Agenda item

FSD 21012

The Committee was updated with respect to the audit of purchasing cards. This was because it was noted in the audit report dated January 2021, that there were three P1 recommendations outstanding. These had now been addressed.  The Committee noted that currently, many controls were effective; however there were still inadequate controls in certain areas. There were issues with direct debit payments, where certain members of staff would set these up for efficiency reasons, but when said member of staff was off sick or left the organisation--then no one knew how to cancel the direct debits. It was also the case that when members of staff had left the organisation, purchasing cards were not being deactivated. There were also issues with inadequate controls for managing credit limits. It was anticipated that all the remaining issues would be ironed out in due course; for now, the audit opinion was ‘reasonable’.

Members were updated concerning the review of payroll. It was agreed that more effort should be made by claimants to put in their expenses claims in a timely manner. The audit opinion for payroll was ‘reasonable’. Four P2 recommendations had been made which had been accepted by management.

The Committee was updated regarding the audit of small business support grants. The purpose of the audit review was to examine the effectiveness of controls operated by the Finance Directorate and the Council’s Exchequer Contractor for the payment of small business support grants that had been made available to small businesses as a result of the Covid pandemic. Controls were in place and were working very well, and the overall audit opinion was ‘substantial’. Members were pleased to note the extensive controls that had been put in place. It was noted that out of 2007 payments made, (totalling over £20m), there had only been 1% of claims associated with fraud, error or non-compliance. Similarly, the review of Retail, Leisure and Hospitality Support Grants had also received an overall audit opinion that was ‘substantial’. 

Members received an update concerning ‘Starters and Leavers’. The Head of Audit and Assurance acknowledged Members’ frustrations that the issues concerning Starters and Leavers had still not yet been fully resolved. He said that he had attended meetings of the CLT (Corporate Leadership Team) and various managers briefing meetings, and had explained clearly what the current procedures were, and what managers should do—so managers were now without excuse. The Head of Audit and Assurance explained that a simpler process was being developed, so that instead of managers having to fill in separate forms for HR and IT, there would just be one form to fill in. The new streamlined process was anticipated to be operational by the end of April. 

The Committee heard that in some cases, accounts had been left open for what the managers would perceive as being ‘practical’ reasons in terms of trying to assist operational processes in handover situations. The Head of Audit and Assurance had reported back on this matter to CLT and the Chief Executive. It was felt that the solution would come when the SharePoint online process was implemented. 

The Head of Audit and Assurance briefed the Committee that a new audit report for management was planned which would summarise all of the issues and problems and would be presented to the Committee.

A Member stated that it was part of a manager’s job to manage the members of his team that were leaving, and failure to do so should be a disciplinary matter with respect to the manager. He said that he would not expect HR to issue a P45 until the leaving process had been followed for an employee. A Member suggested that this matter may merit a note from the Committee to the Chief Executive. The note to essentially say that Members were concerned that this matter had not improved. Another Member stated that he would like to see the Chief Executive attend the Audit Sub-Committee with respect to this matter. The Chairman agreed that a note should be drafted for the Chief Executive, which would note the Committee’s irritation that this matter kept coming back to the Audit Sub-Committee. The note to also suggest that the Chief Executive issue a further directive in this regard. The Head of Audit and Assurance agreed to action this.

A Member pointed out that if former staff members were still being given access to their accounts and IT systems—then this represented a significant security risk. Staff members should not be allowed to leave so soon without carrying out a handover process first. This would mean that when they did leave, they would no longer need access to their accounts or IT systems.    

Members were updated with respect to the follow up review of Highway Maintenance. Internal Audit were waiting for management to supply documentation to show compliance with their agreed procedures and with Financial Regulations. Until this information was provided, the two P1 recommendations would remain open. It was noted that the Assistant Director for Highways was also responsible currently for the running of the vaccination centre.

Members heard that with respect to the audit of Procurement Cards, progress had been made and the P1 recommendations had been signed off. 

The Committee was briefed concerning the follow up audit of St Olave’s Grammar School. Despite various obstacles faced both by the school and by the Internal Audit Team, progress had been evidenced. The audit of the school was in the process of being completed. The school had now recruited a Head of Finance. It was felt that the school was now on the right course, and that the P1 recommendations had been implemented. A summary of the full audit review for the school would be submitted to the next meeting of the Committee, and it was planned that an onsite visit to the school be undertaken in the autumn. 

The Head of Audit and Assurance gave a positive update with respect to Looked After Children. New management were going through all 76 placements to ensure that valid contracts were in place, and that Financial Regulations and Contract Procedure rules were being followed. Progress had been made and the Internal Audit Team were confident that the issues were now being addressed. 

The Head of Audit and Assurance provided an update concerning pre-planning advice issues that had been raised at the last meeting. The Head of Audit and Assurance  had followed this matter up with the Assistant Director of Planning and Building Control. This was concerning the service that councils provided with respect to pre-planning advice, and it was noted that government guidance existed for this. There was a service where someone came in and paid a fee for planning advice before submitting a formal planning application. Concerns had been raised regarding the segregation/division of duties. A Member had raised an issue as to how this potentially looked from the perspective of the public. The other issue that had been raised was after a planner had given planning advice, it could be the case that later down the line, he/she may feel that this advice was not correct, but may then find it difficult to penalise a planning application that had been submitted on the advice that was previously given, as a fee had been paid to the Council for this advice.

It was explained that everything that came from the Planning Team was checked by a second person, so that no planning advice that was disseminated would be the sole responsibility of just one person. It would always  be reviewed and signed off by another senior member of the team. It was also the case that advice was provided on a ‘without prejudice’ basis. In other councils it was often the case that this work was undertaken solely by one planning officer. The view of the Assistant Director was that there was no need for a further division of responsibilities, and that this would be counterproductive and may require additional resources. It was noted that the Planning Officers adhered to a professional code of conduct. 

The Member who had previously raised concerns around planning advice thanked the Head of Audit and Assurance for his comprehensive update and for investigating the issues further.

The main Council accounts for 19/20 were still being audited. There had been some queries and delays that had partly been caused by the pandemic, but there had also been some issues relating to property, plant and equipment, where Ernst & Young (the external auditors) required further information. With respect to the objection to the accounts from an elector, it was noted that KPMG (the former external auditor) now had all the information that was required to hopefully bring the matter to a close. A discussion took place regarding the effect of the depreciation on land and buildings.

It was noted that the current P1 list was shorter than was normally the case.

Members commented on the matters relating to the increase in the fees requested by the external auditor. The Head of Audit and Assurance explained the reasons given by the external auditor for the proposed increase in fees. He referenced the fact that in the recent Redmond Review, it was stated that the fees for external auditors should be at least 25% higher than was currently being charged. It was not clear when this matter would be resolved, and so the Head of Audit and Assurance said that he would seek an update from the Director of Finance. The Chairman remarked that this was a matter that the Director was working hard to resolve, and that in this case the PSAA (Public Sector Audit Appointments) had shown themselves to be toothless. A Member expressed concern that increased costs in various forms were being imposed on local councils, and this may be a matter that may need to be escalated upwards. The Head of Audit and Assurance informed Members that the Government was providing an additional £15m to councils to assist in covering the additional costs of external audit for next year.

A Member referenced the fact that the external auditors had commented that Bromley’s financial management system was dated and that this had caused them to experience difficulties in the auditing of the Council’s accounts. This meant that they could not run some of the automated software that they would normally use in the audit process. The Head of Audit and Assurance explained that this was an older version of Oracle, and he would find out when the upgrade to a newer system was due to take place.

A Member wondered if the fees of the external auditor would decrease when the new Financial Information system was in place.

RESOLVED that: 

1)  The Head of Audit and Assurance would try and find out when the fee payable to the external auditors would be agreed

2)  The Head of Audit and Assurance would find out when the upgrade to the Council’s financial management system would take place

3)  The Internal Audit Progress report be noted

4)  The list of Internal Audit reports published on the Council’s website be noted

5)  The External Audit update be noted

6)  A note should be drafted for the Chief Executive, which would note the Committee’s irritation that the matter of issues around starters and leavers kept coming back to the Audit Sub-Committee. The note to also suggest that the Chief Executive issue a further directive in this regard.