Agenda item

FSD 19050

 

The report informed Members of recent audit activity across the Council and provided updates on matters that had arisen from the previous meeting of the Committee.

 

The overall objective of the Financial Strategy and Budget Compliance Audit was to review the key controls around the Council’s financial strategy and budget monitoring arrangements. Members noted that controls were in place and working well. Internal Audit had made three priority 2 recommendations to improve the framework of controls around the Financial Strategy and budget monitoring arrangements.

 

Members were appraised concerning the audit of Housing Benefit and the Council Tax Reduction Scheme. They were pleased to note that the audit opinion was ‘Substantial’. A priority one and a priority two recommendation had been made to improve controls.

 

However, the audit of Arboricultural Services revealed many defects, and four priority one recommendations had been raised, along with six priority two recommendations. The priority one recommendations related to:

 

·  Deficiencies in the payment process

·  A significant number of orders remained ‘open’ on the ‘Confirm’ system.

·  Deficiencies were identified in the way the contract was monitored

·  Defaults were not being processed correctly

 

The value of the defaults had been estimated at £6357.00 and it was recommended that the default amount be recovered in the final invoice payment. The audit opinion for Arboricultural Services was therefore ‘Limited’. The Head of Audit and Assurance explained that Arboricultural Services had lost the Service Manager in August 2018, and that one of the remaining officers had to step into the role at short notice on an interim basis, and probably with an inadequate hand over. In January 2019, two more officers left the service, and this was probably one of the main reasons why there had been so many difficulties. Additionally, the management of this contract had not been passed over to the Business Performance Management Team as had other ECS (Environment and Community Services) contracts. Members found this surprising and wondered why this was the case. It was anticipated that now a business performance framework was going to be used, with a corrective action plan adopted—that the situation would improve significantly.

 

It was noted that the service still had staffing issues, but recruitment was now underway to recruit a new officer.

 

The Chairman was disappointed to hear of further problems with an ECS contract, and was pleased to note that the contract would be monitored going forward by Sarah Foster’s team.

 

It had been mentioned that the new Arboricultural Service contract had commenced in April 2019. A Member wondered how a new contract could be negotiated when there were so many issues with the previous contract. It was explained that enough data relating to work undertaken and completed existed to enable this to be done.

 

A Member expressed concern that the contract had been allowed to drift along for so long without management control. He felt sorry for the Interim Service Manager and suggested that perhaps the Executive Director for Environmental and Community Services be asked to attend a meeting of the Audit Sub-Committee to explain. This was a suggestion but was not passed as a resolution. 

 

A Member said that in his view, the management of the contract had been a shambles since 2008, and he asked what assurance could be provided that high level contracts were now being managed effectively. He suggested that the Contracts Sub-Committee should be re-instated.

 

A Member asked if a report on Arboricultural Services had gone to the Environment and Community Services, Policy Development and Scrutiny Committee (ECS PDS Committee) yet, and the answer to this was no. He expressed the view that as well as the PDS, the matter should also be referred to the Commissioning Board. The Head of Internal Audit and Assurance responded that it was possible to refer the matter to the Procurement Board. It was then noted that a Member had already requested that the matter be referred to the ECS PDS Committee. A Member said that it would be good to know when an audit on Arboricultural Services had previously been undertaken. The Head of Internal Audit and Assurance said that he would investigate this.

 

A Member commented that if tree inspections were not being adequately carried out, then this could result in insurance claims for tree damage being instigated against the Council. He asked if LBB had lost any money due to the deficiencies in the management of the contract and the Head of Internal Audit and Assurance responded that he was not aware that LBB had lost any money. 

 

It was agreed that the issues concerning Arboricultural Services be referred to the ECS PDS Committee for their attention and scrutiny. 

 

The Committee heard that the audit of Residential Care had gone well, and the audit opinion was ‘Substantial’. Two priority two recommendations had been made. There had been instances when the weekly fee charged by the service provider had exceeded the recommended ceiling rates without proper explanation. There had also been instances when placements had been categorised as ‘Emergency Placements’ in error—this had now been addressed. 

 

Members were pleased to learn that the audit of Strategic Commissioning’ had gone well, and that the audit opinion was ‘Substantial’. The overall objective of the audit was to review the 3 lines of defence and existing controls in place to mitigate the risk of failure to deliver the target operating model as a commissioning organisation. One priority two recommendation was made to improve the control framework.

 

Members were briefed around the audit of Total Facilities Management (TFM). The objective of the audit was to review the key controls around the management of the Total Facilities Management contract. Unfortunately, the audit opinion for Total Facilities Management was ‘Limited’. Eleven priority two recommendations were made by the audit team to improve controls. Ten of these were accepted by management for implementation. One was accepted as a ‘risk’ but no management action was proposed.

 

The recommendation that was accepted in principle (but without any action being proposed by Management) related to carrying out pro-active measures such as spot checks on maintenance works undertaken by the contractor. When the reason for this was queried by Members the answer provided was that management had stated that they did not have the required resources or expertise. Members were not happy with this as they felt that to do basic maintenance checks would not require significant expertise.

 

With respect to the TFM contract, mention was made of problems with the complaints process and the use of a customer satisfaction survey. A Member expressed the view that customer satisfaction surveys were of very limited value, and felt that the focus should be on resolving issues that had arisen from the complaints process.

 

It was agreed that the matters raised in the TFM audit should be referred back to the Executive, Resources and Contracts PDS Committee for their information and scrutiny. 

 

The Head of Audit and Assurance continued with an update on Traffic and Road Safety Procurement. The procurement arrangements had been audited to ensure that controls were in place and that contract procedure rules were being complied with. There were three priority 2 recommendations, but the overall audit opinion was substantial.

 

The Committee was briefed on the audit of Treasury Management. The objective of the audit was to review the key controls around the Council’s investments. The Committee was pleased to note the ‘Substantial’ audit opinion, with just one priority two recommendation made to improve the control framework.

 

Members noted that with respect to the audit of the Adult’s Social Care Budget Management, and Children’s Social Care Budget Management, that in both cases the audit opinion was ‘Substantial’. The Committee was appraised concerning the sharp increase in demand for Children’s Social Care Services nationally and the risk of a consequent overspend, which was why it was included in the Audit Plan.

 

 

 

Members noted that the audit of payroll expenses had resulted in a ‘Substantial’ audit opinion. Three priority 2 recommendations were made to tighten the control framework.

 

The Head of Audit and Assurance explained how the Troubled Families Programme, and the criteria used to determine if the intervention in the family had been successful, worked. If an intervention was judged to be successful, then a ‘results payment’ could be claimed. The total amount claimed for payment by results for the 426 individual claims submitted between the period 1 October 2018 and 31 March 2019 was £340,800.

 

Regarding the update following the Home Tuition Audit, the Head of Audit and Assurance briefed the Committee concerning the progress made in dealing with the three outstanding priority 1 recommendations. These related to Core Panel Decisions, Attendance Registers, and Procurement issues (which included the use of only one supplier). It was now the case that the recommendations pertaining to Core Panel Decisions and Attendance Registers had been fully implemented; the recommendation relating to procurement issues had been partially implemented.

 

Members were briefed around the audit undertaken to review Health and Safety. A priority 1 recommendation had been made because a full suite of risk assessments was not available. This was a work in progress and it had been agreed by the Corporate Leadership Team that the matter be added to the Annual Governance Statement as a significant weakness. 

 

Barry Cull (Principal Auditor) informed the meeting that the matter of the extended use of agency workers in non-ECHS roles had been referred by the Director of HR to the Chief Officers’ Executive (COE). The COE issued instructions to Directors for a business case to be made to and approved by the Director of HR, for all non-ECHS agency staff who had been in post over 6 months. Resultantly, all 37 non ECHS business cases had now been received by the Director of HR and 25 had been approved. The outstanding business cases would be assessed by the Director of HR when he came back from leave. Mr Cull felt that the Director of HR was being rigorous in his approach to dealing with this matter, and that significant progress had been made. Therefore the priority 1 recommendation was now considered to be implemented. 

 

Members were advised that the two outstanding priority 1 recommendations for Leaving Care remained outstanding. The Head of Service indicated that they did not have the resources to check the 200+ grant sheets that required checking due to a lack of resources. A meeting was going to be held with the Head of Service and Head of Finance to discuss. 

 

The Committee was reminded that as at the end of the previous Audit Sub-Committee meeting, there were three priority 1 recommendations that remained outstanding relating to the audit of the adult mental health contract. The recommendations relating to the deed of variation, performance monitoring and management reporting remained open. It was now the case however, that the Deed of Variation to the contract had been returned by Oxleas and had been looked at by LBB’s Legal Section. The document had  been returned to Oxleas for sign off. It was therefore anticipated that this priority 1 recommendation would soon be implemented; implementation of all of the recommendations was expected shortly.

 

Members were notified concerning the progress that had been made in resolving the outstanding priority 1 issues that had been identified at the previous audit relating to Strategic Property. Further checks were required by Audit to see if the recommendations had been implemented, so for the time being the recommendations remained open.

 

The Head of Audit and Assurance reminded the Committee that at the previous meeting of the Audit Sub Committee, it was noted that two priority 1 recommendations required to be implemented regarding the way that LBB’s waivers were managed. These related to the use of a central register and a standard template. Both of these recommendations had now been fully implemented. 

 

Members noted the Departmental and Corporate Risk Registers. The Head of Audit stated that a new ‘Risk’ had been added to the Corporate Risk Register. This was to do with the possible detrimental impact of Brexit on service delivery. Members were reminded that it had been agreed that any ‘Risk’ deemed to be ‘Red’ (High) should be brought to the attention of the relevant PDS Committee and that the ‘further action column’ on the register be kept under review.

 

A Member drew attention to the Corporate Risk Register and to Risk 4, which was the risk that LBB would fail to manage change and maintain an efficient workforce. The first risk causes identified included ‘Potential changes to working relationship with Members as we move to a smaller organisation’. He asked for further clarification concerning this, and the Head of Internal Audit and Assurance said that he would try and find out more about this from HR.

 

A Member referred to Risk 18 on the ECHS Risk Register which identified housing related risks connected to the roll-out of Universal Credit. In the ‘further action required’ column, an action that had been identified was to ‘set up a working group with Housing Associations to explore additional measures to support residents with the roll out of universal credit’.A Member requested an update regarding this and it was agreed that the Head of Internal Audit and Assurance would provide the Member with an update via email.  

 

A Member asked for an update concerning the Mortuary Contract and it was agreed that an email update be provided to the Member concerned.

 

(Post meeting note: an email was sent to the Member from the Assistant Director for Public Protection and Enforcement on 6^th June to provide an update). 

 

A Member referred to Risk Item 8 on the ECS Risk Register, which was ‘Arboricultural Management’. This had been rated as ‘Low Risk’ on the Risk Register. The Member suggested that in view of the audit report on the service, the risk should be re-classified to a higher risk rating.   

 

RESOLVED that:

 

1) The Progress Report be noted.

 

2) The list of Internal Audit reports published on the Council’s web-site is noted.

 

3) Members note the latest position on the Council’s Departmental and Corporate Risk Registers.

 

4) Members note the list of waivers sought since November 2018

 

5) The Head of Audit and Assurance would investigate when an audit on Arboricultural Services was last conducted and report back to the Committee.

 

6) The matters raised in the TFM audit should be referred back to the Executive, Resources and Contracts PDS Committee for their information and scrutiny.

 

7) The issues concerning Arboricultural Services be referred to the ECS PDS Committee for their attention and scrutiny. 

 

8) The Head of Internal Audit and Assurance would contact HR and obtain clarification concerning the comment in the Corporate Risk Register about the ongoing need to reduce the size of the organisation.

 

9) The Head of Audit and Assurance would investigate progress made with the setting up of a working group in partnership with Housing Associations to mitigate risks associated with the roll out of Universal Credit.

 

10) Consideration be applied to re-rating the level of risk for Arboricultural Management on the ECS Risk Register.

 

Post Meeting Note:

 

The referrals to committees noted in resolutions 6 and 7 above, were made on 5th June.