london borough of hounslow internal audit …... · this document sets out progress on the annual...

LONDON BOROUGH OF HOUNSLOW INTERNAL AUDIT PROGRESS REPORT 2012/13

January 2013

2

CONTENTS

PAGE

Introduction 3 Background 3 Progress to Date 3 Non-Permanent Employees Audit Report 4 Definition of Assurance & Priorities 5 Priority 1 Recommendations 6 Appendix 1 - Status of Audit Work 8 Appendix 2 - Summary of Final Reports 17 Appendix 3 – Non-Permanent Employees Audit Report 22 Appendix 4 - Statement of Responsibility 26

3

Introduction

This document sets out progress on the annual internal audit plan for the London Borough of Hounslow that was agreed by the Audit Committee at its meeting on 16

th April 2012. The purpose of

the report is to provide Audit Committee members and management with an update on the delivery of the internal audit plan and highlight any issues that should be brought to your attention.

Background

The purpose of the internal audit plan is to identify the work required to achieve a reasonable level of assurance to be provided by the Council’s Internal Audit team in compliance with the Code of Practice for Internal Audit.

The fundamental role of Internal Audit is to provide senior management and Members with independent assurance on the adequacy, effectiveness and efficiency of the system of internal control, and to report major weaknesses together with recommendations for improvement. This role is fulfilled by carrying out appropriate audit work, normally in accordance with a strategic plan and an annual operational plan, as approved by the Director of Corporate Resources and the Audit Committee.

As internal audit is a major source of assurance that the Council is effectively managing the principal risks to the achievement of its corporate objectives, a key rationale for the development of the internal audit plan was the Council’s own Corporate and Service Risk Registers and how the internal audit plan can provide this assurance.

Progress to Date

Audit fieldwork on the 2012/13 Internal Audit Plan is progressing well and audit coverage has been in line with the plan, as shown in Appendix 1. We have issued seven final reports since the last Audit Committee meeting; these include:

• Procurement - Constructionline • Procurement - DS Catering

• Liberata – Contract Monitoring • Accounts Payable

• Sparrow Farm School • Norwood Green School

• St Paul’s School

4

We have also issued seven draft reports where we await management’s response prior to issuing the final reports. These are as follows:

• Council Tax • NNDR

• Children’s Placements • Housing Allocations

• Children’s Swift Replacement • Adult’s Placements

• Financial Assessments

The outcome of these audits will be reported to the next meeting of the Audit Committee.

Non-Permanent Employees Audit Report An audit of Non-Permanent Employees was performed as part of the 2011/12 Internal Audit Plan, in which eleven recommendations were raised. There were three Priority 1 recommendations, seven Priority 2 recommendations and one Priority 3 recommendation agreed by management.

As part of the follow-up exercise presented to the Audit Committee on 13th December 2013, we

reported that Internal Audit had yet to receive a response to confirm whether the recommendations had yet been implemented. Having consulted with the Assistant Director for Transformation and Human Resources it was confirmed that, of the ten Priority 1 and Priority 2 recommendations raised, nine have been implemented and one is partly implemented. Further details are provided in Appendix 3.

5

Definition of Assurance & Priorities

Audit assessment

In order to provide management with an assessment of the adequacy and effectiveness of their systems of internal control, the following definitions are used:

Level Symbol Evaluation Assessment Testing Assessment

Full There is a sound system of internal

control designed to achieve the system objectives.

The controls are being consistently applied.

Substantial

Whilst there is a basically sound system of internal control design, there are weaknesses in design which may place some of the system objectives at risk.

There is evidence that the level of non-compliance with some of the controls may put some of the system objectives at risk.

Limited Weaknesses in the system of

internal control design are such as to put the system objectives at risk.

The level of non-compliance puts the system objectives at risk.

Nil

Control is generally weak leaving the system open to significant error or abuse.

Significant non-compliance with basic controls leaves the system open to error or abuse.

The assessment gradings provided here are not comparable with the International Standard on Assurance Engagements (ISAE 3000) issued by the International Audit and Assurance Standards Board and as such the grading of ‘Full’ does not imply that there are no risks to the stated control objectives.

Grading of recommendations

In order to assist management in using our reports, we categorise our recommendations according to their level of priority as follows:

Level Definition

Priority 1 Recommendations which are fundamental to the system and upon which the organisation should take immediate action.

Priority 2 Recommendations which, although not fundamental to the system, provide scope for improvements to be made.

Priority 3 Recommendations concerning issues which are considered to be of a minor nature, but which nevertheless need to be addressed.

System Improvement Opportunity

Issues concerning potential opportunities for management to improve the operational efficiency and/or effectiveness of the system.

6

Priority 1 Recommendations

Six priority 1 recommendations have been raised as a consequence of the final reports issued since the last Audit Committee meeting. These were as follows:

Audit Constructionline

Recommendation Management should be reminded that when selecting contractors to invite to tender for works / services, only contractors who are appropriately qualified /skilled for the job to be undertaken should be invited.

Response Agreed. The Head of Procurement has agreed to distribute a guidance note to staff.

Implementation Date

Immediate.


Recommendation Management should be reminded that where Constructionline highlights a concern in the form of a “consult note”, the note should be read and advice sought from the Head of Procurement if the procuring officer wishes to continue to select the contractor to be invited to tender for work /services.

Response Agreed. The Head of Procurement has agreed to distribute a guidance note to staff.

Implementation Date

Immediate.


Recommendation Management should be reminded that contracts should not be awarded to contractors that exceed the maximum contract value as specified by Constructionline. The approving Manager should obtain approval from the Head of Procurement to exceed this amount by an agreed tolerance.

Response Facilities – Agreed. Our Property Maintenance Co-ordinator will be undertaking training before we commence any new tendering.

Project Co-ordination and Capital Strategy – Agreed. We would normally ensure this is not exceeded. The control will be tightened going forward.

The Head of Procurement has agreed to distribute a guidance note to staff.

Implementation Date

Immediate.

7

Audit DS Catering

Recommendation The documentation relating to extensions of contracts should be retained on file so that management are able to resolve any disputes or queries and provide information required under the FOI Act regarding the extension of contracts.

The Corporate Contracts register held by the Procurement team should be updated to include a column to record extensions approved.

Response Agreed. The documentary evidence relating to extensions should be retained. Following a corporate audit of CSLL in 2011 corporate register it was agreed that the relevant data and correspondents pertaining to CSLL contracts would be held by the contract manager so that the Contracts Register should be up to date.

Implementation Date

31st December 2012.

Audit DS Catering

Recommendation Rotation of suppliers should be used to ensure value for money is obtained by the Council. The negotiated procedure should not be used over a long period for a particular supplier, as was in respect of Howards Catering Supplies Ltd, and should only be used in very exceptional circumstances, if all tender submissions received are unacceptable.

Response Agreed. The tendering process for the supply of fresh meat is in progress and enquiries have been received from more than one supplier. In response to the tender on meat we have had three responses and these are currently being evaluated.

Implementation Date

Immediate.

Audit Accounts Payable

Recommendation Staff should be reminded that Purchase Orders should be raised for all goods and services in line with the Council’s Financial Regulations.

Response Agreed. Significant time and effort is being placed in training staff in the departments on the Agresso Web ordering system, enabling these staff to go back and train any new staff members on the system in their own departments respectively.

Implementation Date

31st March 2013

8

Appendix 1 – Status of Audit Work

Department Area Scope Status Opinion

Recommendations

Comments

1 2 3

Chief Executives

Performance Management

Covering adequacy and effectiveness of the Council's strategic approach to performance management (including management information, target setting, reporting, roles and responsibilities etc) following the re-structuring of the Council.

Draft

Human Resources

Covering adequacy and effectiveness of controls over grievance and disciplinary procedures. Separately, to review limited company status if a sample of contractors.

Final Substantial /

Limited 1 9

Corporate Resources

Risk Management

Covering adequacy and effectiveness of the risk management process following the re-structuring of the Council and the revised RM Strategy and Procedures issued following our 2010/11 audit.

Final Substantial /

Limited 2 2 1

Corporate Governance

Covering adequacy and effectiveness of corporate governance arrangements as part of our three year strategic plan and the re-structuring of the Council.

February 2013

Procurement / Contract Management

Covering adequacy and effectiveness of the Council’s corporate approach to procurement and contract management following the recent re-writing of procurement rules.

- Constructionline Final Substantial /

Limited 3 2

- DS Catering Final Substantial /

Limited 2 3 2

Financial Assessments Covering adequacy and effectiveness of controls over assessment of client finances and debt management.

Draft

Core Financials - CRSA

The use of CRSA to provide assurance that managers understand their requirements and take ownership of their responsibilities. To be utilised on a number of the core financials and will be issued prior to fieldwork and used to scope the audit.

Ongoing

Completed questionnaires being used the scoping of core financial audits.

9


Recommendations

Comments

1 2 3

Corporate Resources

Budget / Financial Management

Focus on significant savings initiatives / projects across the Council. To cover strategic approach to co-ordinating savings initiatives and also specific key examples in each Department.

WIP

Accounts Receivable / Debt Management - Pre-change

Covering adequacy and effectiveness of controls over prior to the replacement of the Accounts Receivable system. CRSA to be applied.

Final Full / Substantial 2 1

Accounts Receivable / Debt Management - Post-change

Covering adequacy and effectiveness of controls over following the replacement of the Accounts Receivable system. CRSA to be applied.

WIP

Accounts Payable Covering adequacy and effectiveness of controls over the payment of creditor invoices. CRSA to be applied.

Final Substantial / Substantial

1 2 1

Handling of Card Payment Data Covering adequacy and effectiveness of controls over the handling of card payment data.


Council Tax

Covering adequacy and effectiveness of controls including liabilities, billing, cash collection, recovery and accounting. CRSA to be applied.

Draft

NNDR

Covering adequacy and effectiveness of controls including liabilities, billing, cash collection, recovery and accounting. CRSA to be applied.

Draft

Housing & Council Tax Benefits

Covering adequacy and effectiveness of controls including new claims, amendments, backdated benefits, payments and reconciliations. CRSA to be applied.


3

Capital Accounting – Additions & Disposals

Covering adequacy and effectiveness of controls over accounting for capital payments.

Final Full / Full

General Ledger

Covering adequacy and effectiveness of controls including access control, journals, virements, etc. CRSA to be applied.

Planned Q4

Payroll & Expenses Covering adequacy and effectiveness of controls over starters, leavers, amendments, etc. CRSA to be applied.


Treasury Management

Covering adequacy and effectiveness of controls over investments, loans, management information, etc. CRSA to be applied.


2 1

10


Recommendations

Comments

1 2 3

Corporate Resources

Cash & Bank – Reconciliations

Covering adequacy of controls with regards accounting for cash. The audit will specifically cover the changes brought about by the changes to the Council’s bank accounts.

Final Full / Full

Cash & Bank - Effectiveness

Covering effectiveness of controls with regards accounting for cash. The audit will specifically cover the changes brought about by the changes to the Council’s bank accounts.

January 2013

Liberata - Contract Monitoring Covering adequacy and effectiveness of controls including quality, performance, contract payments, etc.

Final Full / Full

Pensions Investments

Covering adequacy and effectiveness of controls including investments, receipt of interest, management fees, reconciliations and management reporting.

WIP

Pensions Administration

Covering adequacy and effectiveness of controls including payments, inter-fund adjustments, contract monitoring and access controls. CRSA to be applied.

WIP

11


Recommendations

Comments

1 2 3

Children's & Adults Services

Adult Commissioning Covering adequacy and effectiveness of controls including strategy, contracts and performance monitoring.

February 2013

Adult Placements

Covering adequacy and effectiveness of controls including registration of carers, placements, performance and budget control.

Draft

Supported Planning & Brokerage

Covering adequacy and effectiveness of controls over the supported planning and brokerage process.

February 2013

Adult Social Care Payments – Scheduled Payments (Res / Nursing)

Covering adequacy and effectiveness of controls in respect of the new Adults Social Care Payments system, ContrOCC, focusing on scheduled payments in respect of residential and nursing care.

January 2013

Due to delays in the implementation of the system, this audit maybe deferred to 2013/14.

Adult Social Care Payments – Scheduled Payments (Direct Payments)

Covering adequacy and effectiveness of controls in respect of the new Adults Social Care Payments system, ContrOCC, focusing on scheduled payments in respect of direct payments.

January 2013


Adult Social Care Payments – Payment of Actuals (Homecare)

Covering adequacy and effectiveness of controls in respect of the new Adults Social Care Payments system, ContrOCC, focusing on payment of actuals in respect of homecare.

February 2013


Adult Social Care Payments – Invoice Payments

Covering adequacy and effectiveness of controls in respect of the new Adults Social Care Payments system, ContrOCC, focusing on invoice payments.

February 2013


Self Directed Support Covering adequacy and effectiveness of controls over self directed support.

WIP

School Place Planning Covering adequacy and effectiveness of controls including strategy, contracts and performance monitoring.

WIP

12


Recommendations

Comments

1 2 3


Children's Placements

Covering adequacy and effectiveness of controls including registration of carers, placements, performance and budget control.

Draft

Schools

Establishment audits to a sample of primary, secondary and specials schools, including those that will be submitting SFVS during 12/13.

Planned Q1-4

Springwell Junior Final Substantial 1 1

St Michaels & St Martin’s Primary Final Substantial 4 1

The Green Secondary Final Substantial 6

Feltham Hill Junior Final Substantial 4 1

Grove Road Junior Final Substantial 3

Isleworth Town Junior Final Substantial 4 2

Sparrow Farm Junior Final Substantial 2 1

Fairholme Primary Final Substantial 2

Westbrook Primary Final Substantial 4 1

Heathland Secondary Final Limited 9 1

Marlborough Primary Draft

Norwood Green Infant & Nursery Final Substantial 2

Cedars Primary Final Substantial 3

St Pauls CE Primary Final Substantial 4 1

Chatsworth Primary WIP

Sparrow Farm Infant & Nursery Final Substantial 1

Worple Primary WIP

Feltham Hill Infant & Nursery WIP

13


Recommendations

Comments

1 2 3


Early Years Providers

Covering adequacy and effectiveness of controls over the implementation of new procedures to manage the new providers of services for 2 year olds.

Final Full / Substantial 2

Regeneration, Economic Development & Environment

Major Capital Projects Covering adequacy and effectiveness of controls over the management of the Council’s major capital projects.


7

Asset Management

Covering adequacy and effectiveness of controls over the management of the Council’s assets, including the recently introduced new asset management system.


2 1

Property Management - Debt Management

Covering adequacy and effectiveness of controls over the management of the Council’s commercial property portfolio.

Final Substantial /

Limited 2 2 1

Section 106 Agreements Covering adequacy and effectiveness of controls over the recording / monitoring of Section 106 Agreements.


2

Planning Applications & Enforcement

Covering adequacy and effectiveness of controls including receipt of applications, decisions and enforcement. The audit will follow-up on the issues raised in the 11/12 audit of this area.

January 2013

Parking Covering adequacy and effectiveness of controls including on and off street parking and enforcement.

February 2013

Housing Allocations

Covering adequacy and effectiveness of controls over the housing allocation process, including new arrangements that are due to be implemented in the coming months.

Draft

14


Recommendations

Comments

1 2 3

Regeneration, Economic Development & Environment

Temporary Accommodation

Covering adequacy and effectiveness of controls over the use of temporary accommodation, including the action plan that was produced following 09/10 audit of this area.

February 2013

Management of the Housing Contract

Covering adequacy and effectiveness of controls over the implementation of the recently new Management Agreement with Hounslow Homes.

March 2013

Housing Related Support

Covering adequacy and effectiveness of controls over the remodelling of the manner in which Sheltered Housing is managed.


1 4

Waste / Recycling

Covering adequacy and effectiveness of controls over waste management and, in particular, the incurring of costs / avoidance of penalties.

Final Full / Substantial 2

GIS Property Gazateer

Covering adequacy and effectiveness of controls over the accuracy and completeness of the Council’s property records.

Final Limited / Limited 1 5

IT Audit

ISO 27001 Assessment

Covering adequacy and effectiveness of controls over the Councils arrangements for Information Security we will undertake a Gap Analysis against the International Standard for Business Continuity.

WIP

Backup and Recovery

Covering adequacy and effectiveness of controls over the arrangements that are in place for the prevention of system downtime through adequate resilience arrangements and that systems are appropriately backed up

Planned Q4

Civica APP Application

Covering adequacy and effectiveness of controls over the Councils Environmental systems. This system has not been subject to previous audit work

Final Limited / Limited 1 10 1

Children’s Swift Replacement (TRIO)

Covering adequacy and effectiveness of controls over the controls that are in place over the implementation of the Liquidlogic Children’s implementation including a review of project controls prior to system go live.

Draft

15


Recommendations

Comments

1 2 3

IT Audit

Adults Swift Replacement (TRIO)

Covering adequacy and effectiveness of controls over the controls that are in place over the implementation of the Liquidlogic Adults implementation including a review of project controls prior to system go live.

Draft

Children’s Go Live

To audit the go live arrangements of the Children’s Liquid Logic implementation performing a evidence check of the controls that the Council has put in place to provide assurance on the readiness for system go live.

Q4

Adult Application Audit

To audit the recently implemented Adults Social Care application performing a controls based audit to provide assurance over the security and resilience of the system and confirm the completeness of information held on the application.

Q4

IT Asset Management Covering adequacy and effectiveness of controls over the arrangements for ICT Asset Management

Final Limited / Limited 3 2

IT Change Management

Covering adequacy and effectiveness of controls over ICT change management arrangements over implementations of changes to the IT environment

WIP

Mobile Devices

Covering adequacy and effectiveness of controls over the Council's use of portable devices, including the governance of usage and that security controls have been established

WIP

Follow-up

Covering adequacy and effectiveness of controls over the process that ICT has in place to monitoring and implementing recommendations raised as part of the 2011-12 IT Audit Plan

Planned Q4

16


Recommendations

Comments

1 2 3

Ad Hoc Requests

Alexandra Primary School – Free School Meals

To determine if information submitted by Alexandra Junior School to the DfE relating to free school meals eligibility is correct and investigate the reason for the discrepancy between the records held by the school and that held by the Council.

Final N/A 2 2

Youth Offending Service

To provide assurance that the risks associated with the administration and security of the bus passes were being appropriately managed.

Final N/A 2

Imprest Discrepancy – Brentford, Isleworth & Chiswick Community Mental Health Team

To validate the expenditure and cash in hand figures submitted on the BIC team’s reimbursement claim for the period from 12 April 2012 to 30 April 2012, following the identification of a discrepancy in the account.

Final N/A 3 1

Misc Payments to HT at Fairholme School

To investigate payments made to the HT as a management fee at the school.

Completed N/A

Benefits - Stage 3 Complaint

To assess questions raised by the Stage 3 complaints panel who recently considered a complaint brought against Revenue and Benefits concerning a landlord who felt he should have been paid his tenants' housing benefit directly.

Completed N/A

Homeless People Unit

To carry out an audit on the Homeless Assessment function of the Housing Options and Solutions Service as part of the 2011/12 Internal Audit Plan. The purpose of the audit is to provide assurance that the risks associated with Homelessness are being appropriately addressed.

WIP

Other

Follow-up of Recommendations

All priority 1 and 2 recommendations are followed up to confirm implementation and periodically reported to the Audit Committee.

On-going

Hounslow Homes A separate annual internal audit plan is agreed with and delivered for Hounslow Homes.

On-going

17

Appendix 2 - Summary of Final Reports

Brief outlines of the work carried out, a summary of our key findings raised and the assurance opinions given in respect of the final reports issued since the last meeting of the Audit Committee are provided in this section.

Procurement - Constructionline

Constructionline is a database of construction-related contractors who have completed a pre-qualification process, including verification of their financial position, experience and company status, which have been submitted. Compulsory information must be provided by all suppliers and confirmed annually or at any time there is a change to the information provided. Users of the system can input the work parameters they require and a list of contractors who can undertake the work will be provided.

The system follows the EU Public Procurement Legislation and the Local Government Act and is designed to reduce the associated risks for procurers and reduce the cost and resources of carrying out individual tender exercises. The fundamental rule for procurement is to be transparent and fair. Constructionline should be used in line with procurement rules which, when followed, demonstrate fairness in a transparent fashion with a full audit trail.

The Council’s new Contracts and Tenders Regulations have been introduced and training has been offered and provided to a wide circle of Council Officers who are involved in procurement.

The audit focussed on three teams in the Council who regularly use Constructionline in their procurement process. The teams were Facilities Management, Corporate Property Project Co-ordination and Children’s Services Capital Strategy team.

Our assessment in terms of the design of, and compliance with, the system of internal control covered is set out below.

Evaluation Assessment Testing Assessment

Substantial Limited

We raised three priority 1 recommendations and two priority 2 recommendations where we believe there is scope for improvement within the control environment. These are set out below:

• New contractors should be invited to tender as part of each Constructionline exercise. This is in addition to inviting previously used contractors and those who have competitively bid on other contracts.

• When selecting contractors to be invited to tender for works / services, only contractors who are appropriately qualified /skilled for the job to be undertaken should be invited. (Priority 1)

• A strict contractor rotation policy should be created by each section using Constructionline which must be agreed with the Head of Procurement.

18

• Where Constructionline highlights a concern in the form of a “consult note”, the note should be read and advice sought from the Head of Procurement if the procuring officer wishes to continue to select the contractor to invite to tender for work / services. (Priority 1)

• Contracts should not be awarded to contractors that exceed the maximum contract value as specified by Constructionline. The approving Manager should obtain approval from the Head of Procurement to exceed this amount by an agreed tolerance. (Priority 1)

Procurement - DS Catering

The Procurement – DS Catering function operates within the directorate of Children’s and Adult’s Services and is run by the DS Catering team, an in-house school meals provider to primary schools. The provisions required to provide the catering services are procured from suppliers in accordance with the Council’s Tenders and Contracts Regulations. .

The Council has in place an Annual Procurement Plan for 2012/13, which was updated in July 2012. The Plan includes the DS Catering procurements, relating to the supply of provisions, totalling £1,850,000 over a three year period.

It was noted that a report was submitted to Cabinet on 19th December 2012 which

included recommending the externalisation of DS Catering as a joint venture with a commercial partner which will be undertaken via an EU compliant competitive dialogue procurement process.

The scope of the audit covered the areas of policies, procedures and legislation; selection of contractors; tender/quote receipt, opening and evaluation; contract documents; contractual payments and budgetary control; and monitoring arrangements.



Substantial Limited

We raised two Priority 1 recommendations, three Priority 2 recommendations and two Priority 3 recommendations where we believe there is scope for improvement within the control environment. These are set out below:

• In order to provide accurate information with regards the Council’s financial commitments relating to contracts, and to ensure contracts are re-tendered on a timely basis, the Council’s contracts register should be reviewed to ensure that contract expiry dates are identified and appropriate action taken to initiate retendering or extension of contracts where appropriate. All contracts should be recorded on the contracts register.

• The documentation relating to extensions of contracts should be retained on file so that management are able to resolve any disputes or queries and provide information required under the FOI Act regarding the extension of contracts.

The Corporate Contracts register held by the Procurement team should be updated

to include a column to record extensions approved. (Priority 1)

19

• The designated officer of the Procurement Board should be contacted to ensure that the Annual Procurement Plan is updated to show that DS Catering contracts relate to school meals only and not catering for residential and day centres.

• The negotiated procedure should only be used in very exceptional circumstances if all tender submissions received are unacceptable. Rotation of suppliers should be used to ensure value for money is obtained by the Council. (Priority 1)

• As required in section 12 of the Guide to Tender Evaluation, all bidders should be notified in writing in respect of the feedback on the tender decision. All decisions made should be fully documented and all paperwork produced from the evaluation process kept on the tender file.

• A signed copy of all contracts should be retained on file by DS Catering to ensure delivery of each contract is in accordance with terms and conditions contained in the signed contracts. The signed contracts should be held securely by the Legal Services.

• Documentary evidence of variance analysis should be retained on file to evidence that corrective action is being taken on a timely basis.

Liberata – Contract Monitoring

Monitoring of the contract for the provision of revenues and benefits services falls within the Finance Revenues and Benefits Client Unit. The current contractor is Liberata UK and the contract commenced on 15 December 2005 and has a contract period until 2016.

The overall objective of this audit was to provide assurance that management have implemented adequate and effective controls with regards the monitoring of the Liberata

contract. In summary, the scope covered the areas of implementation of recommendations from previous audit; policies, procedures and legislation change controls; additional works (unspecified one-off) and variation to the contract; quality control; performance incentive schemes; contract payments and budget monitoring; performance review and management reporting and complaints procedures.

As a result of the work undertaken, the level of assurance for this audit is set out below.


Full Full

No recommendations were made in respect of improvements to the control environment as a consequence of the audit.

20

Accounts Payable

The Accounts Payable (Creditors) function is within the Council’s Shared Services Centre. The payment of invoices process is spread between the Payments team and the Operations team. Invoices are sent to the Payments team and are scanned and recorded on the Accounts Payable system. The majority of payments are paid via BACS, whilst a small number of suppliers are paid by cheque. The Operations team oversee the system side of the process and also set up or amend new or existing creditors (subject to correct authorisation).

In summary, the scope covered the areas of policies, procedures and legislation; timely invoice submission and authorisation of payments; requesting new creditors; changes to supplier bank details; BACS / cheque payments; credit notes refunds; recovery of duplicate payments and implementation of recommendations from previous audit.



Substantial Substantial

We raised one priority 1 recommendation, two priority 2 recommendations and one priority 3 recommendation where we believe there is scope for improvement within the control environment. These are set out below:

• Staff should be reminded that purchase orders should be raised for all goods and services in line with the Council’s Financial Regulations. (Priority 1)

• Departments should be reminded of the need to date stamp the invoices sent to the Payments team so that payments can be processed on a timely basis and late submissions monitored for corrective action.

• Random accuracy checks should be undertaken on invoice data entry and the Agresso general ledger transaction date field amended to show the correct data or the correct field narrative/ title.

• The authorisation process for creating new suppliers on the Accounts Payable system should be strengthened to only allow specific officers to authorise.

21

Schools

As part of the Internal Audit Plan we undertake compliance audits at a sample of schools on a cyclical basis. The scope of these audits covers the areas of management organisation; School Development Plan and Ofsted inspections; budget setting, monitoring and control; staffing; disbursement accounting records; inventory records; unofficial school fund; data protection and security; and other income.

We have issued final reports in respect of the following schools:

• Sparrow Farm I & N School • Norwood Green I & N School

• St Paul’s Primary School

Common issues that have arisen as a consequence of our visits include the following:

• Up to date declaration of interest forms.

• Demonstration of Governing Body decisions in its minutes.

• Security of assets and update of the school inventory.

• Systems access, including password changes.

• Disposals policy

22

Appendix 3 – Non-Permanent Employees Audit Report An audit of Non-Permanent Employees was performed as part of the 2011/12 Internal Audit Plan, in which eleven recommendations were raised. There were three Priority 1 recommendations, seven Priority 2 recommendations and one Priority 3 recommendation agreed by management.

As part of the follow-up exercise presented to the Audit Committee on 13th December

2013, we reported that Internal Audit had yet to receive a response to confirm whether the recommendations had yet been implemented. Having consulted with the Assistant Director for Transformation and Human Resources it was confirmed that, of the ten Priority 1 and Priority 2 recommendations raised, nine have been implemented and one is partly implemented. The table below summarises the position on each of the recommendations.

No Recommendation Priority Follow up response Recommendation Status

1 There should be clear information on the Council’s intranet instructing Managers to contact the Senior Human Resources (HR) Contracts Advisor when they wish to recruit non-permanent employees but are unable to utilise the corporate contract with Comensura.

2 Rules of Engagement created and approved by Cabinet on 6 Nov 2012.

Implemented

2 Off-Contract non-permanent employees should not start in their recruited positions until an ‘Authority to Recruit Agency or Contract Staff Outside of the Comensura Contract’ form has been fully completed by the Head of Finance, the relevant Director and the Chief Executive. A copy of this form should be provided to the Head of HR and Organisational Development for his records. Consideration should be given to developing a central record in which such waivers, and therefore failure to comply with Council procedures, can be easily checked and escalated where necessary.

1 Key proposed actions highlighted in the paper presented to Cabinet on 12 June 2012 indicated that approval will now be required from either the Assistant Director for Transformation & Human Resources or Chief Executive.

Implemented

23


3 Recruiting Managers should be made aware that adequate checks need to be undertaken for off-contract non-permanent employees before they commence employment with the Council.

1 Procedure on fixed term contracts were updated and effective from 1 Oct 2012, including a section on the requirement for employment checks to be carried out.

Implemented

4 Recruiting Managers who have recruited non-permanent employees off-contract and have obtained evidence of Criminal Records Bureau (CRB) checks, should be reminded that they must not retain the information any longer than that is absolutely necessary (6 months). The CRB disclosure must then be destroyed in a secure manner. The CRB number and issue date should be noted and retained but not the actual disclosure.

2 There are no longer any

off-contract

arrangements and by removing them, have

negated the need to do this. However, the new

rules around CRB are also being implemented

and they reiterate the

rules around storage of checks.

Implemented

5 Recruiting Managers who do not recruit via the Corporate Contract should be assisted in the process and reminded that it is their responsibility to ensure that the Agency Workers Regulations are complied with.

2 The Rules of Engagement approved by Cabinet in November 2012 require recruitment to be controlled through four routes (via Comensura, LB Resourcing Partnership, secondment/fixed term contract or consultancy contract) to ensure compliance with Agency Workers Regulations. Individuals found to be recruiting outside of this process will be subject to disciplinary action.

Implemented

24


6 Recruiting Managers who have obtained approval not to recruit via the Corporate Contract should be reminded of the need to ensure that there is a contract in place between the Council and the non-permanent employee. Advice should be sought from the Legal Team as to the exact wording and content of the contract.

2 Compliance with the Rules of Engagement will require a contract to be drawn up.

Implemented

7 When an off-contract non-permanent employee is retained for longer than originally agreed in the ‘Authority to Recruit Agency or Contract Staff Outside of the Comensura Contract’ form, the reason for the extension of the period of employment should be detailed in a new waiver form and should be fully completed and authorised.

2 Compliance with the Rules of Engagement require extensions for all contracts of service to be approved by a Lead Member.

Implemented

8 Managers who do not respond to the Comensura invoice payment validation request emails sent to them by Finance Officers should have their names escalated to the relevant Accountancy team. These Accountancy teams should then remind the Managers that they should be checking the accuracy of the timesheets and the payment rate, etc.

1 Confirmed as implemented at the time of the Audit.

Implemented

9 The weekly invoice from Comensura should be subject to validation checks, including time sheets against the invoice spreadsheet and the calculations of the rate of pay with the number of hours claimed. Ten per cent of the supporting information for each invoice should be checked and signed to confirm the checking has been completed.

2 Confirmed as implemented at the time of the Audit.

Implemented

25


10 The Human Resources Team should assess requests from Managers who wish to employ an individual on a sessional basis (non-schools). Assurance should be obtained to show that the recruitment has been authorised, the right to work has been confirmed and any qualifications and CRB checks have taken place. The Human Resources Officer should reject any applications which they do not consider to be “sessional”. Annual reviews should also be led by Human Resources to ensure that approved sessional workers still qualify for this type of arrangement.

2 The review of sessional

workers has been progressed and the use

of zero hours contracts and bank staff in high

usage areas has been introduced. Expected

completion is March /

April 2013.

Partly implemented

26

Appendix 4 - Statement of Responsibility We take responsibility for this report which is prepared on the basis of the limitations set out below.

Internal Audit January 2013

Contact Persons: Brian Welch Mike Clarkson

Internal Audit Manager Internal Audit Manager Telephone – 0208 583 2359

The matters raised in this report are only those which came to our attention during the course of our internal audit work and are not necessarily a comprehensive statement of all the weaknesses that exist or all improvements that might be made. Recommendations for improvements should be assessed by you for their full impact before they are implemented. The performance of internal audit work is not and should not be taken as a substitute for management’s responsibilities for the application of sound management practices. We emphasise that the responsibility for a sound system of internal controls and the prevention and detection of fraud and other irregularities rests with management and work performed by internal audit should not be relied upon to identify all strengths and weaknesses in internal controls, nor relied upon to identify all circumstances of fraud or irregularity. Auditors, in conducting their work, are required to have regards to the possibility of fraud or irregularities. Even sound systems of internal control can only provide reasonable and not absolute assurance and may not be proof against collusive fraud. Internal audit procedures are designed to focus on areas as identified by management as being of greatest risk and significance and as such we rely on management to provide us full access to their accounting records and transactions for the purposes of our audit work and to ensure the authenticity of these documents. Effective and timely implementation of our recommendations by management is important for the maintenance of a reliable internal control system.

london borough of hounslow internal audit …... · this document sets out progress on the annual...

Documents