - Order place for Limetree, Carlton £10k remainder to be carried over to next financial year.Canch - Tender process required move budget to 13/14.Manton - Awaiting Lis funding outcome move to budget to 13/14.Kilton - Awaiting planning approval move budget to 13/14.

Refurbs - tenders opened for Beckett Ave £36k works to begin early April. Carry forward remaining budget.Canch - Budget to be moved to 13/14.Manton - Budget to be moved to 13/14Kilton - Budget to be moved to 13/14.

7401 Retford Cemetery - Public ToiletsK Somers/A Smith

90 0 90 90 89 -1 0 Expected completion & handover end of Jan 2013 Works completed awaiting final invoices.

7422 Manton Allotments Regeneration D Linley 0 0 60 60 0 -60 -60Budget required to be moved to next financial year as awaiting other decision on progress of scheme.

Move to next financial year still awaiting members preferences for the land.

7403 Community Garden - Strawberry Rd, Retford D Linley 25 0 25 25 4 -21 -21 Site works to be completed. Site works not completed carry forward will be required.

7410 Community Sports Fund P Clark 25 0 25 25 0 -25 -25 Awaiting confirmation of member preferences.Move to next financial year still awaiting members preferences.

FINANCE AND PROPERTY - COUNCILLOR JUNE EVANS

7217 Capital Improvements M Evans 0 48 48 48 41 -7 -7 Budget will be expended & works complete.Majority of works completed remaining budget will require carrying forward.

7416 Energy Conservation - SMART metering K Ellis 25 0 25 25 23 -2 -2Orders for Smart metering QB and TH and fitting of to go out this week. Full amount to be spent.

Majority of works completed including delivery of equipment. Some installation works may require a carry forward.

7009 Canch Skate Park D.Linley 0 7 7 7 3 -4 -4 Remainder of works on wall gabion to be completed this quarter.Awaiting further quotes to consider all the options available to re-clad the stone gabions.

COMMUNITY PROSPERITY - COUNCILLOR DAVID PRESSLEY

7253 Worksop Creative Village Phase I R Wilkinson 847 63 1,051 1,051 1,099 48 0 Building complete, first tenant moved in. Awaiting final invoice.Scheme completed. Overspend has occurred however majority should be covered by an increase in grant from ERDF.

7227 Bridge Street Public Realm D Watson 230 -4 662 662 419 -243 -243

On schedule. Continue with programmed work: install ducting, columns, electrics, street furniture etc. Scheme will be approximately 80% complete. Remaining to be completed Q1 2013/ 14.

Phase 1 & 2 works all completed, phase 3 started and on programme. Newcastle St/Ryton St installation of street furniture started. Remaining budget to be moved into next financial year.

7216 CCTV Digital Upgrade D Armiger 293 0 293 293 126 -167 -167 Scheme to be completed.Works have begun to upgrade the control room and the installation of the new equipment. Currently awaiting invoices, remaining budget moved to next financial year.

7402 Car Parking Machines improvements/replacement R Wilkinson 300 0 176 176 32 -144 -144Tender drawn up, distributed and returned, machines should be replaced this quarter.

Delay due to GIS map will require remaining budget to be carried forward.

7254 Tuxford Conservation Area S Britt 105 70 125 125 66 -59 -59Grant to have been offered to Newcastle Arms for £55k, currently awaiting applications from various properties.

Grant offered to Newcastle Arms for £55k works to begin in spring. Lamp post works near completion. Move remaining budget to next financial year.

7409 Mobile CCTV Cameras for the District D Armiger 30 0 30 30 29 -1 0 Scheme to be completed.All equipment will be delivered in April therefore require budget to be moved to next financial year.

7408 Civic Pride Initiatives D Armiger 25 0 25 25 0 -25 -25 Awaiting confirmation of member preferences. Awaiting confirmation of member preferences.

7272 Worksop Creative Village Phase II R Wilkinson 500 0 20 20 12 -8 -8planning application submitted, plus funding bid. Decision expected around June

Awaiting final decision on funding and grant application.

POLICY & COMMUNITY ENGAGEMENT

7298 Disabled Facilities Grant W Pigott 1,700 174 974 974 660 -314 -314Due to success of DFG Panel an underspend is expected for 2012/13. Budget to be reprofiled to ensure on-going ability to meet demand as this is a statutory requirement.

On target to achieve an underspend by the end of the financial year.

7267 Fuel Poverty (Private Sector Housing Initiatives) W.Pigott 0 6 166 166 57 -109 -109Budget has been boosted by successful bid for Gov't funding. Expect to complete 50 replacement boilers and 4 full heating systems for qualifying residents in private sector.

Due to the short time scale to deliver this project the target may not be achieved – this is mainly due to the capacity of the contractors.

7419 Empty Homes Grant W Pigott 0 0 126 126 35 -91 -91

There is still interest being shown by owners despite promotion of the scheme ceasing due to capacity issues. However, plans are being put in place for 2013/14 as we will have access to Gov't funding of £42K (& £28k fin 14/15). Match funding will be needed as although it isn't a requirement, the Gov't funding will be insufficient on it's own to achieve the expected target of 10 properties in the 2yr period.

There are three empty homes grants currently in the pipeline but it is highly likely the work will be completed and the grant paid early in the new financial year.

FINISHED SCHEMES / RETENTIONS

7224 Flood Alleviation Works I Davies 100 0 110 110 110 0 0

Currently on construction stage for flood alleviation works at Beckland Hill, East Markham. Completion 8th Feb 2013. Other minor works completed at Carr Dyke Retford, Beckingham, and various locations across Bassetlaw.

Major works completed at Beckland Hill, East Markham. All other minor flood alleviation works completed.

7258 Worksop Market Relocation R Blagg 50 12 53 53 53 0 0 Equipment purchased and installed. Scheme completed.

7088 Exchange Street Redevelopment Retford J.Unstead 0 0 33 33 33 0 0 capital project complete, in retention period capital project complete, in retention period

CAPITAL PROGRAMME 2012/13 BUDGET MONITORING - POSITION AS AT 31ST MARCH 2013

Project Manager To 31st March 2013

APPENDIX 3

Cost Centre

CAPITAL SCHEMECapital

Programme Approved

Reprofiling Approved

Revised Capital

Programme ReprofiledQ4 Expected Q4 achievements

05 March 2012

28 June 2012 2012/13 Expected Actual Variance 2012/13

£'000 £'000 £'000 £'000 £'000 £'000 £'000

CAPITAL PROGRAMME 2012/13 BUDGET MONITORING - POSITION AS AT 31ST MARCH 2013

Project Manager To 31st March 2013

7420 Langold Country Park - Bandstand J Foster 0 0 32 32 32 0 0 Scheme completed and bandstand open. Scheme completed and bandstand open.

7418 Net App Equipment Server N Barratt 0 0 26 26 26 0 0 Scheme Completed. Scheme Completed.

7213 Retford Market Square D Watson 0 12 25 25 24 -1 0Final inspection 8 March. Retention to be paid. Project physically and financially complete.

Inspection undertaken, few snags to be resolved retention released in Q1 next financial year.

7406 Langold Country Park - Perimeter Fence D Linley 30 0 23 23 14 -9 0 Scheme to be completed with £9k saving. Scheme completed with £9k saving.

7219 IT Computer Replacement Fund N Barratt 50 0 22 22 23 1 0 Scheme Completed. Scheme Completed.

7269 Switchboard Telephonetics A Burton 0 11 16 16 16 0 0 Scheme Completed. Scheme Completed.

7102 Parish Council Play Initiatives D Linley 0 11 11 11 11 0 0 Scheme Completed. Scheme Completed.

7270 Public Realm Improvements - The Old Market Square D Watson 0 11 11 11 11 0 0 Scheme Completed. Scheme Completed.

7413 Rewiring of Amcott House and Emergency Lighting P Rose 20 0 6 6 6 0 0Progress limited by building structure and listed status. Scheme completed for 2012/13.

Scheme Completed. Remainder of budget moved to 13/14 capital program.

7222 Buildings At Risk S Britt 20 20 4 4 4 0 0Scheme Completed. Remainder of budget moved to 13/14 capital program.


7206 7229 7252

Canch RedevelopmentJ Unstead / I Davies

0 34 4 4 4 0 0Scheme Completed. Remainder of budget moved to 13/14 capital program.


7011 Common Conservation Fund S.Britt 0 4 4 4 4 0 0 Scheme Completed. Scheme Completed.

7005 Retford Enterprise Centre R Wilkinson 0 0 0 0 0 0 0Solution for wind turbine agreed, should release retention this quarter.

Currently awaiting final agreement with Lindum for retention and also with NCC on bond monies.

7086 Play Area Development - Knighton Fields D.Linley 0 0 0 0 0 0 0 capital project complete. Retention paid. Scheme Completed.

7256 Queens Building New Internal Doors J Belton 0 0 0 0 0 0 0 capital project complete. Retention paid. Scheme Completed.

7268 Energy / Carbon Reduction Schemes K Ellis 0 0 0 0 0 0 0 capital project complete. Retention paid. Scheme Completed.

7280 Pension Strain 0 0 0 0 0 0 0 capital project complete. Retention paid. Scheme Completed.

TOTAL GENERAL FUND 6,379 1,059 6,180 6,180 4,300 -1,880 -1,915

HOUSING - COUNCILLOR ALAN RHODES

Various Decent HomesS Morris / S Watson

6,180 0 6,180 6,180 6,152 -28 -28 Progressing throughout year. Progressing throughout year.

Various Other Capital ImprovementsS Morris / S Watson

4,074 0 4,193 4,193 4,121 -72 -72 Progressing throughout year. Progressing throughout year.

9210 Vehicle Fleet S Morris 1,125 0 850 850 828 -22 -22 Scheme to be completed.Majority of vehicles received some still to be delivered carry forward required.

7274 Kingston Road Community Centre K Reshad 0 43 104 104 113 9 0 capital project complete, in retention periodAll works completed and centre open, currently in retention period.

9216 Purchase 10 Styrrup Road 0 0 75 75 0 -75 -75 New approval via officer DD 3031.Purchase will be completed next financial year move budget to 13/14.

9215 Purchase 14 Rutland Crescent 0 0 70 70 0 -70 -70 New approval via officer DD 3037.Purchase will be completed next financial year move budget to 13/14.

9214 Purchase 72 Sandringham Road 0 0 60 60 50 -10 0 Purchase complete. Purchase complete.

9211 Flat 7 Sycamore Road, Carlton-in-Lindrick 0 0 35 35 35 0 0 Purchase complete. Purchase complete.

TOTAL HOUSING 11,379 43 11,567 11,567 11,299 -268 -267

GRAND TOTAL 17,758 1,102 17,747 17,747 15,599 -2,148 -2,182

APPENDIX 4a

Cost Centre

SCHEMEOriginal Budget

Revised Budget

Spend to Date - 31 Mar '13

C/fwd% of Revised Budget Spent

Contractor Comment

9422 Partner works 4,861,580 4,811,394 4,811,369 100% Bullock Works progressing well, running to programme

9487 Supply Extractor Fans 40,000 41,577 41,577 100% A1 HousingFans supplied to requirements of DH's programme - on track

9444 Decent Homes Works in Void properties 200,000 200,000 199,952 100% Bullock On target

9405 Boiler Replacement & Affordable Warmth 275,000 305,221 305,223 100% BRS On target

9488 Asbestos Removal 20,000 0 0 #DIV/0! Tersus Budget transferred to 9422

9490 PME's & Isolators 20,000 11,746 11,746 100%Eon, Metering

Services, NpowerOn target, works ordered

9491 Decoration Allowances 15,000 0 0 0%Wilkinsons, Top

deck, Will now be paid for by BDC revenue account; budget moved to 65 Northumberland Ave

Estate Planned Maintenance 175,000 277,390 249,234 28,156 90% Hornes, CPS

Works to Armstrong Rd now complete, Further schemes in Retford to commence beginning Feb, Carlton fencing programme ongoing, on target for full year spend.

9434 Decent Homes Contingency 15,000 251 251 100% Budget transferred to 9422

9494 DH's works carried out by BRS 25,000 506 0 0% BRS Budget transferred to 9422

9495 Renewable Energy Solutions 0 3,060 3,064 100% A1 Housing On target

9496Refurbishment works to 65 Northumberland Ave. Carlton in Lindrick

25,000 20,435 20,435 100% Bullock Works to commence early March

9436 Fees 508,420 508,420 508,060 100% On target

TOTALS 6,180,000 6,180,000 6,150,912 28,156 100%

9492

TECHNICAL and HOUSING SERVICES

DECENT HOMES CAPITAL POSITION STATEMENT - MARCH 2013

APPENDIX 4b

Cost Centre

SCHEMEOriginalBudget

RevisedBudget

Spend to Date - 31 Mar '13

C/fwd% of Revised Budget Spent

Contractor Comments

9463 Adaptations - Minor / Major 610,306 530,306 530,306 100% BullockOn going adaptation works, programme now down to 1 shower per week, £5k transferred to stairlifts, this should achieve target spend

7238 Starlift installations 50,000 54,899 54,899 100% ObamBudget increased by £5k, on target to achieve full spend, works programmed to budgeted figure.

7239 BRS Heating Adaptations 20,000 - 0 0% BRS Budget transferred to Renewables Phase 3.

9200 Lifetime Homes 68,000 - 0 0% TBC Budget transferred to Renewables Phase 3.

7241 DDA works to Communal Areas 58,950 48,331 48,332 100% HornesArmstrong Road under way, due to be complete by end Feb, Forest View barriers out to quotation, £10k transferred to flat to pitch, on target for full year spend.

9201 Fire Risk Assessments - Sheltered Schemes 362,800 30,800 30,876 100%Pilot for sprinkler systems complete. Carry Forward £160k due to Sheltered Schemes Review

9202 Community Centres - Improve Fire safety 90,700 - 0 0% Money re-directed to EWI and Renewable Energy Scheme

7250 Fire Protection to Flats with communal areas 370,941 355,941 354,929 100% Various Continuing on programme

7251 Structural Repairs 317,460 188,460 189,402 100% HornesWork underway, full budget committed, currently experiencing issues wih de-canting tenants. On target for full year spend

9428 Damp Proof Course's 89,469 89,469 100% Hornes Works running to schedule, on target for full year spend.

9466 Crime & Community Safety 105,265 66,590 66,863 100% Door Entry works complete

9203 Ashford Court Heating Scheme 226,750 129,235 129,235 100%Individual heatings in lieu Disrtrict heating - works underway, £86,750 transferred to RHPP 3

9489 Larwood Sheltered housing scheme - heating upgrade 127,000 128,128 128,648 100% Works completed

9204 Renewable Energy schemes 181,400 404,309 404,547 100% BullocksRenewable Heat Incentive scheme - Phase 2. Works complete - awaiting £153k grant

9205 External Wall Insulations 113,400 203,550 203,550 100% EON / Hornes / BullockEWI Works at Retford and Carlton complete; supplementary works nearing completion

9468 Conway Gardens - Individual heatings - 7,957 7,983 100% Matthews and Tannert Scheme commissioned - Release of retention monies

9206Flat to Pitch roof conversions, Armstrong Road and Eagle Place, Retford

136,000 218,426 218,426 100% Works commenced on site mid January, progressing well.

9207 Replacing single with double glazing to Upvc windows 453,516 782,602 782,602 100% BullocksWorks well underway, £329k transferred from 9208, due to large number of windows identified for replacement this financial year.

9208 Installation of 'secure by design' External doors 357,400 22,995 22,982 100% BullocksWorks well underway, £329k transferred to 9207, due to large number of windows identified for replacement this financial year.

9209 Installation of PV Solar panels 45,350 55 55 100% Budget transferred to 9205

9212 Window Upgrade programme at Tuxford - 36,935 36,935 100% Bullock Budget transferred from 9200

9213 Tuxford Renewables - Phase 3 - 444,750 372,378 72,372 84% BullockMoney transferred from Adaptations, Lifetime Homes, Structual works and Ashford Court to create this budget to complete phase 3.

9217 Smoke Alarms to General Stock - 70,500 70,500 100% Money transferred from 9201

9448 Contingency - - 0%

9439 Fees 378,762 378,762 378,460 100% On target

Totals 4,074,000 4,193,000 4,121,378 72,372 98%

TECHNICAL and HOUSING SERVICES

CAPITAL WORKS OTHER THAN DECENT HOMES POSITION STATEMENT - MARCH 2013

APPENDIX 5

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

% % % % % % %General Fund 9.96 12.63 13.14 12.32 13.14 11.42 9.94HRA 48.03 40.31 39.07 40.08 39.07 34.55 32.13

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

£ £ £ £ £ £ £Increase in Council Tax Band D 0.85 10.13 3.35 5.02 3.35 3.10 1.21Increase in Rents 0.00 2.94 8.60 0.21 8.60 8.72 8.69

PRUDENTIAL AND TREASURY INDICATORS QUARTER 4 - 2012/13

To facilitate the decision making process and support capital investment decisions the Prudential Coderequires the Council to agree and monitor a minimum number of prudential indicators. For housingauthorities, these are separated for the Housing Revenue Account (HRA) and the General Fund capitalinvestment. These indicators are mandatory, but can be supplemented with local indicators if this aidsinterpretation and many will cover three years forward. The indicators cover affordability, prudence, capitalexpenditure, external debt and treasury management.

Explanations of the indicators are given below:-

Indicator 1: Ratio of Financing Costs to Net Revenue Stream

This indicator identifies the trend in the cost of capital (borrowing costs net of interest and investment income)against the net revenue stream. Estimates reflect the changes to the capital programme (as reportedelsewhere on this agenda) and the effect on revenue funds.

Indicator 2 - Incremental Impact of Capital Investment Decisions

The indicator illustrates the impact of new capital investment decisions on the level of Council Tax andhousing rents. The fluctuations reflect the impact of changes to the capital programme of schemes whichare to to be funded by borrowing, this will include new approvals, carry forwards and movements onfinancing of these schemes and the expected useful life of the assets financed from borrowing. There iscurrently a small voluntary MRP charged for this year which relates to two small long term loans. The actualoutturn reflects the underspend on the General Fund capital programme.

APPENDIX 5

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

£'000 £'000 £'000 £'000 £'000 £'000 £'000Total Capital Expenditure - General Fund 6,565 7,238 6,929 8,480 6,929 6,180 4,300Total Capital Expenditure - Housing (HRA) 10,560 11,379 11,243 11,457 11,243 11,567 11,299

Capital Programme 17,125 18,617 18,172 19,937 18,172 17,747 15,599HRA Self Financing Settlement 26,863 0 0 0 0 0 0

43,988 18,617 18,172 19,937 18,172 17,747 15,599

The expected movement in the CFR is dependent on the level of Prudential borrowing required to fund capitalexpenditure decisions taken during the budgeting cycle. (There is no longer any supported expenditure, asthe Government now provide the Decent Homes Backlog funding as a grant). The unsupported element is thecapital expenditure freedom allowed under the Prudential Code. The Prudential Code anticipated that thesenew freedoms would enable the Council to enter into projects such as spend to save schemes, or decisionsto allocate additional resources from revenue. The changes to the Capital Programme are reflected in boththe Revised and Quarterly Estimates.

The CFR measures the Council’s underlying need to borrow for a capital purpose, and the change year onyear is influenced by the capital expenditure in the year.

Indicator 3 - Total Capital Expenditure (Including Leasing)

The indicator represents the actual outturn position of capital expenditure based on the latest CapitalProgramme shown elsewhere in this report.

Indicator 4 - Capital Financing Requirement

APPENDIX 5

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

Capital Expenditure £'000 £'000 £'000 £'000 £'000 £'000 £'000General Fund 6,565 7,238 6,929 8,480 6,929 6,180 4,300HRA - Supported Spend 4,795 0 0 0 0 0 0HRA - Unsupported Spend 32,628 11,379 11,243 11,457 11,243 11,567 11,299Total CapitalProgramme 43,988 18,617 18,172 19,937 18,172 17,747 15,599

Financed byGENERAL FUNDBorrowing 1,230 1,503 1,104 1,740 1,104 1,104 387Capital Receipts 3,304 4,380 4,564 5,218 4,564 3,404 2,318Capital Grants & Contributions 2,027 1,355 1,242 1,350 1,242 1,668 1,595Capital Reserves 0 0 144 0 0 0Revenue 4 0 19 28 19 4 0Leasing 0 0 0 0 0 0 0Total 6,565 7,238 6,929 8,480 6,929 6,180 4,300

HRABorrowing 31,658 1,500 1,500 1,500 1,500 1,489 1,500Capital Receipts 1,342 71 0 289 71 216 57Capital Grants & Contributions 229 3,500 3,500 3,528 3,500 3,619 3,985Major Repairs Reserve 4,194 5,000 5,000 5,000 5,000 5,000 4,280Revenue 0 1,308 1,243 1,140 1,172 1,243 1,478Leasing 0 0 0 0 0 0 0Total 37,423 11,379 11,243 11,457 11,243 11,567 11,299

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

Capital Financing Requirement £'000 £'000 £'000 £'000 £'000 £'000 £'000CFR - General Fund 28,587 29,341 28,802 29,488 28,802 28,828 28,110Net Movement 590 215 915 215 241 -477

CFR - HRA 96,518 98,672 98,018 98,018 98,018 97,957 97,667Net Movement 1,500 1,500 1,500 1,500 1,439 1,149

Total CFR 125,105 128,013 126,820 127,506 126,820 126,785 125,778Total Movement in CFR 2,090 1,715 2,415 1,715 1,680 673

This CFR is shown in total and is also split between General Fund and HRA

APPENDIX 5

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

£'000 £'000 £'000 £'000 £'000 £'000 £'000Capital Financing RequirementBalance b/f 1 April 93,227 125,923 125,105 125,105 125,105 125,105 125,105Balance c/f 31 March 125,105 128,013 126,820 127,493 126,820 126,785 125,778In Year Borrowing Requirement 31,878 2,090 1,715 2,388 1,715 1,680 673

Annual Change in Capital Financing RequirementGeneral Fund 220 590 215 902 215 241 -477HRA 31,658 1,500 1,500 1,500 1,500 1,439 1,149

31,878 2,090 1,715 2,402 1,715 1,680 673

Represented by

MRP - General Fund -1,010 -913 -889 -838 -889 -863 -863Financing need for the year 1,230 1,503 1,104 1,740 1,104 1,104 387

Voluntary MRP - HRA 0 0 0 0 0 -50 -51Downward Revaluation of non-Dwelling HRA Assets 0 0 0 0 0 0 -300Financing need for the year 31,658 1,500 1,500 1,500 1,500 1,489 1,500Total Net Financing Need 31,878 2,090 1,715 2,402 1,715 1,680 673

Net Borrowing/DebtLong Term Borrowing 111,988 121,642 117,926 126,488 117,926 111,926 113,426Temporary Borrowing 8,000 8,000 4,000 4,000 4,000 5,000 5,000Other Long Term liabilities 81 81 0 0 0 0 0Estimated Total Net Debt 31 March 120,069 129,723 121,926 130,488 121,926 116,926 118,426

Indicator 5 - Gross Borrowing and the Capital Financing Requirement

In order to ensure that over the medium term the Council's borrowing will only be for capital purposes, theCouncil must ensure that net external borrowing does not, except in the short term, exceed the total of capitalfinancing requirement in the preceding year plus the estimates of any additional capital financing requirementfor the current and next two financial years. This is a key indicator of prudence.

APPENDIX 5

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

£'000 £'000 £'000 £'000 £'000 £'000 £'000General Fund Borrowing 130,917 134,000 30,000 30,000 30,000 30,000 30,000HRA Borrowing 105,846 105,846 105,846 105,846 105,846Other long Term Liabilities 83 0 0 0 0 0 0

AUTHORISED LIMIT 131,000 134,000 135,846 135,846 135,846 135,846 135,846

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

£'000 £'000 £'000 £'000 £'000 £'000 £'000Borrowing 119,988 129,000 130,907 131,000 130,907 131,000 131,000Other Long Term Liabilities 81 0 93 0 93 0 0

OPERATIONAL LIMIT 120,069 129,000 131,000 131,000 131,000 131,000 131,000

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1 Actual

2012/13 Q2

Actual

2012/13 Q3 Actual

2012/13 Q4

Actual£'000 £'000 £'000 £'000 £'000 £'000 £'000

Borrowing 119,988 121,561 116,926 120,458 120,957 116,957 118,426Other Long Term liabilities 81 0 0 0 93 0 0Estimated Total Debt @ 31 March 120,069 121,561 116,926 120,458 121,050 116,957 118,426

Indicator 6 - Authorised Limit

This represents the limit beyond which borrowing is prohibited. It reflects the level of borrowing which, whilenot desired, could be afforded in the short term, but is not sustainable. It is the expected maximum borrowingneed with some headroom for unexpected movements. The indicator has been increased to take intoaccount the Debt Cap determined by the Government for HRA Self Financing.

Indicator 7 - Operational Boundary

This indicator is based on the probable external debt during the course of the year. It is not a limit and actualborrowing could vary around this boundary for short times during the year. It should act as an indicator toensure the authorised limit is not breached.

Indicator 8 - Actual External Debt

This indicator shows the Council’s actual levels of external debt as at each quarter (borrowing and other longterm liabilities).

APPENDIX 5

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1 Actual

2012/13 Q2

Actual

2012/13 Q3 Actual

2012/13 Q4

Actual£'000 £'000 £'000 £'000 £'000 £'000 £'000

Upper Limit on Fixed Rate Exposure 100% 100% 100% 97% 97% 98% 98%

119,988 121,561 116,926 118,242 118,210 114,425 115,894

Upper Limit on Variable Rate Exposure 20% 20% 20% 4% 10% 4% 1%

-4,712 -198 -24,385 -4,691 -12,726 -4,096 -706

2011/12 Actual

2012/13 Original

Estimate

2012/13 Revised

Estimate

2012/13 Q1

Estimate

2012/13 Q2

Estimate

2012/13 Q3

Estimate

2012/13 Q4

Actual

£'000 £'000 £'000 £'000 £'000 £'000 £'000Actual Principal Investments over 365 days 0 0 0 0 0 0 0

Upper Limit for Principal Sums Invested for Over 365 Days 0 0 0 0 0 0 0

Maturity Structure of Fixed Rate Borrowing

2011/12 Actual

2012/13 Upper Limit

2012/13 Revised

Upper Limit

2012/13 Q1 Actual

2012/13 Q2

Actual

2012/13 Q3 Actual

2012/13 Q4

Actual

% % % % % % %Under 12 Months 7 25 25 7 7 13 1312 Months to 2 Years 0 50 50 0 0 3 32 Years to 5 Years 14 50 50 14 14 15 155 Years to 10 Years 8 50 50 7 7 8 810 Years and Above 72 100 100 72 72 61 61

Indicator 10 - Upper Limit for Total Principal Sums Invested Over 365 Days

This indicator is set to limit the amount of funds the Council can invest for periods over 365 days. Due to thecurrent uncertainty with financial markets, investments over 365 days are not allowed under the Council'sadopted Treasury Management Strategy.

Indicator 11 - Maturity Structure of Fixed Rate Borrowing

This indicator reflects the fact that the Council is exposed to the risk of having to refinance debt at a time inthe future when interest rates may be volatile or uncertain. This indicator assists the Council in avoidinghaving large concentrations of fixed rate debt that has the same maturity structure and would therefore needreplacing at the same time.

This indicator sets a limit for exposure to fixed and variable interest rates (net borrowing). The indicatorreflects the importance of interest rate risk management. While fixed rate borrowing and investment cancontribute significantly to reducing the uncertainty surrounding future interest rates, the pursuit of optimumperformance may justify or even demand, retaining a degree of flexibility through the use of variable interestrates on at least part of the treasury management portfolio. There was no long term borrowing made duringthe quarter. Money Market Funds held at the end of the quarter totalled £0.706m (variable rate). Whilst allcurrent borrowing is fixed rate, £2.532m of investments are fixed rate (includes Icelandic Investments).

Indicator 9 - Upper Limits for Fixed and Variable Interest Rate Exposure

APPENDIX 6 INVESTMENTS Breakdown of investments from January 2013 to March 2013 Below is a graph of Bassetlaw District Council’s value of investments over the period of January 2013 to March 2013.

The graph can be split over the following banks, investments and Money Market Funds.

06-Jan

13-Jan

20-Jan

27-Jan

03-Feb

10-Feb

17-Feb

24-Feb

03-Mar

10-Mar

17-Mar

24-Mar

31-Mar

Organisation £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 banks/building society Glitnir 332 332 332 332 332 332 332 332 332 332 332 332 332

Heritable 486 486 431 431 431 431 431 431 431 431 431 431 431

Landsbanki Island 1,505 1,505 1,505 1,505 1,505 1,505 1,505 1,505 1,505 1,505 1,505 1,505 1,505

Singer & Friedlander 208 208 208 208 208 208 208 208 208 208 208 208 208

Santander UK Ltd 0 0 0 0 0 0 0 0 0 0 0 0 0

Lloyds TSB 0 0 0 0 0 0 500 500 500 500 500 500 500

Barclays Bank Money market fund

RBS 2,524 2,524 2,456 2,456 2,456 1,849 2,949 2,949 2,949 2,949 2,174 706 706

Blackrock 0 0 0 0 1,373 0 0 0 0 0 0 0 0

Fidelity 0 0 2,660 808 2,912 2,664 2,664 1,179 2,494 1,282 1,067 0 0

DB Advisors 1,639 2,418 2,081 1,349 884 0 1,629 808 808 808 0 0 0

Insight 1,572 1,572 2,621 2,621 2,621 0 0 0 0 0 0 0 0

Total 8,266 9,045 12,294 9,710 12,722 6,989 10,218 7,912 9,227 8,015 6,217 3,682 3,682

0.00

2,000,000.00

4,000,000.00

6,000,000.00

8,000,000.00

10,000,000.00

12,000,000.00

14,000,000.00

06/0

1/13

13/0

1/13

20/0

1/13

27/0

1/13

03/0

2/13

10/0

2/13

17/0

2/13

24/0

2/13

03/0

3/13

10/0

3/13

17/0

3/13

24/0

3/13

31/0

3/13

2012/13 Quarter 4 Investments

Investments Outstanding Icelandic Outstanding

APPENDIX 6 PERFORMANCE/YIELD

7 day LIBID - 3 month average (whole UK) 0.36%Daily interest rate - 3 month average (BDC) 0.39%

The graph shows how the Council has been performing on their daily interest rate return on investments, compared to the market comparison of the 7-day LIBID. The graph clearly shows that the Council has been performing above the market comparison on their investment interest returns during the second half of the quarter, however during the first half the investment return has slipped below the benchmark rate an explanation is detailed below for the reasoning in this decline. The Government has been looking to maintain low interest rates to stimulate growth. Monetary policy of 0.5% Bank Rate has been followed by Quantitative Easing (£375bn), which has helped to foster low short term rates, but has not seen cash necessarily going to the consumers and business. The Funding for Lending scheme was introduced relatively recently whereby low costs funds have been provided to banks to foster lending further. A side product is that cheap monies being available from the UK Government reduces the need for market funding, which has lowered market rates altogether. This is why MMFs rates have dropped.

0.000%

0.100%

0.200%

0.300%

0.400%

0.500%

0.600%

Bassetlaw District Council's average daily interest rate compared to 7 day LIBID rate

7 Day LIBID

BDC average ratereturn

January February March

APPENDIX 6

SECURITY BENCHMARKING

Average Cumulative Credit Loss Rates by Letter Rating, 1982-2012 Rating Year 1 Year 2 Year 3 Year 4 Year 5 Aaa 0.00% 0.01% 0.00% 0.00% 0.02% Aa 0.01% 0.04% 0.07% 0.10% 0.18% A 0.04% 0.10% 0.22% 0.37% 0.49% Baa 0.12% 0.32% 0.57% 0.84% 1.19% Ba 0.64% 1.91% 3.54% 5.41% 6.90% B 2.77% 6.73% 10.45% 13.49% 15.57% Caa-C 11.66% 19.62% 26.40% 30.64% 35.08% Investment Grade 0.06% 0.15% 0.28% 0.43% 0.60% Speculative Grade 3.09% 6.42% 9.56% 12.13% 14.00% All Rated 1.13% 2.31% 3.38% 4.22% 4.85% There are a number of ways that a security benchmark can be produced. The Council will take the above table and apply the percentages to calculate a portfolio position. This will weight actual investments in the portfolio in accordance with the credit rating and term of investment. Current Investments at 31st March 2013

Organisation Bank/building soc/MMF Period Principal

Lloyds TSB Bank 3 Months 500,000

Royal Bank of Scotland Money Market Fund Overnight 706,000

Grand Total 1,206,000 Portfolio Risk on 31st March 2013

Principal (P) Moody's Rating

Days to Maturity (Dtm)

P x Dtm Historical Exp of Default Weighting

500,000 A2 43 21,500,000 0.04% 8,600706,000 Aaa 1 706,000 0.00% 0

1,206,000 22,206,000 8,600

Period Weighted Average Life Default % Under 1 yr 18.41 0.04 Over 1 yr 0 0 Overall 18.41 0.04 Due to the Council only applying their surplus cash into their Money Market Funds or highly rated institutions for no longer than 6 months this is deemed the safest possible investment decisions. All Money Market accounts are ‘AAA’ rated with Moody’s and are instant access.

APPENDIX 6

Market Review In the first quarter of 2013 after months of speculation Moody’s downgraded the UK by one notch from its top rating of Aaa to Aa1 citing weak growth, challenges to fiscal consolidation and reduction in government’s ability to absorb market shocks. The main fallout was political as gilt yields fell lower on negative headlines in Europe. The UK’s AAA rating remains on negative outlook with Standard & Poors and was moved to watch negative by Fitch in March. Sterling depreciated notably on the quarter falling by around 5% against the US dollar and Euro. The Bank of England (BoE) Monetary Policy Committee (MPC) voted unanimously to leave policy rate at 0.50% in the quarter and the asset purchase programme size was also maintained at £375bn. However, BoE Governor Mervyn King and Paul Fisher joined David Miles in voting for £25bn additional purchases at the February and March meetings. The February BoE Quarterly Inflation Report left growth forecasts unchanged but increased the 2 year inflation forecast above the 2% target. Also in February the public got its first real look at future BoE Governor Mark Carney as he appeared before the Treasury Select Committee and argued in favour of flexible inflation targeting. The March Budget delivered by Chancellor George Osbourne was fiscally neutral while the MPC remit was adjusted slightly. The Office for Budgetary Responsibility (OBR) cut its growth forecasts for 2013 (0.6% from 1.2%) and 2014 (1.8% from 2%) resulting in increased borrowing estimates for the next five years. In January, Prime Minister Cameron gave his much anticipated speech on the EU and pledged if re-elected to renegotiate the UK’s relationship and hold an in-out referendum by the end of 2017. Data released during the quarter was predominantly weak. GDP data showed the economy contracted 0.3% in the fourth quarter of 2012 and the threat of a triple dip recession has been raised from weak PMI data. Manufacturing and Construction PMIs for March were 48.3 and 47.2 respectively although the Services PMI provided a glimmer of hope increasing to 52.4 from 51.8. BoE Fund for Lending Scheme data was also disappointing with net lending down 0.2% annualised since its launch. Unemployment rate increased 0.1% to a 7.8% three month average and inflation was firmer up from 2.7% to 2.8%. Retail sales, Industrial production and Public Finances were mixed showing no underlying strength. Sterling money market yields edged lower in the fourth quarter: 3-month LIBOR ended at 0.51% down 0.01%, 6-month LIBOR at 0.60% down 0.07% and 12-month LIBOR at 0.91% down 0.10%.

0

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

0.009

0.01

<1 year 1 to 2 yrs 2 to 3 yrs 3 to 4 yrs 4 to 5 yrs

His

tori

c D

efau

lt (

%)

Period

Relative Investment Risk Vs. Rating categories

Benchmark Limit

AA

A

BBB

COUNCIL

APPENDIX 6

Borrowing Summary for 1st April 2012 to 31st March 2013

InterestRate

01.04.12 Opening Balance

New Borrowing

Princ repaid

Closing Balance 31.3.13

PWLB From Maturity £ £ £ £ 486017 16-Oct-01 30-Sep-61 5.125% 3,500,000 3,500,000488463 01-Mar-04 28-Feb-14 4.800% 60,000 -30,000 30,000488465 01-Mar-04 28-Feb-14 4.800% 65,000 -32,500 32,500494089 26-Nov-07 26-Nov-37 4.510% 5,000,000 5,000,000494235 09-Jan-08 09-Jan-43 4.390% 10,000,000 10,000,000494618 07-May-08 31-Mar-58 4.430% 5,000,000 5,000,000496124 21-Oct-09 21-Mar-18 3.540% 5,000,000 5,000,000496752 02-Mar-10 02-Sep-14 2.640% 4,000,000 4,000,000496753 02-Mar-10 02-Mar-20 4.200% 4,000,000 4,000,000497886 10-Sep-10 31-Mar-33 3.990% 4,000,000 4,000,000497986 28-Sep-10 31-Mar-28 3.920% 4,000,000 4,000,000498951 31-Aug-11 30-Sep-22 3.910% 5,000,000 5,000,000498968 07-Sep-11 31-Mar-24 3.940% 4,000,000 4,000,000502033 28-Mar-13 30-Sep-17 1.610% 0 1,500,000 1,500,000

HRA Self Financing Loans 499563 28-Mar-12 31-Mar-27 3.050% 5,500,000 5,500,000499564 28-Mar-12 31-Mar-29 3.180% 5,500,000 5,500,000499566 28-Mar-12 31-Mar-35 3.410% 5,500,000 5,500,000499567 28-Mar-12 31-Mar-39 3.480% 5,500,000 5,500,000499565 28-Mar-12 31-Mar-41 3.490% 4,863,000 4,863,000

0

80,488,000 81,925,500

Market

FMS Wertmanagement 15-Mar-04 16-Mar-54 4.750% 5,000,000 5,000,000DEXIA Municipal Agency 19-Mar-04 19-Mar-54 4.750% 5,000,000 5,000,000FMS Wertmanagement 30-Jan-06 30-Jan-66 3.560% 5,700,000 5,700,000EAA Covered Bond Bank 18-Apr-06 19-Apr-66 4.630% 6,500,000 6,500,000Barclays Bank 06-Oct-06 06-Oct-76 4.850% 5,000,000 5,000,000Barclays Bank 06-Oct-06 06-Oct-76 4.850% 4,300,000 4,300,000

31,500,000 31,500,000

Temporary

Wirral M B Council 14-Apr-11 15-Oct-12 1.950% 2,000,000 -2,000,000 0Wirral M B Council 18-Apr-11 18-Oct-12 1.950% 2,000,000 -2,000,000 0Wirral M B Council 21-Apr-11 23-Jul-12 1.900% 1,000,000 -1,000,000 0Oxfordshire CC 13-Jan-12 11-Jan-13 0.830% 3,000,000 -3,000,000 0Humberside Fire & Rescue 16-Jul-12 15-Jul-13 0.300% 1,000,000 1,000,000Bolton Metropolitan BC 23-Jul-12 22-Jul-13 0.650% 1,000,000 1,000,000Portsmouth City Council 11-Jan-12 10-Jan-14 0.550% 3,000,000 3,000,000 Total Temporary Borrowing 8,000,000 5,000,000Total Long Term Borrowing 111,988,000 113,425,500Total Gross Borrowing 119,988,000 118,425,500

APPENDIX 6

£0

£2,000,000

£4,000,000

£6,000,000

£8,000,000

£10,000,000

£12,000,000

2013‐2014

2014‐2015

2015‐2016

2016‐2017

2017‐2018

2018‐2019

2019‐2020

2020‐2021

2021‐2022

2022‐2023

2023‐2024

2024‐2025

2025‐2026

2026‐2027

2027‐2028

2028‐2029

2029‐2030

2030‐2031

2031‐2032

2032‐2033

2033‐2034

2034‐2035

2035‐2036

2036‐2037

2037‐2038

2038‐2039

2039‐2040

2040‐2041

2041‐2042

2042‐2043

2043‐2044

2044‐2045

2045‐2046

2046‐ 2047

2047‐2048

2048‐2049

2049‐2050

2050‐2051

2051‐2052

2052‐2053

2053‐2054

2054‐2055

2055‐2056

2056‐2057

2057‐2058

2058‐2059

2059‐2060

2060‐2061

2061‐2062

2062‐2063

2063‐2064

2064‐2065

2065‐2066

2066‐2067

2067‐2068

2068‐2069

2069‐2070

2070‐2071

2071‐2072

2072‐2073

2073‐2074

2074‐2075

2075‐2076

2076‐2077

2077‐2078

Principal

Year

Borrowing Maturity at 31.3.13

Agenda Item No. 6(i) BASSETLAW DISTRICT COUNCIL

AUDIT & RISK SCRUTINY COMMITTEE 30th MAY 2013

REPORT OF DIRECTOR OF RESOURCES AND INTERIM CHIEF EXECUTIVE CORPORATE RISK MANAGEMENT QUARTER 4 2012/13 Cabinet Member: Finance & Property Contact: Mike Hill Ext: 3174 1. Public Interest Test 1.1 The author of this report, Mike Hill, has determined that the report is not confidential. 2. Purpose of the Report 2.1 To update Members of the Audit & Risk Scrutiny Committee on the current level of

assurance that can be provided against each corporate risk. 3. Background and Discussion 3.1 The current Risk Management Strategy was considered and approved by Cabinet in September 2010, and a further report on the Council’s new approach to managing

risk was reported to this Committee on 26th April 2012. 3.2 A key deliverable of the Strategy was the development of the Risk Management

reporting process, with the key aim of streamlining reports to enhance their use in management’s decision making. The Strategy introduced the Corporate Risk Register as a key enabler to this objective.

3.3 The Corporate Risk Register provides assurance on the key risks identified as Corporate Risks, and Quarter 3 was reported to this Committee on 7th March 2013.

3.4 Existing risks identified within both the Council’s corporate and operational service risk registers are subject to quarterly review by senior management and on an on-going basis through the work of Internal Audit.

Corporate Risk Register 3.5 The Corporate Risk Register and supporting comments as at the end of quarter 4

(March 2013) are provided below, and this includes a summary of all control gaps currently identified on the Council’s Corporate Risk Register.

WELFARE REFORMS CREATES SIGNIFICANT NEGATIVE COMMUNITY IMPACT: Owner: Andrew Burton Current Risk and Direction of Travel: RED - NO CHANGE Summary of Control Weaknesses: There is no overall change in this risk category. ‘High Risk’ Audit Recommendations: There are no high risk audit recommendations outstanding. Corporate Risk Register Outstanding Controls: The new Local Council Tax Benefit Scheme has been through the process of consultation, and the scheme itself was approved by full Council in January 2013. The remaining risks are that the adopted scheme could face a legal challenge, as is happening in other parts of the Country; and residents who previously received full benefit are now having to pay a council tax bill of c£90, potentially causing staff capacity issues in dealing with enquiries. SIGNIFICANT ONE-OFF CHALLENGE TO A DECISION OR NEW COMPENSATION TREND EMERGES: Owner: Stephen Wormald Current Risk and Direction of Travel: RED - NO CHANGE Summary of Control Weaknesses: There is no overall change in this risk category. ‘High Risk’ Audit Recommendations: The Council should carry out an exercise to determine the information held on contaminated sites and then undertake a risk assessment of them. This is now completed. A comprehensive risk assessment should be completed for the Pest Control service to offer assurance that staff are not subjected to unnecessary or unidentified risks in the course of carrying out their duties. This is now completed. All market traders should provide details of their Public Liability insurance to the Market Officers who should ensure that it is current and that its expiry date is recorded. This is now completed.

Equipment identified within the annual independent platyground inspection as requiring urgent repair should be inspected and remedial action taken as a priority. This is now completed.

Corporate Risk Register Outstanding Controls: Further work needs to be completed with regard to land and property maintenance inspections, to avoid excessive insurance claims being made. Work is ongoing with regard to quantifying the claims lodged against BDC for the repayment for Personal Search Fees (land charges), and further instructions from the LGA and Bevan Britain are awaited. The proposed pay and grading scheme has not yet received final approval for implementation. SUPPLY CHAIN FAILURE: Owner: Mike Hill Current Risk and Direction of Travel: AMBER - NO CHANGE Summary of Control Weaknesses: There is no overall change in this risk category. ‘High Risk’ Audit Recommendations: There are no high risk audit recommendations outstanding. Corporate Risk Register Outstanding Controls: The Council’s key suppliers have been identified, and work is now ongoing with regard to determining the vulnerabilities for each contract. Once this has been established then a series of mitigation measures can be put in place. Further work will then involve discussions with each key supplier to work together to manage the risk of supply chain failure. DATA LOSS OR PRIVACY INCIDENT: Owner: Steve Brown Current Risk and Direction of Travel: AMBER - NO CHANGE Summary of Control Weaknesses: There is no overall change in this risk category. ‘High Risk’ Audit Recommendations: There are no high risk audit recommendations outstanding.

Corporate Risk Register Outstanding Controls: The Data Protection Officer is attending a Data Protection and new EU directives training course in June. A new training course for internal staff is being created, and will also cover guidelines on protecting against the risk of data loss and privacy incidents. This will be released with the new security policy which will be to ISO27002 standard, and will be completed by July 2013. FINANCIAL INTEGRITY OF THE COUNCIL: Owner: Neil Taylor Current Risk and Direction of Travel: RED – NO CHANGE Summary of Control Weaknesses: There is no overall change in this risk category. ‘High Risk’ Audit Recommendations: There are no high risk audit recommendations outstanding. Corporate Risk Register Outstanding Controls: Further work is being undertaken to assess the potential for sponsorship of/advertising on council owned assets. Methodologies for Value for money reviews and benchmarking of core costs of services have yet to be progressed. Work is ongoing to address the estimated 2014/15 budget shortfall of £920k. A number of reports went to Cabinet in February and April 2013 to deliver part of the savings, and other reports to Cabinet will be made throughout the year to identify the remainder, including the outcomes from the organisational review process. AVOIDING BUDGET OVERHEATING: Owner: Neil Taylor Current Risk and Direction of Travel: GREEN - IMPROVEMENT Summary of Control Weaknesses: There is an improvement in this risk category due to the quarter 4 budget monitoring report presenting a small underspend in the estimated outturn for 2012/13. ‘High Risk’ Audit Recommendations: Car park ticket machine information should be reconciled to the ASLAN (car parks) system and the financial ledger. This is now completed.

Building Control should be informed on a periodic basis of any invoices sent which are overdue. This information should be used to contact the property owner and request payment and the Completion Certificate should not be issued until payment has been made. The procedure to be used to invoice for inspection fees should be decided and implemented as soon as possible to ensure all income due is requested in a timely manner. This is now completed. Corporate Risk Register Outstanding Controls: The fourth quarterly budget monitoring report for 2012/13 is reported on this Committee’s agenda. It shows that whilst there are still a number of overspends in some service areas, overall the outturn is likely to be a small underspend in year. FAILURE TO UNDERTAKE ORGANISATIONAL CHANGE TO MEET FUTURE FINANCIAL SHORTFALLS: Owner: Neil Taylor Current Risk and Direction of Travel: RED – NO CHANGE Summary of Control Weaknesses: This is in reaction to the risk entitled “Financial Integrity of the Council”, where savings have to be identified in order to set a balanced budget for 2014/15. There is no overall change in this risk category. ‘High Risk’ Audit Recommendations: There are no high risk audit recommendations outstanding. Corporate Risk Register Outstanding Controls: The financial target is now known and the process will be managed as follows:

1) The February and April 2013 Cabinet meetings received a number of reports regarding potential changes to services.

2) The budget report presented to February 2013 Cabinet also detailed a number of service reviews to be undertaken in year.

3) The comprehensive Organisational Review process is underway, with the working group meeting on a weekly basis to deliver a report to the Management Team by September 2013.

FAILURE TO DELIVER SERVICES DUE TO SICKNESS AND ABSENCE: Owner: Len Hull Current Risk and Direction of Travel: AMBER – NEW RISK Summary of Control Weaknesses: The Council is going through a period of change where vacancies that arise are not generally being replaced. This causes stress and places more pressure on the remaining staff delivering the service. In addition, overall sickness performance

has deteriorated for 2012/13 following a steady fall in terms of the average number of days taken per employee in recent years. It is important to ensure management practices are consistent throughout the organisation. ‘High Risk’ Audit Recommendations: There are no high risk audit recommendations outstanding. Corporate Risk Register Outstanding Controls: Each service reacts differently depending on staff numbers and types of work. The organisational review process will consider these issues as part of its remit, but appropriate mitigations will need to be designed at service and departmental manager level.

4. Implications

a) For service users

The primary aim of the Risk Management Strategy is to improve the Council’s ability to deliver on its strategic priorities and other objectives. The successful implementation of risk management principles will produce many benefits for our residents and service users.


The Risk Management Strategy clearly supports the Council’s corporate governance arrangements and the strategic objective of a Well Run Council.

c) Financial - Ref: 14/952

The financial implications are considered when the Council’s corporate and service risks are identified, analysed, scored, managed and monitored.

d) Legal – Ref: 149/05/13

There is an overriding requirement to ensure that the management of risk is

treated as a priority, and the Monitoring Officer in conjunction with the Council’s Solicitor, will continue to exercise an overview of the discharge of the Council’s statutory functions.

e) Human Resources

As contained within the report. f) Community Safety, Equalities, Environmental

As contained within the report. g) This is not a key decision.

5. Options, Risks and Reasons for Recommendations 5.1 This report is provided to Members for information and consideration. Members may

wish the Corporate Risk Management Group to consider other perceived risks as deemed appropriate.

6. Recommendations 6.1 That the Audit and Risk Scrutiny Committee note the progress of actions identified

within the Corporate Risk Register. Background Papers Location Associated Papers

Head of Finance & Property’s Office

data.bassetlaw.gov.ukdistrict council offices, potter street, worksop, notts. s80 2ah audit and risk...

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