Agenda item
Internal Audit and Anti-Fraud Progress Report
- Meeting of Audit Committee, Thursday, 12th November, 2020 5.30 p.m. (Item 5.3)
- View the background to item 5.3
Minutes:
Mr Paul Rock, Head of Internal Audit, Fraud and Risk presented the Internal Audit and Anti-Fraud progress report. Mr Rock said the report provided an update on the progress against the delivery of the 2019/20 and 2020/21 Annual Audit Plan and highlighted any significant issues since the last report to the Audit Committee in July 2020.
Mr Rock referred members to paragraph 3.2 and said Officers were present at the meeting to answer questions in relation to the three outstanding reports for 2019/20. He said a management response had been received yesterday in relation to the Domiciliary Care audit, which his team would be finalising shortly. He said he also hoped to finalise the Corporate Governance and the Local Community Fund opinions in the coming weeks. Mr Rock continued stating good progress was being made against the 2020/21 Internal Audit Plan and key officers for the six ‘limited’ assurance reports, as outlined in Appendix A, were present at the meeting.
Mr Rock said he was particularly pleased with the improvement in the implementation of agreed management actions and said the percentage of fully and partially implemented actions categorised has ‘high priority’ and ‘medium priority’ had increased, when compared with the performance from last year.
Referring to Social Housing Fraud, Mr Rock reported a further four properties had been recovered in addition to the seven mentioned in the report. The report also provided an update on the Anti-Bribery Policy which requires review annually. He said minor changes had been made to this. Mr Rock recommended the Anti-Bribery policy be publicised widely in the Council as well as to the members of the public in order to send a strong message to help minimise the risk of bribery.
The Chair thanked Mr Rock for his report before inviting the Officers to address their individual reports which were either outstanding awaiting management responses or had received ‘limited’ assurances following Internal Audit’s assessments.
Monitoring of Domiciliary Care Contracts
Mr Warwick Tomsett, Joint Director of Integrated Commissioning in the Health, Adults and Communities Directorate presented his response stating that the management response to the internal audit report had now been submitted to Mr Rock. He said all the recommendations therein had been implemented. He said there had been a delay in some of the recommendations being taken forward, especially in relation to contract monitoring and making sure the right performance measures were in place for the contracts. Mr Tomsett described how one of the recommendations in relation to the payment system had resulted in some delay. He said the Electronic Home Care monitoring system was not working effectively and as such the contract was ended with the provider. A simpler system of block payments to care providers was adopted, which is reviewed every six weeks. He informed Members all outstanding issues with the electronic system had now been closed off and outstanding payments had been made to care providers.
In response to questions from members the following was noted:
· There wasn’t a gap between the electronic system being terminated and the block payment system being adopted. The contract for the electronic system came to an end in March 2020 and the block payment system was introduced in March 2020. However, a report back to Internal Audit was not provided until all payments from the electronic system had been investigated and paid. This proved particularly challenging as the team was also managing the response to the pandemic.
Corporate Governance
Ms Asmat Hussain, Corporate Director for Governance and Monitoring Officer stated the response to the Corporate Governance Audit opinion was close to being finalised. Ms Hussain said there were a few internal strategies, policies and procedures that required fine tuning and once this had been done, she hoped to submit her final response next week.
· Members had no specific questions for Ms Hussain.
Local Community Fund
Ms Sharon Godman, Service Head of Corporate Strategy, Policy and Performance stated further evidence was being gathered as per the recommendations made in the audit opinion and she was working with the Audit team on the detail. She said there was no further update at this stage.
· Members had no specific questions for Ms Godman.
o ACTION: In future, Internal Audit to provide some detail about any outstanding reviews to enable Members to ask questions in advance of the final reports/opinion.
IR35 – Management and Control of Off Payroll Engagement
This ‘limited’ assurance report was deferred until the next meeting of the Audit Committee, as the Officer was not present to answer questions regarding this report.
Back up Schedules and Protection
Mr Adrian Gorst, Divisional Director for IT, said he was disappointed at the ‘limited’ assurance given, although it was appropriate in the circumstances. He said that his department was using the audit function to flush out the shortcomings in the current arrangement with the strategic partner, before the contract is re-tendered in April 2021. He said by taking this tactical measure to address the shortcomings, he wanted to ensure that any new contract addressed the issues raised by internal audit. Mr Gorst said there was a detailed action plan in place to correct the shortcomings and said he was working to secure funding as part of the capital report going to Cabinet shortly.
He said the new Cloud contracts come into place on the 1st April 2021 and these included protections for business continuity and backups within that, so once the contract is implemented there would be contract monitoring in place, with the usual expectation to ensure it is robust.
In response to questions from Members the following was noted:
· Data is being backed up but to a standard that would have been acceptable five to six years ago. The expectations of how data is backed up has changed, especially now with new threats of data hacking and cybercrime. Therefore, it needs to be backed up to a different place, encrypted and stored separately.
· In response to how restoration testing is done, Mr Gorst said at present this was done on an ad-hoc basis, when someone had lost a file and wanted it restored. He said restoration testing of back-ups was required and he wanted to ensure this was built into the new contract so regular restoration testing takes place. Mr Gorst said a tiered approach was required to ensure the back-up system is in place and is tested by users to ensure it restores data that is required.
· The current contract has a long duration period and does not have flexibility within it to change the back-up process without additional costs to the council. As such, Mr Gorst wanted to ensure the new contract would meet the Council’s needs and expectations.
Control and Monitoring of Parking Permits
Ms Ann Sutcliffe, Corporate Director for Place introduced the report and stated she welcomed the internal audit review as this helped to ensure a thorough review of systems and processes in place for the administration of parking permits.
Mr Dan Jones, Divisional Director for Public Realm added he was thankful to the auditors who had undertaken the review of the parking permit system and the recommendations made by them. He said the issues highlighted by the report had been dealt with; the governance arrangements being strengthened with the help of legal colleagues. Similarly, reconciliation issues had been resolved with IT and budget monitoring had been picked up through staff training. Mr Jones said staff had completed several spot checks with paper permits, however as the system had moved to a virtual platform this was now less of an issue.
In response to questions from members the following was noted:
· Referring to the database systems, members asked if issues with the validation of names and addresses had been resolved. Mr Darby, Head of Parking and Mobility Services, responded saying the checking of data comes from the UPNR data and that had been resolved to a satisfactory conclusion. In terms of the Council Tax database, this is used to see if there are any fraudulent claims. For example, a single occupancy household applying for a further parking permit. If anomalies are found these are referred to the anti-fraud team to investigate.
Financial Assessments for Residential and Non-Residential Support
Ms Claudia Brown, Divisional Director for Adult Social Care said the internal audit report had identified several areas for improvement and as such she had instigated a project involving several members to staff to look at each area that had been identified. She said the ‘task and finish’ groups would be looking at systems, policies and procedures and would be reporting back at the end of the financial year. In particular, she highlighted the areas of debt recovery and deferred payments.
Mr Roger Jones, Head of Revenue Services added Adult Social Care debt recovery, was a sensitive area with a final warning letter being sent to debtors. However, a more robust approach was required, even if this wasn’t palatable to some people, such as pursuing debt through county court judgements and the involvement of third-party debt collectors, if this debt is to be collected.
In response to questions from members the following was noted:
· Since the pandemic, the teams working in Adult Social Care had been redesigned with a duty system in place, whereby staff are rostered in and others work from home. Where an assessment needs to be made, this is done via a video call or phone call. However, if staff are required to go to a client’s home, they are given the correct PPE to wear.
· Mr Jones confirmed that where a debtor owned assets such as a property, the Council would look to place a charge on this rather than use other methods of debt collection. However, most debtors do not own their home. Ms Brown added there were instances of debtors with cash sums in bank accounts, but these were unreachable. She said she would be preparing a report looking at debt collection and the options available, which would be presented to Councillors.
Capital Programme Governance
Ms Ann Sutcliffe, Corporate Director for Place introduced this report stating the Council had reviewed its capital programme by looking at how this is funded and the governance structures around it. She said the involvement of audit was welcomed and timely as it gave fresh commentary on the systems in place. She said significant inroads had been made to the actions identified in the internal audit report.
Ms Jane Abraham, Interim Head of Capital Delivery stated that from a project management perspective a more robust project documentation process was followed to improve the overall standard of submissions. She said funding sources had to be identified from the onset, as well as authorisation signatures and if legal comments were required this was done. She said this process was followed for growth bids, project initiation documents as well as highlight reports, with the timely monitoring of dashboards.
Ms Marion Kelly, Interim Programme Director, Finance Improvement Team highlighted the issues facing project managers using Agresso and the difficulties in managing budgets and making decisions. She said the finance team was in dialogue with IT through the Agresso Board to develop a pipeline of changes required to address the issues and improve outcomes. A prioritisation matrix was being agreed with IT, with thirty priority areas.
In response to questions from members the following was noted:
· Members thanked Officers for the update and said they appreciated the work being done to address the finance issues highlighted. Reporting issues and the underspend in the capital programme impacted on communities, dependant on the funding.
Management of Acquisition of Properties for Temporary Accommodation
Ms Ann Sutcliffe, Corporate Director for Place introduced the report and stated Ms Karen Swift, Divisional Director for Housing and Regeneration and Mr Rupert Brandon Head of Housing Supply, were also present at the meeting in relation to this report.
Ms Sutcliffe said she always welcomed and embraced audit reports even if this resulted in limited assurances and attendance at Audit Committee. She said this was a critical review of the management of acquisitions of properties for temporary accommodation which was needed because of the sums involved.
Ms Swift provided a short summary of the reasons behind the acquisition of properties for temporary accommodation and said the recommendations identified in the internal audit report were being addressed. She said the recommendation in relation to the ‘change note’ had been regularised and a further report would be going to Cabinet on all the three streams of the project. Ms Swift said all future Cabinet reports would include stronger finance comments and would set out what the funding streams are. She said the recommendation in relation to insurance had now been completed and she very much saw recommendations five, six and seven as a means for improvement, for future reports and decisions on the acquisition of properties.
In response to questions from members the following was noted:
· In response to what controls had been put in place to ensure the Insurance Team are notified of purchases, Mr Rupert Brandon said there was confusion as to if the council’s insurance policies covered properties brought back as leasehold. However, following the audit report, its clear individual properties require insurance and this anomaly has now been corrected. He said the process map for the acquisition of properties was being rewritten as there are many individuals involved in the process.
· Regarding the cost of repair work and if these were higher than the original value for money calculations, Mr Brandon said in respect of Poplar HARCA properties, the Council was not buying these back now. He said they had been batched together as fifteen to twenty properties and were not been fully assessed for repair work, for fear of losing these properties to lettings. Mr Brandon said a new process had been introduced to ensure the cost of repair work for properties bought back from leaseholders from their own stock did not fluctuate with an inspection regime being undertaken by Tower Hamlets Homes, before the property is valuated.
The Chair thanked all the Officers who made contributions to this item and said she hoped the implementation of the recommendations within the Internal Audit reports would lead to improvements within their areas of responsibility.
Following on from the presentations, general questions regarding the report were asked:
o ACTION: Mr Rock to review both the Anti-Bribery and Anti-Fraud policies to ensure they are clear on when to involve the responsible authorities, such as the police in cases being investigated.
The Audit Committee RESOLVED to:
- Note the contents of the report and the overall progress and assurance provided, as well as the findings/assurance of individual reports; and
- Approve the Council’s Anti-Bribery Policy.
Supporting documents:
- Internal Audit and Anti-Fraud Progress Report, item 5.3 PDF 277 KB
- Appendix. 1 for Internal Audit and Anti-Fraud Progress Report, item 5.3 PDF 235 KB
- Appendix. 2 for Internal Audit and Anti-Fraud Progress Report, item 5.3 PDF 142 KB
- Appendix. 3 for Internal Audit and Anti-Fraud Progress Report, item 5.3 PDF 631 KB