To receive from BDO (external auditors) the Certification Report.
RECEIVED from BDO (External Auditors) the external audit Certification Work Report 2016/17 to 31 March 2017, relating to details of grant claims and returns, Action Plan and fees.
1. This was BDO’s annual report to the Committee about the outcomes of their Certification work.
2. As detailed at page 5 of the report, the report outlines the findings on the work of the Housing Benefit subsidy claim. One major finding from this work is detailed in the last paragraph on the left hand column on page 5 of the report. This was a human error that occurred by the benefits team. The team had not applied the correct cut-off date to the claim that they had prepared. The team had included a week’s worth of benefits that should have been purported in the 2017/18 period and will be. The £1.3m amendment was made to the claim in respect of this. That money would come back to the Council as part of the 2017/18 budget and was not lost.
3. Findings of BDO’s further detailed elements of their work, is outlined on page 6 of the report. They had found a number of small areas where the processing staff had made mistakes with information that had been input into the benefits system. The system was correctly set up using all the correct software requirements to process the cases. Conclusions of this work are outlined in the right hand column on page 6 of the report. These were the key findings from the benefits work which was done and completed in line with the DWP deadline.
4. The second piece of work BDO undertook is detailed at page 7 of the report – ‘Pooling of Housing Capital Receipts’, where the Government takes a cut of council sold assets (housing) receipts that the Council had received. DCLG (Department of Communities & Local Government) asked BDO to look at the Council’s correct recording of sales relating to council houses and to report accurately to them about when they are to receive their share of those receipts.
BDO had also identified one error in respect of this particular reserve that fed into the value that had to be reported. The figure of £1.6m should have been input but actually £600k was included by the team.
5. The final piece of work carried out by BDO related to the GLA Procedural Compliance, as detailed at page 7 of the report. This is where the Council has bid for and successfully received funding from the Mayor’s Housing Covenant (scheme regarding homes for Londoners), as detailed at page 7 of the report. BDO had now been through this and there were 2 exceptions that they were required to report to the GLA. No action was taken by the GLA and these exceptions are detailed by 2 bullet points at page 7 of the report.
6. The following statements, questions and responses raised in response to the report:
a. James Rolfe, in response to the reported overpayments (page 6 of the report), that the amounts talked about seemed very trivial when you talk about £1800 on a £320m grant claim. The auditors are duty bound to report these with this grant claim and is a requirement of the DWP.
b. The Chair asked about the small errors made with the grant claims. What happens with the officers in those particular departments, how is this taken forward, do discussions occur with those officers as to how those errors were made and what process is followed? James Rolfe clarified that the department works through the Audit report and findings, as that sets out where the errors are. Officers learn from that and build into their reconciliation procedures. The grant return is a detailed series of reconciliations that pulls the information together from all sorts of different cells in the data base. Sometimes cells get missed and officers learn from that by building these into reconciliation processes.
c. The Chair clarified Councillor Haywards question regarding errors BDO had picked up in the certification process which gave rise to the Committee to talk about. Was there a process whereby if there are errors that are occurring, that we look at how that is happening and a discussion with the teams that are involved, to make sure that it doesn’t happen again. James Rolfe clarified that in an organisation of 4,000 staff and millions of transactions every year, errors are made. The issue is not that they won’t happen again, because they will. The issue is therefore what assurance systems does the council have, in place to ensure that those errors are picked up i.e. surname error, date error. There are all sorts of assurance systems in place to make sure that the data that is recorded in the council’s IT systems is as accurate as possible. The best example is OFSTED, who attend Children’s Services offices and do case file checks to establish that all case records are accurately recorded.
There is a similar process that is applied in Adult Social Services whereby the CQC (Care Quality Commission) come in. Another process that customer services data bases use regarding CRM whereby staff check the information being input so that it is held correctly. This refining of data goes on all the time and there are requirements to ensure that it is kept accurate and up to date all the time. But there is not the equivalent in non-financial information as finance has with the auditors who are checking the whole financial information.
Gary Barnes (Executive Director – Regeneration & Environment) also clarified the process for customer complaints.
d. Councillor Hurer wanted clarification that finance officers report back to the auditors as part of the closure of accounts and that they have understood the errors in the processes reported and how they are being dealt with. James Rolfe clarified that with regards to the annual accounts, the Chief Executive and James Rolfe sign off a document that states that the council have highlighted all the issues they were aware of and that there are appropriate assurance systems in place to make sure the information received is accurate.
7. The Chair thanked BDO for their report.
AGREED that the Grant Claims and Returns Certification Works Report 2016/17 be noted and endorsed by the Committee.