Report of: Internal Auditor BDO

Purpose of report:

To inform the Committee on progress made against the Internal Audit work plan and on the outcome of their reviews (including within the executive summary reports on General Ledger and Insurance).

Recommendation:

To discuss and note the report.

Greg Rubins, Internal Auditor (BDO) introduced the report, highlighting that:

·       Two reports had been finalised – General Ledger and Insurance.

·       The planned Community Strategy and Cyber Security audits had been deferred to next year to fit in with when the Council’s own plans and strategies would be ready.

·       The main issue included in the General Ledger report related to the QL system and a plan was in place to fix the issue.

In response to questions, the Head of Financial Services advised that there were two key milestones related to the QL system:

·       Steady state – where all processes were in place, but operated with additional processes (known as workarounds) and resources to keep the system going. It was expected to reach ‘steady state’ by the end of February, at which point full financial information for ODS and the Council would be available.

·       Business as usual – where the system was being used as intended, with all workarounds removed. It was unlikely that this stage would be reached until the end of May.

The Head of Financial Services assured the Committee that he was confident those targets would be met and confirmed that the additional resource required in the steady state stage was in the region of £200,000 over the last 12-month period. He confirmed that the QL system implementation was not seen as a major risk at the time, but that an external review of the implementation would be undertaken and the results presented to the Committee.

In response to questions, Bill Lewis, Financial Accounting Manager advised that the Council planned to (internally) close and draft the accounts in line with the previous 31 July timescale, but following the Redmond Review that external audit dates would be pushed out closer to the revised November date as the primary reason for the Government changes was the pressure/resourcing issues related to external audit. It was confirmed that the allocation of the additional £45m Government funding for external audit nationally was unknown.

Cllr Amar Latif joined the meeting.

In reference to the information on the Omicron grant boost contained in the report, the Head of Financial Services explained that the Council received a £300,000 boost to its Additional Restrictions Grant (ARG) and an estimated £2.8m through the Omicron Variant Grant, which was required to be paid out to around 800 businesses by 31 March 2022. He advised that the Council had written to BEIS and the LGA highlighting concerns about the tight timescales for grant payment and that since the inception of the business grants in 2020, the Council’s fraud team had staved off around £17.5m of grant payment in fraudulent claims, involving around 2,700 claims made to the Council – which demonstrated that taking time to pay the grants and do due diligence had proved beneficial.

Responding to a question about penalties for the Council failing to disperse all of the grant money within the specified timescales, the Head of Financial Services advised that if businesses had not applied by 18 March 2022, with all the due diligence the Council needed to do this would mean that those businesses would not be eligible for the grant – as it was important that the due diligence was done to ensure the grant was paid to the right businesses, which took time.

In response to a question, the Head of Financial Services advised that councils nationally still had £250m unspent ARG funding due to the similarly tight timescales conflicting with the need for due diligence in order to protect the public purse.

The Committee:

·       Noted the contents of the report.

·       Requested that the findings of the external review of the QL system implementation be presented at a future meeting.

·       Noted concern about the Government’s tight timescales for the payment of the Omicron Variant Grant and that with proper care the fraud team can save the Government an awful lot of money.

·       Noted that it would like the Government to give serious consideration to a more realistic deadline for payment of grants to allow for appropriate due diligence.