Report of: the external auditor: Ernst & Young (to follow)

Purpose: to inform the Committee of the certification work on its claims and returns.

Recommendation: That the Audit & Governance Committee considers and notes the report.

The Committee considered the report of the Council’s external auditors, Ernst & Young informing them of the certification work on its claims and returns in relation to Housing Benefit.

David Guest, Ernst & Young, introduced the report and outlined how the error rate and subsidy claim were calculated and the types of errors found. He explained that the total value of extrapolated errors would likely lead to a reduction in payment of subsidy from the Department of Works and Pensions as it exceeded the threshold permitted before subsidy was withdrawn. The recommendations included improving accuracy and checks to reduce the errors below the threshold.

He said it was not usual for a council to exceed the threshold but as the complexity of cases increased it was now usual to be issued a qualification letter. The results from the testing should reflect training and changes to processes, but because of the delay between close of year and the end of the audit there was a period when the same errors continued and affected the following year’s audit.

The Benefits Manager and the Head of Financial Services outlined the actions the service was taking to reduce the error rate and answered questions from the committee:

·         The errors were small – less than 1% of the total housing benefit expenditure of £64m – but had a significant cost to the council if they exceeded the threshold for loss of subsidy.

·         The reasons for the most common types of errors would be identified and detailed procedures and training put in place. There would be a standardised pattern of work and assessment to increase confidence in the accuracy of processing; and updated procedures to reflect best practice, current law and case law

·         Checking, feedback and performance reviews were carried out regularly and a quality control system (PMQA) was in place. Checking would now mirror the audit process and pro-actively seek to reduce the error rate.

·         There would be more thorough checking of data from the DWP to reduce errors creeping in from incorrect initial data.

·         Training would be comprehensive and focus on problem solving and accuracy.

·         Dealing with claims with a high risk of error (workers on zero hours or with irregular hours, and complex claims) presented challenges. The relative risks changed with the volume of different types of claims.

·         Where the likely dates of changes affecting many claimants were known (for instance pay reviews for major employers; rent changes; pension increases) these were put in the diary and reminder letters sent or known changes applied automatically.

·         The manager held IIRV qualifications and was keen for senior staff to achieve these.

·         The universal credit rollout brought further challenges to the benefits team.

·         There were monthly meetings and weekly checks on performance and a focus on the impact of errors and effectively managing claims types.

The Committee noted that financial reporting would show the subsidy penalty as a pressure on reserves.

The Committee noted the report, their concerns, and the action plan, and asked that the benefits manager come back in June to report on progress on the action plan.