Agenda and minutes

Apologies were received from Councillor Onslow.

Councillor Peter Fortune substituted for Councillor Onslow.

Councillor Fortune declared an interest as a Bromley school teacher, and as a member of the Board of Affinity Sutton Homes. Councillor Fortune also declared that his wife was a Bromley school teacher. 

Councillor Fawthrop declared an interest as his wife was employed by Bromley Adult Education. 

Councillor Reddin declared an interest as a governor of St Olave’s School, and as the parent of a child at Warren Road Primary School.

Councillor Fawthrop declared an interest as the parent of a child attending a Bromley school.

Councillor Nicholas Bennett declared an interest as a member of the Scrutiny Board of Affinity Sutton. 

In accordance with the Council’s Constitution, questions to this Committee must be received in writing 4 working days before the date of the meeting.  Therefore please ensure questions are received by the Democratic Services Team by 5pm on 19^th June 2014.

No questions had been received.

RESOLVED that the minutes of the meeting held on 12^th March 2014 (excluding exempt information) be confirmed.

Report CSD 14076

The matter concerning the play equipment at Hookwood Road, Pratt’s Bottom had been fully investigated. It was found that the specification of the play equipment was compatible with the rural setting of the park. The matter could now be closed.

It was noted that the issue of placement waivers being scrutinised by PDS Committees had also been resolved subsequent to the Assistant Director for Commissioning forwarding details of the process to the Head of Internal Audit.

The matter of the Value for Money Study offered by CIPFA was ongoing, and the Committee would receive an update at the November 2014 meeting.  

RESOLVED

(1) that the Matters Arising report be noted

(2) that the matters arising concerning the placement waivers and the play equipment be closed

(3)  that an update on the Value for Money study offered by CIPFA be provided to the Audit Sub Committee in November 2014

This report was written by Luis Remedios, Head of Audit.

Commentary:

The Annual Report of Audit Activity in 2013/14 was written for Member information and was also intended to assist the Council in meeting the financial management and internal control requirements of the Accounts and Audit Regulations 2011. Part of the overall arrangements required the Chief Executive and the Leader to sign an annual governance statement.  Included in this report were highlights of the performance of the Internal Audit function, a summary of the audits undertaken and an opinion on the overall adequacy and effectiveness of the organisation’s internal control environment based on this work and the Annual Governance Statement. Members noted that schools were now included within the report but there was an annual fraud report elsewhere on the agenda.

It was noted by the Committee that Internal Audit work and outputs had been reviewed by External Audit who concluded that Internal Audit were providing a satisfactory service. It was further noted by the Sub-Committee that Internal Audit had completed the high risk audit reviews that had been scheduled in 2013/14 and had received positive feedback from client departments.

The Committee was made aware that over the past year there had been five major investigations reported to the Committee. The resulting investigations, other fraud work, and monitoring the Greenwich partnership had used up a lot of officer time. The summary of audit work undertaken so far had resulted in 86 reports, including schools. 

The Committee commented and noted Section 3.31 on page 23 of the agenda,  “Recommendations by Category”.  It was noted that Authorisation Issues had increased by 6% from the previous year, from 1% to 7%. It was also noted that there was an increase in Breach of Contract/SLA  issues from 4% to 6%. The Committee were impressed by the fact that Breach of Financial Regulations or Procedureshad decreased from 11% to 3% which was good progress. The Committee expressed some concern that Supervisory/Monitoring issues were high at 27%. The Committee were impressed that there was good improvement concerning School Primary Accounting Documentation, with issues falling by 11%.

Members were satisfied about the outcome of the Integration of Public Health Audit that was referred to on page 45 of the Annual Governance Statement. The pre-integration check by Internal Audit had shown that the integration was progressing satisfactorily. 

Councillor Fawthrop noted page 35 of the AGS (Annual Governance Statement) with reference to Bromley being a “value for money council.” Councillor Fawthrop questioned how LBB could be a value for money council if no value for money audit had taken place. The Chairman pointed out that responsibility for ensuring value for money extended across the council and was not solely that of Audit.

Councillor Fawthrop remarked that there should be less reliance on external audits, and more reliance on internal audits.   

RESOLVED that:

(1) the Annual Audit Report 2013/14 be noted

(2) The Sub-Committee approved the Draft Annual Governance Statement

Report CEO 1409

The Internal Audit Progress Report was written by Luis Remedios, Head of Audit.

The report informed Members of recent audit activity across the Council and provided updates on matters arising from the last Audit Sub Committee. It covered:

  Priority One Recommendations

  Audit Activity

  Waivers

  Publication of Internal Audit Reports

  Auditor of the Year

  Housing Benefit Update

  Other Matters

  Risk Management

The Head of Audit introduced the report by explaining that this report covered the last two months of internal audit activity. There would be a further report written in September 2014, and this would be circulated to the Audit Sub-Committee Members by email in October 2014. Much time had been spent on completing work from the previous year, and much time had also been given to the investigation of the part two fraud investigations.

The Committee referred to Section 3.5 of the report on page 50 of the agenda—Looked After Children (LAC). It was noted that two areas of concern had been identified by the London Borough of Wandsworth Audit Team. The first of these was that proper controls for evidencing funding approvals for placement decisions were not in place. In one instance it was identified that an over payment of £11,336.00 had been made; action had been taken to recover the over payment.

A secondary issue that had been identified with respect to LAC, was that the completion of assessments and reviews was often failing to take place within statutory timescales. If this was not rectified, there was a danger of both sanctions and reputational damage.

Recommendations to deal with these issues were being implemented.

The Committee referred to Section 3.7 of the report. This was another audit problem that had been identified by the LBW Audit Team. It was noted that there were problems in many services around the issue of ordering and invoices. There were many cases where orders had been raised after invoices had been received. This caused problems in that commitment to expenditure was not reflected in budgets. The Vice Chairman expressed surprise and concern at this, and stated that it was really an easy problem to solve. The matter had been raised  by  the Chief Executive, in recent meetings with chief officers and senior managers and it was clear that this practice was not acceptable. Members had asked if the worst offenders were being targeted and the Head of Audit responded that they were but given the number of retrospective orders of 3,290 over a four month period it was a corporate problem. This recommendation was accepted by management for  implementation. 

The Committee noted Section 3.8 (page51) of the report, which related to TCES (Transforming Community Equipment Services). It was noted that there had been numerous problems with the verification of Invoices Submitted as outlined in the report. It appeared that there were no proper audit trails or challenges, no proper stock control, differences in the charge out rate for non-stock items stored to that specified  ...  view the full minutes text for item 7.

As requested by the Sub-Committee, an information briefing has been compiled of Internal Audit Reports. The reasons for placement waivers are provided in part two of the agenda.

Members and Co-opted Members have been provided with advance copies of the briefing via email.  The briefing is also available on the Council’s website at the following link: AUDIT 250614 INFORMATION REPORTS

Printed copies of the briefing are available upon request by contacting Steve Wood on 0208 3123 4316 or by email at stephen.wood@bromley.gov.uk

RESOLVED that the publicised internal audit reports be noted.  

RESOLVED that the exempt minutes of the meeting held on 12^th March 2014 be agreed.

Report CEO 1410

This report was written by Luis Remedios, Head of Audit.

This report informed Members of recent Internal Audit activity on fraud and investigations across the Council and provided an update on matters arising from previous Audit Sub Committee meetings. The report detailed updates on previously reported cases, expanded on cases of interest, detailed cases on the fraud register, provided a further update on the results of the 2012 National Fraud Initiative (NFI) and detailed the reasons given for exemptions sought for not publicising four investigation reports.

RESOLVED that the Internal Fraud and Investigation Report be noted.

Report CEO 1407

This report was written by Luis Remedios, Head of Audit.

This was the fourth annual fraud report that summarised all fraud and investigations undertaken for 2013/14.The report informed Members of all the fraud and investigation activity for 2013/14. It summarised all the allegations of fraud that had been received, investigations of matters not fraud related but breach of financial regulations/procedures, results of the housing benefit partnership with the Royal Borough of Greenwich and findings from the National Fraud Initiative (NFI) data matching exercise. The report also  referenced other matters such as trends in fraudulent activity, training staff in fraud awareness, proactive exercises in council tax, addressing key fraud risks, the fraud training toolkit for staff and future arrangements for the investigation of benefit fraud. 

RESOLVED that the contents of the Annual Internal Audit Fraud and Investigation Report be noted.