AUDIT COMMITTEE

 

 

MINUTES of a meeting held on 29th January, 2007.

 

Present:  Councillor N.P. Hodges (Chairman); Councillor A.D. Dobbinson (Vice-Chairman); Councillors Ms. L. Burnett, Mrs. M. Kelly Owen, C.L. Osborne and A.J. Readman.

 

Also present:  Councillor Mrs. M. Randall and Gill Lewis and Richard Harries of the Wales Audit Office.

 

 

743      APOLOGY FOR ABSENCE -

 

This was received from Councillor J. Clifford.

 

 

744      MINUTES -

 

RECOMMENDED - T H A T the minutes of the meeting held on 21st November, 2006 be approved as a correct record.

 

 

745      DECLARATIONS OF INTEREST -

 

No declarations were received.

 

 

746      MATTERS WHICH THE CHAIRMAN HAD DECIDED WERE URGENT -

 

RECOMMENDED - T H A T the following matters which the Chairman had decided were urgent for the reasons stated, be considered.

 

 

747      REVIEW OF PROGRESS WITH SCHOOL IMPROVEMENT AND STRATEGIC MANAGEMENT (WALES AUDIT OFFICE) -

 

Urgent by reason of the need for there not to be undue delay in consideration of the recommendations of the Wales Audit Office regarding School Improvement and Strategic Management

 

Members were advised of the results of the progress report on School Improvement and Strategic Management undertaken by the Wales Audit Office in 2006.

 

The Council had been subject to an inspection of its Education Service by Estyn and the Audit Commission in 2001 when it had been judged to have some serious weaknesses.  A further inspection of School Improvement and Strategic Management in 2004 reported that changes had led to improvement.  Both School Improvement and Strategic Management were judged to be fair with promising prospects for improvement.

 

In 2006, the Wales Audit Office had reviewed the progress the Council had made following these inspections and assessed the progress made against each of the recommendations of the Estyn / Audit Commission reports of 2004.  The review also assessed the extent to which the Education Service was making effective use of the Council’s service planning framework and how the whole Council was working together to support School Improvement and Strategic Management.

 

The Wales Audit Office had concluded that following the inspections in 2001 and 2004, the Council as a whole and the Education Directorate had devoted energy to ensuring that the essential features of an effective Education Service were in place.  The Council could now use its growing credibility within the education sector to provide leadership to the wider education community across the Vale.

 

The report had made six recommendations:

 

R1 -      Explore the opportunities for working collaboratively with other councils to extend the range and quality of advisory support to schools in the Vale, including Welsh medium provision.

 

R2 -      Consider preparing shorter more focused performance reports for the Education Scrutiny Committee that would enable it to focus attention on key issues.

 

R3 -      Review how the Council’s service planning process could be fully utilised to effectively inform and be informed by the Education Plan required by the Assembly Government.

 

R4 -      Ensure that Education Service Plans were written in a way that specified outcomes.

 

R5 -      The Council now needed to develop a clear vision for future education service in the area, building on the planned investment in schools that was currently underway.

 

R6 -      Make plans for the future provision of special schools in the borough that clarified the relationship between their local role and their regional role and made any regional role explicit in commissioning and funding arrangements.

 

RECOMMENDED -

 

(1)       T H A T the contents of the report and the Wales Audit Office recommendations be noted.

 

(2)       T H A T the Wales Audit Office recommendations be addressed as part of the service planning process for 2007/08.

 

(3)       T H A T the progress made to date within the Education Directorate following the Wales Audit Office reviews be noted.

 

 

748      REVIEW OF HUMAN RESOURCES STRATEGY AND IMPLEMENTATION (WALES AUDIT OFFICE) -

 

Urgent by reason of the need for there not to be undue delay in consideration of the recommendations of the Wales Audit Office regarding the Human Resources Strategy

 

Members were advised of the results of the review of the Human Resources Strategy Implementation undertaken by the Wales Audit Office in 2006.

 

It had been agreed as part of the risk assessment process during 2004 that due to the significance and impact of the Human Resources Strategy (2003-2006) on the Council’s corporate objectives, that an update position statement of its implementation be carried out.

 

The review investigated whether the Council had made progress in implementing its HR Strategy by reviewing progress in:

 

·          workforce planning

·          recruitment

·          balanced pay structure (this related to job evaluation and implementation of job

           evaluation)

·          management information (sickness absence)

·          service user’s views on the HR service.

 

The Wales Audit Office had concluded that the Council was in the process of implementing the HR Strategy.  Some components of the HR Strategy were being developed well by the Council, particularly in relation to the progressing of workforce planning.  In other respects, including job evaluation, recruitment and retention and the management of attendance, further work remained to be done.  The Department had acknowledged this and was already addressing many of the issues raised through the updating of its HR Strategy.

 

The report made six recommendations:

 

R1 -     The Council needed to ensure that the Authority-wide workforce plan was development from the information collated to date and used to support the delivery of the Council’s objectives.

 

R2 -     The Council needed to update the recruitment and retention strategy and guidance as part of the revised HR Strategy.  This would need to be clearly linked to the workforce planning cycle that was underway.

 

R3 -     The Council needed to ensure mechanisms were in place to monitor the progress of both the recruitment and retention strategy and the HR Strategy.

 

R4 -     The Council needed to develop a process for keeping Heads of Service informed of the recruitment progress for their service area.

 

R5 -     The Council needed to produce and maintain an up-to-date action plan for the completion of job evaluation.  CMT and Cabinet needed to receive regular, clear reports on the progress towards completing job evaluation.

 

R6 -     The Council needed to undertake pay modelling as a matter of urgency, and ensure that the resources which had been set aside to deliver this work were sufficient.

 

RECOMMENDED -

 

(1)       T H A T the contents of the report be noted.

 

(2)       T H A T the recommendations inform the development of the new HR Strategy.

 

(3)       T H A T the recommendations be addressed as part of the service planning process for 2007/08.

 

 

749      RELATIONSHIP MANAGER’S ANNUAL LETTER 2005/06 (REF) -

 

A copy of the Council’s Relationship Manager’s (RM) Annual Letter was considered by Cabinet on 21st December, 2006.

 

In previous RMALs the RM had noted the Council’s position in relation to its improvement journey to date.  This year the RM stated that “during 2005/06 the Council had continued to respond to the challenges it faced and had continued to make progress in many areas although there were some corporate and services that need further attention”. 

 

The RMAL was positive about the continuing improvements being made by the Council, in particular:

 

·         The Council’s corporate management arrangements have continued to develop. 

          However, she identified a number of areas where further improvement was

          needed.

·         The Council was taking action to improve services but there were some areas of

          high risk that needed to be addressed.

·         The Council was refining its performance management arrangements which should

          improve its ability to monitor and report progress against key priorities.

·         She had given an unqualified opinion on the Council’s 2005/06 financial statements.

·         She was satisfied with the arrangements that the Council had in place during the

          year to properly support the achievement of its responsibility to secure economy,

          efficiency and effectiveness in its use of resources during 2005/06.

·         She had confirmed that the Improvement Plan met the statutory requirements

          and was produced and published on time.

 

Matters of note from the detailed report included the following points:

 

·         The Council had effective financial management arrangements in place, including

          internal financial controls, Internal Audit, recognised standards of financial conduct,

          legality arrangements and arrangements to prevent and detect fraud and

          corruption.

·         The Council had a good track record of achieving its budget and had been able to

          build a strong financial position over the last few years.  There was significant

          financial pressures for the Council especially within Community Services and in the

          delivery of its major projects.  However, this would need to be robustly tackled and

          monitored if the overall financial position of the Council was to remain sustainable in

          the future.

 

Cabinet had

 

“RESOLVED -

 

(1)      T H A T the Relationship Manager’s report be accepted.

 

(2)      T H A T the report be referred to the Scrutiny Committee (Corporate Resources) and the Audit Committee.”

 

Audit Committee, having considered the contents of the Relationship Manager’s Annual Letter,

 

RECOMMENDED - T H A T the Relationship Manager’s Annual Letter be accepted.

 

 

750     INTERNAL AUDIT PLAN QUARTER 2 ACTUAL OUTTURN V PLANNED 2006/07 -

 

Committee were advised of the half year outturn performance against the 2006/07 Plan.

 

The actual position for the six months of this financial year compared against the Plan was detailed in Appendix A to the report.

 

The figures showed that 95% of overall planned time had been achieved.  The overall outcome during the first six months was a reduction of 125 days over that planned.  This could be directly attributed to the deficit of days available to achieve the desired outcome of 5,512 days as set out in the four-year strategic plan.  With an establishment of 20 full times employees, providing a total of 5,200 days, additional resources were needed to ensure that the Plan was achieved.

 

Although additional resources had been secured early on in the year to meet the deficit of days, due to the temporary member of staff leaving the section, the planned days available for the remainder of the year reverted back to the original establishment of 20 full time employees.

 

However, with the Operational Managers’ span of control extending to include the Efficiencies Team (which incorporates the Procurement Unit), the Senior Group Auditor had been seconded from Audit to oversee this function.  As a result of this, the overall planned days for the remainder of the year had been adjusted downwards to compensate for this.  The revised plan for the remainder of the financial year formed part of a separate report.

 

Committee were shown an analysis of work done in relation to that planned which showed that there had been a significant increase in the number of days allocated to benefit fraud investigations.  However, overall the team had seen a significant decrease in the number of referrals received during the first six months when compared with that of last year.  The number of referrals carried forward from 2005/06 (125) although not significantly higher than those carried forward from 2004/05 (92) had contributed in part to the increase in days.

 

The majority of the increase in days was specifically related to:

 

(a)   Assisting the Housing Benefits Section with intervention visits as part of the verification framework.  The responsibility for which passed to the Benefits Section in August 2005.

 

(b)    The appointment of staff who had little or no experience and therefore required a higher level of supervision, mentoring and training.  In order to ensure that these staff received the most effective form of training, it had been necessary for them to shadow the more experienced officers within the team.

 

Committee were also provided with details of the reviews commenced but not completed during the period as well as those reviews completed within the period.

 

Overall, the reviews undertaken during the first six months of the financial year had not identified any significant weaknesses in the system of internal financial control, with the exception of the Council’s Leisure Centres, which the Auditors’ concerns had been previously reported to the Committee.  The Auditors continued to monitor progress against improvements needed at the Leisure Centres and had completed their follow-up reviews.  The Auditors had concluded that there had been slow but steady progress made to date, the detail of which was contained within a separate report to the Committee.

 

In addition to the above, issues relating to weaknesses in the system of internal financial control at St. Richard Gwyn RC Comprehensive School and Gardenhurst Resource Centre had been identified.

 

RECOMMENDED - T H A T the report on actual audit performance for the half year April 2006 to June 2006 be noted.

 

 

751     INTERNAL AUDIT REVISED 2006/07 PLAN -

 

Audit Committee considered the revised 2006/07 Internal Audit Plan for approval.

 

The Committee had approved the four year strategic plan for 2006/07 to 2009/10 in May 2006.  The Plan had been based on an establishment of 20 full time employees which provided a total of 5,200 days.  However, during year 1 (2006/07) and 3 (2008/09) of the strategic plan, there was a deficit of days available to achieve the desired outcome.  In order to address this shortfall in the first year and to ensure that the plan was achieved, additional resources needed to be secured.

 

Although additional resources had been secured early on in the year to meet the deficit of days, due to the temporary member of staff leaving the section, the planned days available for the remainder of the year were now unachievable.

 

In addition, the Operational Manager - Accountancy / Audit had now been given overall responsibility for the Council’s Efficiencies Team (including the Procurement Unit).  As a result, the Senior Group Auditor had been seconded from Audit to oversee this function, resulting in a further reduction of available planned days making it now impossible to achieve the desired outcome of 5,512 days.

 

The Internal Audit Plan for 2006/07 had been adjusted to reflect the above changes and the revised plan was detailed at Appendix A to the report.  The revised plan was based on an establishment of 19 full time employees which equated to 2,470 available days.  It was noted that it was still the intention of the Section to cover all areas included within the original plan albeit with reduced days allocated to each area.  Utilising Auditors who were normally assigned to Housing Benefit Investigations could achieve this and, as referrals had significantly reduced so far this year, it was the most effective use of the scarce resources available.

 

Having considered the report, it was

 

RECOMMENDED - T H A T the revised plan for the remainder of 2006/07 be approved.


 

752     INTERNAL AUDIT CLIENT SATISFACTION SURVEY RESULTS - SIX MONTHS OF 2006/07 (DFICTP) -

 

Audit Committee were informed of the overall Internal Audit customer / Client Satisfaction Survey results for the first six months of the financial year 2006/07.

 

As part of the Quality Management System and in order to ensure compliance with the Code of Practice for Internal Audit in Local Government, it was important for the Internal Audit Section to demonstrate continuous improvement by constantly assessing its systems and their effectiveness.  The philosophy of continuous improvement in the provision and delivery of services was driven by a process of feedback from the clients / customers.  From the customer / client’s point of view, the Internal Audit Section’s Quality Management System must provide them with a level of confidence in the ability of the Internal Audit Section to deliver the desired quality services that met their requirements.

 

Attached at Appendix A to the report was the overall data results for the first six months of this year extracted from the Audit Management System.  Of the 53 surveys returned, only 4 surveys had been returned where one or more of the questions had been rated just adequate or unsatisfactory.  This indicated that 92.5% of Internal Audit’s clients were either satisfied or very satisfied with the service that was provided.

 

Overall, the survey consisted of 10 questions ranging from briefing and usefulness of initial discussions to clients agreement with overall audit opinion.  The satisfaction survey gave the client / customer an opportunity to make any further comments on the service provision, which was then fed into the continuous improvement process.

 

RECOMMENDED - T H A T the contents of the report be noted.

 

 

753     2006 AUDIT BENCHMARKING REPORT (DFICTP) -

 

Audit Committee were advised of the outcome of the Chartered Institute of Public Finance & Accountancy Audit Benchmarking 2006 exercise.

 

On an annual basis, data sets are produced and forwarded to CIPFA in the structure of a survey form.  These data sets were compared with all club members of the same tier (i.e. District, County, Unitary, Welsh Unitary etc.).  In addition, the data was also compared with up to 13 “Comparator Authorities” that the Council may choose from the other club members.  The resulting output report for 2006 was attached at Appendix A to the report.

 

Overall the report was encouraging with the main strengths of the Internal Audit Section, where an above average performance was indicated, was included within in table 1 of the report.

 

Weaknesses where a lower than average performance was indicated included:

 

·         Compared with the Comparison Group Average of 22% and the all members’

          average of 16%, the Section employed the majority of its staff (67% of the full

          time establishment) within the salary band of under £20k.  Further analysis of the

          salary bandings showed that the Section fell well short of the averages on the

          majority of categories.

·         Overhead costs were higher when compared with both the Comparison Group

          Average and the Unitary Authorities average.  Further analysis showed that

          Transport and Running costs were almost double that of other members.

 

RECOMMENDED - T H A T the report on Audit Benchmarking for 2006 be noted.

 

 

754     MAKING THE CONNECTIONS: SHARED SERVICES IN SOUTH EAST WALES (DFICTP) -

 

Audit Committee were advised of the initiation of a multi-authority project to evaluate the feasibility of sharing certain “back office” and professional support services as part of the “Making the Connections” agenda.

 

The Welsh Assembly Government’s “Making the Connections” agenda aimed to bring about improvement across the whole range of public services.  Specifically, it aimed to make services more responsive, accessible, coherent, effective and efficient.  Local Government in Wales, like many other public services, faced rising demands for higher quality services at the same time as increasing budgetary pressures.  New ways of working were needed to cope with these demands and enable opportunities for efficiency savings to release resources for front line public service delivery.

 

The potential for sharing corporate and support services between organisations had been widely discussed and the Welsh Assembly Government report “Making the Connections” stated that, in terms of delivering support functions more efficiently “The greatest gains are likely to come from organisations in reducing shared support functions”.

 

In response to the “Making the Connections” agenda, the Leaders and Chief Executives of ten local authorities in South East Wales had begun meeting as the connecting South East Wales Forum.  The Forum, which was administered by the WLGA, included Blaenau Gwent, Bridgend, Cardiff, Caerphilly, Merthyr, Monmouthshire, Newport, Rhondda Cynon Taff, Torfaen and the Vale of Glamorgan.  The Forum had agreed to carry out a feasibility study for the provision of shared professional support and back office services across the ten authorities and Audit Committee were provided with information on this study and the management arrangements being put in place to ensure that it addressed the interests of all participating councils.

 

By the end of the feasibility study, the participating authorities would be in a position to take informed decisions on whether to embark on a shared services venture, and if the decision were to proceed, participating councils would be in a position to determine which services to share.  In advance of any such decisions, extensive consultation with Trade Unions would be required.

 

RECOMMENDED - T H A T the contents of the report be noted.

 

 

755     PROGRESS REPORT - LEISURE AND TOURISM - FINANCIAL MANAGEMENT OF THE COUNCIL’S LEISURE CENTRES (DFICTP) -

 

Audit Committee were provided with background information relating to the financial management of the Council’s Leisure Centres and detailed progress made to date since this matter was last reported to Committee.

 

The Internal Audit Section had, over the past four years, undertaken a number of audit system reviews at Council Leisure Centres, the purpose of which had been to:

 

·         review the documentation, procedures and controls in place at the six Leisure

          Centres;

·         appraise and report on the soundness, adequacy and application of financial and

          other related management controls to ensure that they were efficient, effective

          and where appropriate complied with the Authority’s Financial Regulations and

          Standing Orders.

 

The Audit reports issued over this period had clearly identified fundamental weaknesses in the system of financial control at all six Leisure Centres.  The lack of basic financial control had been highlighted as a significant internal control issue and as such, had been included in the Council’s 2005/06 Statement on Internal Control which accompanied the Annual Statement of Accounts.

 

As a result of the overall audit opinion that the financial systems and controls at the Centres were extremely weak and in need of urgent improvement, the Auditors had continued to closely monitor progress at the Leisure Centres.

 

Audit Committee were provided with an update of the progress to date in implementing the necessary controls and procedures.

 

The Audit reports issued during 2002/03 clearly identified fundamental weaknesses in the systems of financial control at all six Leisure Centres.  A total of 240 recommendations had been made by the Internal Audit Section, each recommendation being designated as either high or medium risk, with the majority (204) classed as high priority.  It was noted that a common theme across the six Leisure Centres was apparent with a large number of recommendations, therefore, being replicated, as the system of internal control was extremely weak throughout.

 

Since 2002/03, there had also been nine internal special investigations undertaken by the Internal Audit Section into allegations of financial loss / impropriety at Council Leisure Centres.  Of these, a total of six investigations focused on Penarth Leisure Centre in particular and related to the misappropriation of cash and / or stock.

 

During March and April 2005, the Internal Audit Section had undertaken system based audit follow-up reviews on five of the six Centres (excluding Barry).  The work had focused on the evaluation of procedures and controls surrounding the security of cash at the establishments.  Without exception, all reviews had continued to identify fundamental weaknesses within the financial management of the Centres.

 

Based upon the results of the reviews, Internal Audit had concluded that the lack of action on the part of Senior Leisure Management to implement appropriate procedures had resulted in a situation where Internal Audit could not provide the necessary assurances to the Authority’s Section 151 Officer as to the overall adequacy and effectiveness of the internal controls surrounding the financial management of the Council’s Leisure Centres.  This was felt to be of serious concern and could not be allowed to continue.

 

As a result, Senior Management within Leisure and Tourism had been given six months from September 2005 to develop and implement a Financial Procedure Manual for use in all Leisure Centres.  Staff were also to be fully trained in order to ensure full compliance and management were to monitor the implementation process.

 

Follow-up reviews undertaken during April and May 2006 had indicated that there had been some improvements made at Penarth, Barry and Llantwit Major Leisure Centres, especially with the introduction of a fully documented procedure manual in early January 2006.  However, it had been clear from the reviews that the manual had not been adhered to, had not been accepted by all staff and that training had been haphazard.  Of major concern to the Auditors, was the lack of Senior Management involvement in ensuring that the manual was fully integrated and applied consistently throughout the Service.

 

As a result of this, an update report had been provided to the Director of Environmental and Economic Regeneration in June 2006, which had recommended that:

 

“The Director of Environmental and Economic Regeneration, as the Chief Officer accountable for the financial management of those services that form his areas of responsibility, takes immediate action to rectify the system weaknesses identified at the Leisure Centres.  Such action should include:

 

The nomination of one senior officer within the Leisure and Tourism Division with responsibility for ensuring the implementation, review and monitoring of the Financial procedure Manual throughout the Council’s Leisure Centres, including a suitable programme of training.”

 

In response to the Audit report, the Director had nominated the Leisure Centres’ Manager as the officer with overall responsibility for fully implementing the procedure manual together with all the outstanding recommendations.  The Operation Manager - Strategy and Support also provided invaluable assistance through organising financial training to all appropriate Leisure Centre staff.  Incorporated within her remit was to rationalise the financial procedures and ensure that all adopted a standard and consistent approach.

 

Additional follow-up audit reviews had been undertaken in July 2006 and had concentrated on Holm View, Barry Sports Centre and Cowbridge Leisure Centre.  Once again however, the reviews had identified major risks within the system where fundamental improvements were required with immediate effect.  Of particular concern was the lack of security arrangements at the Centres for accessing the safe, lack of an audit trail for the ordering process relating to catering and inconsistencies in the rate of pay to instructors.

 

The most recent follow-up reviews had been undertaken on the 19th and 20th October, 2006 and had concentrated on Barry, Penarth and Llantwit Major Leisure Centres.  The Auditors had been pleased to report that significant improvements had been made across the three Leisure Centres, although some of the agreed recommendations had yet to be implemented even though the Auditor had considered them to be “quick wins”.

 

Significantly however, one area where little or no improvement in control had been evident in any of the reviews to date was that of catering and bars.  Given that problems in this area had previously resulted in the significant loss of cash / stock at the Leisure Centres, this was the most disappointing aspect of the reviews to date particularly in view of the fact that the Leisure Centres had two senior officers in post whose sole remit was to manage the catering and bars function.

 

Auditors were still unable to identify any audit trail relating to purchase orders and vending machines (a source of considerable theft in the past) were still not being emptied of their income regularly.  This was a breach of the Council’s Financial Regulations and raised issues of security.

 

Based on the results of the Audit Reviews to date, it was concluded that there had been a slow but steady improvement in the implementation of financial controls in most general aspects of the Leisure Centres operation.  It was acknowledged that this process had been greatly assisted by the involvement of the Operational Manager - Strategy and Support in undertaking a programme of training and review of administrative systems.  Only a few lower risk recommendations still remained outstanding although these, nevertheless, still needed to be progressed.

 

However, the continued absence of controls in the areas of catering and bars was of significant concern.  The fact that, over recent years, a number of special investigations had been undertaken relating to the catering, bars and vending functions, where repeated recommendations for improvements had been made must now call into question the overall management of this function.

 

Members of the Committee felt that the contents of the report raised matters of serious concern.  It was acknowledged that some progress had been made, but at disappointingly slow rate.  Breaches of Financial Regulations were viewed as being  especially significant in view of the earlier audit investigations that had been undertaken since 2002.

 

It was felt that urgent action was required, and that more effective progress needed to be made immediately by the Senior Leisure Management, notwithstanding an imminent audit follow-up investigation due to commence in February 2007.

 

RECOMMENDED -

 

(1)      T H A T the contents of the report be noted.

 

(2)      T H A T the serious concerns of the Audit Committee at the situation be placed on record.

 

(3)      T H A T the Senior Leisure Management be instructed to comply with the recommendations of the Audit reports issued since 2002 as a matter of great urgency.

 

(4)      T H A T the concerns of the Audit Committee be conveyed to both the Cabinet and the Chief Executive.

 

 

756     ON-LINE FRAUD AWARENESS TRAINING FOR USE BY THE GENERAL PUBLIC (DFICTP) -

 

Audit Committee were notified of the new interactive software available, which gave the Council a new method of ensuring vital benefit fraud awareness was accessible to the general public on a regular basis.

 

The software would sit on the Council’s external website, with the overall aim of raising the public’s awareness of benefit fraud whilst complimenting the current Department for Work and Pensions aggressive campaign to stamp out benefit fraud.

 

Screen prints of the training package were attached at Appendix A to the report.

 

RECOMMENDED - T H A T the content of the on-line fraud awareness training package be accepted and included on the Council’s external website.

 

 

757     EXCLUSION OF PRESS AND PUBLIC -

 

RESOLVED - T H A T under Section 100A(4) of the Local Government Act 1972, the press and public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in Part 4 of Schedule 12A (as amended) of the Act, the relevant paragraphs of the Schedule being referred to in brackets after the minute heading.

 

 

758     HOUSING BENEFIT / COUNCIL TAX BENEFIT FRAUD INVESTIGATIONS - OUTTURN 2005/2006 AND A COMPARISON OF THE HALF YEAR POSITION 2005/2006 AND 2006/2007 (DFICTP) - (EXEMPT INFORMATION - PARAGRAPH 14) -

 

Audit Committee were informed of the activities that had been undertaken during the first six months of the financial year in regard to Housing Benefit and Council Tax Benefit fraud investigations compared with the position during the same period in 2005/2006.  The report also summarised the activities undertaken and the results achieved during 2005/2006.

 

During 2005/2006, the Auditors working on Housing Benefit and Council Tax Benefit fraud were busy, partly as a result of the high quality of information being received via the Housing Benefit Matching Service.  However, during the first six months of 2006/2007, the level of referrals made via this route had fallen.  This appeared to be a national trend and was partly due to the high quality and quantity of information received from these initiatives during 2005/2006, which had detected many of the existing fraudsters.  The level of referrals made by the Housing Benefit Section had also fallen.  This again was partly due to the success of the verification framework initiative and also the national advertising campaigns that may have deterred some people from submitting fraudulent claims.

 

Of the past six months, there had been 201 new investigations undertaken, compared to 415 new investigations at the same time last year.  During 2005/2006, a total of 714 new investigations had been opened.

 

Investigations were undertaken on the basis of information received or from an allegation made against the claimant or landlord in respect of their Housing Benefit or Council Tax Benefit claim.  As well as the new investigations undertaken during the year, some cases were ongoing from previous years.

 

50% of the investigations undertaken during 2005/2006 were on the basis that the claimant was not living at the address.  Most of these were referred from the Housing Benefit Section as a result of the claimant not returning an intervention form or the visiting officer being unable to contact them.  During the first six months of 2006/2007, non occupation allegations had fallen to 29%.  However, the proportion of undeclared income / capital allegations had increased although overall the actual numbers had fallen compared to the same period in 2005/2006.

 

Just under 13% of cases (23) had been closed with fraud being proven in 2006/2007.  This was comparable to 2005/2006 where the percentage of cases closed as proven was 14% (108).  The majority of the closures were as a result of the information being found to be all in order and therefore no fraud or error had been established.

 

Once a case had been closed and fraud had been proven, the amount of overpayment was calculated by the Benefits Section.  A decision was then made, using the Council’s prosecution policy, as to the most appropriate action.  The total value of Housing Benefit and Council Tax Benefit overpayments that were proven as fraud and hence recoverable during 2005/2006, was £327,166.

 

From 1st April, 2006 to 30th September, 2006, 11 cautions, 7 administrative penalties and 15 successful prosecutions had been administered.  One prosecution case had resulted in a custodial sentence.  The value of Housing Benefit and Council Tax Benefit paid that had been proved as being fraudulently claimed was £128,950 and this was recoverable.

 

The information provided to Members illustrated that the level of referrals received so far in 2006/2007 and hence current case load, had reduced significantly when compared to 2005/2006.  This had a negative effect on the Performance Indicators, which measure the number of investigations that were carried out and the number of investigators employed.  There was little that could currently be done to improve the number of referrals as the level and quality of referrals received were largely uncontrollable.  The new fraud management system did include a module that would enable proactive work to be carried out.  The necessary data and training should be in place within the next few months.  Meanwhile, as referrals had substantially reduced and the Auditor posts were generic, officers had been delegated to undertake audits as well as Housing Benefit and Council Tax Benefit investigations.  This had meant that staff could assist in achieving the audit plan as well as dealing with the current fraud caseload.

 

RECOMMENDED - T H A T the report outlining the activities of the Housing Benefit and Council Tax Benefit fraud investigations be noted.