www.pwc.com
Certification Report to
those charged with
governance 2009/10
Certification
Report (2009/10)
Report to those
charged with
governance
The Members of the Audit Committee
Council Offices
Holt Road
Cromer
Norfolk
NR27 9EN
18 February 2011
Ladies and Gentlemen
Subject: Certification Report (2009/10)
We are pleased to present our Annual Certification Report summarising the results of our 2009/10
certification work. We look forward to presenting it to members on 8 March 2011. The purpose of this
report is to provide a high level overview of the results of certification work we have undertaken at North
Norfolk District Council on 2009/10 claims and returns that is accessible for members and other
interested stakeholders. Fees for 2009/10 certification work are summarised in Appendix A.
Results of Certification work
During the period June to November 2010 we certified three claims and returns worth a total of
£52,556,810. Of these, none were amended following certification work undertaken. However one
required a qualification letter to set out significant issues arising from the certification of the claim. We
set out further details in the attached report.
We ask the Audit Committee to consider:
the adequacy of the proposed management action plan for 2009/10 set out in Appendix B, and;
the matters arising from the certification work qualification letter set out in Appendix C.
Yours faithfully,
PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP, The Atrium, St Georges Street, Norwich, NR3 1AG
T: +44 (0) 1603 615244 F: +44 (0) 1603 631060 pwc.com/uk
Table of Contents
Introduction ...................................................................................................................5
Scope of work .................................................................................................................5
Code of Audit Practice and Statement of Responsibilities of Auditors and of Audited
Bodies ........................................................................................................................5
Statement of responsibilities of grant-paying bodies, authorities, the Audit
Commission and appointed auditors in relation to claims and returns................5
Results of Certification Work ...................................................................................... 8
Claims and returns certified ......................................................................................... 8
Issues arising................................................................................................................. 8
Weaknesses in internal control ..................................................................................... 8
Non compliance with regulations/ terms and conditions ........................................... 9
Appendix A ................................................................................................................... 12
Certification Fees ......................................................................................................... 12
Appendix B ................................................................................................................... 13
2009/10 Management Action Plan ............................................................................ 13
Appendix C ................................................................................................................... 17
Matters arising from the certification work ............................................................... 17
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Introduction
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4
Introduction
Scope of work
Grant-paying bodies pay billions of pounds in grants and subsidies each year to local
authorities and often require certification, by an appropriately qualified auditor, of the
claims and returns submitted to them. Certification work is not an audit but a different
kind of assurance engagement. This involves applying prescribed tests, as set out
within Certification Instructions (“CIs”) issued to us by the Audit Commission, which
are designed to give reasonable assurance that claims and returns are fairly stated and
in accordance with specified terms and conditions.
The Audit Commission is required by law to make certification arrangements for
grant-paying bodies when requested to do so and sets thresholds for claim and return
certification, as well as the prescribed tests which we as local government appointed
auditors must undertake. We certify claims and returns as they arise throughout the
year to meet the certified claim/return submission deadlines set by grant-paying
bodies.
We consider the results of certification work when performing other Code of Audit
Practice work at the Authority, including for our conclusions on the financial
statements and on value for money.
Code of Audit Practice and Statement of
Responsibilities of Auditors and of Audited
Bodies
In March 2010 the Audit Commission issued a revised version of the „Statement of
responsibilities of auditors and of audited bodies‟. It is available from the Chief
Executive of each audited body and on the Audit Commission‟s website. The purpose
of the statement is to assist auditors and audited bodies by explaining where the
responsibilities of auditors begin and end and what is to be expected of the audited
body in certain areas. Our reports and management letters are prepared in the context
of this Statement. Reports and letters prepared by appointed auditors and addressed
to members or officers are prepared for the sole use of the audited body and no
responsibility is taken by auditors to any member or officer in their individual capacity
or to any third party.
Statement of responsibilities of grant-paying
bodies, authorities, the Audit Commission
and appointed auditors in relation to claims
and returns
In November 2010 the Audit Commission updated the „Statement of responsibilities of
grant-paying bodies, authorities, the Audit Commission and appointed auditors in
relation to claims and returns‟. This is available from the Audit Commission‟s website.
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The purpose of this statement is to summarise the Audit Commission's framework for
making certification arrangements and to assist grant-paying bodies, authorities, and
the Audit Commission‟s appointed auditors by summarising their respective
responsibilities and explaining where their different responsibilities begin and end.
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Results of
Certification Work
Results of Certification
Work
Claims and returns certified
A summary of the claims and returns certified during the year is set out below. In one
case a qualification letter was required to set out significant issues arising from the
certification of the claim. None of the claims/returns were amended following the
certification work undertaken.
Claims and returns certified in 2009/10
CI
Reference
Title
Form
Value (£)
Qualification
BEN01
Housing and
Council tax
benefit subsidy
MPF720A
31,613,979.00
Qualification letter issued, see
Appendix C
HOU21
Disabled
facilities
DFG
2009D3
345,000.00
-
LA01
National nondomestic rates
return
NNDR3
20,597,830.52
-
Issues arising
Significant issues were identified which are discussed below.
Weaknesses in internal control
In addition to the issues noted in the qualification letter, see Appendix C, the
following weaknesses were noted.
The Authority did not comply with all required deadlines for submission of
claim forms.
The Authority did not provide the original hard-copy of the BEN01 claim
form to the auditors for certification.
The risks of not addressing these issues and our recommendations for improvement
are set out in the table below.
Internal control issues
Claim/Return
(deadline)
Issue
Risk to the
Authority
Recommendation
Housing and
Council tax
benefit subsidy
BEN01
The Authority did
not comply with all
required deadlines
for submission of
Failure to
comply with
deadlines can
result in
All claims and returns
should be submitted
promptly and by the
stated deadline.
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Claim/Return
(deadline)
Issue
Risk to the
Authority
(31 Nov 2010)
claim forms to the
grant paying bodies
and appointed
auditor as specified
in the relevant
certification
instructions.
delayed
payment of
claims, and
fines for noncompliance.
As specified in
paragraph 17 of the
certification
instructions, the
Authority is required
to provide the
original signed hardcopy of the claim
form to the auditors
for certification. The
Authority was unable
to do this as the
original copy had
been returned to the
DwP. We therefore
certified a
photocopied version
of the claim form.
Failure to
comply with
certification
instructions
can result in
delayed
payment of
claims, and
fines for noncompliance.
Disabled
facilities
HOU21
(30 Oct 2010)
Housing and
Council tax
benefit subsidy
BEN01
(31 Nov 2010)
Recommendation
All hard-copy claims
and returns should be
submitted to the
appointed auditor for
certification in
accordance with the
certification
instructions.
Non compliance with regulations/ terms and
conditions
Our work on the Housing and Council Tax Benefit subsidy (“BEN01”) (certification
deadline 30 November 2010) was conducted in accordance with the relevant
certification instructions which requires observations, to be reported within a
covering qualification letter. A copy of the letter can be found in Appendix C.
The risks of not addressing the issues identified in the qualification letter and our
recommendation for improvement is summarised in the table below. We have not
sought to duplicate the detailed findings which are set out in the qualification letter
here.
Compliance issues
Claim/
Return
(deadline)
Issue
Risk to the
Authority
Recommendation
Housing and
council tax
benefits
subsidy
Errors were identified
including:
These errors
could have a
financial
impact on
We recommend that
the Authority
considers the
reasoning behind why
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Expenditure
misclassification;
9
Claim/
Return
(deadline)
(BEN 01)
(31 Nov
2010)
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Issue
Insufficient
documentation
maintained on file
to support benefit
assessment; and
Data input
incorrectly into the
calculation of
benefit
Risk to the
Authority
Recommendation
the subsidy
amount
receivable
from the
DwP. Due to
the errors
identified we
were
required to
perform
additional
testing of 172
claimants,
this has an
impact on
the grant
certification
fee.
the errors identified in
our testing occurred
and puts in place
appropriate corrective
measures. Such
measures may include:
Liaising with
the housing
benefit system
provider
Civica to
improve
system
overpayment
identification;
Improving
benefit
assessor
training; and
Reminding
staff of the
importance of
retaining
evidence on
file.
10
Appendices
Appendix A
Certification Fees
The fees for certification of each claim/return are set out below:
Claim/Return
BEN01 – Housing and Council tax benefit subsidy
HOU21 – Disabled facilities
LA01 – National non-domestic rates return
Total
2009/10 (£) 2008/09 (£)
60,000
57,000
975
950
2,600
2,550
63,575
60,500
These fees reflect the Authority‟s current performance and arrangements for
certification. It may be possible to reduce fees should the Authority improve its
performance by:
•
Coordination: assigning a key member of staff with responsibility to liaise
with auditors and claim/return preparers in order to coordinate and improve
certification arrangements across the authority;
•
Review: improving accuracy of claims/returns submitted for certification
requiring independent review;
•
Documentation: improving working papers and quality of evidence
available to support the claim/return; and
•
Access: improving staff availability during the certification process.
We are happy to discuss how we may assist further with your improvement, for
example we can perform specific focussed, risk-based work in this area should that be
required.
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Appendix B
2009/10 Management Action Plan
Claim/Return
(deadline)
Issue
Recommendation
Management response
Responsibility
(Implementation
date)
Housing and
Council tax
benefit subsidy
BEN01
(31 Nov 2010)
The Authority did not comply with
all required deadlines for
submission of claim forms to the
grant paying bodies and appointed
auditor as specified in the relevant
certification instructions:
All claims and returns should
be submitted promptly and
by the stated deadline.
The 31 May 2010 was a bank
holiday Monday. The
Authority acknowledges that
the submission was made four
days after the submission date.
The Authority strives to meet
the submission deadlines
however late software releases
do delay the final submission
if the Authority wish to submit
an as reflective claim as
possible.
Revenues and
Benefits Manager
(31 May 2011)
Disabled
facilities
HOU21
(30 Oct 2010)
BEN01, received 4 June
2010 (deadline 31 May
2010) ; and
HOU21, received 6
September 2010 (deadline
30 June 2010).
Users on the Logasnet system
have been reviewed and the
officer responsible for
submitting the HOU21 claim
has been added to the system,
in addition diary reminders
have been added to outlook
calendar.
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Claim/Return
(deadline)
Issue
Recommendation
Management response
Responsibility
(Implementation
date)
Housing and
Council tax
benefit subsidy
BEN01
(31 Nov 2010)
As specified in paragraph 17 of the
certification instructions, the
Authority is required to provide the
original signed hard-copy of the
claim form to the auditors for
certification. The Authority was
unable to do this as the original copy
had been returned to the DwP. We
therefore certified a photocopied
version of the claim form.
All hard-copy claims and
returns should be submitted
to the appointed auditor for
certification in accordance
with certification
instructions.
The auditors had access to
both a hard copy version and
the electronic version sent to
the DwP. In future the original
signed copy will be retained.
Revenues and
Benefits Manager
(31 May 2011)
Housing and
Council tax
benefit subsidy
BEN01
(31 Nov 2010)
Our certification work identified
errors including:
We recommend that the
Authority considers the
reasoning behind why the
errors identified in our
testing occurred and puts in
place appropriate corrective
measures. Such measures
may include:
The Authority accepts the
recommendations and does
and will continue to provide
assessor training for staff
around evidence and
overpayment classification.
Additionally process maps
within the EDM system
support the requirement to
retain evidence. We are in
regular contact with Civica to
improve overpayment
identification etc. A business
case will be considered by the
Council in the week
commencing 21 February 2011
to approve the procurement of
Revenues and
Benefits Manager
(ongoing)
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Expenditure
misclassification;
Insufficient documentation
maintained on file to
support benefit assessment;
and
Data input incorrectly into
the calculation of benefit.
Liaising with the
housing benefit
system provider
Civica to improve
system overpayment
identification;
Improving benefit
assessor training;
14
Claim/Return
(deadline)
Issue
Recommendation
and
Reminding staff of
the importance of
retaining evidence on
file.
Management response
Responsibility
(Implementation
date)
a replacement system for
Revenues and Benefits. The
specification will reflect the
need for robustness in
classification and reporting of
overpayments.
The Authority does contest
what appears to be conflicting
guidance from DwP to local
authorities and from the Audit
Commission to auditors
around the need to establish
evidence to validate payment
of rent. As an Authority we do
not, in every case, establish the
liability for rent payment. We
have illustrated that where we
have no evidence of actual rent
payments we review the case
after a period of time. Having
spoken to colleagues in other
local authorities this is
interpreted differently by
different auditors. Further
details of the guidance given to
auditors and advice given to
the Authority from the DwP
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Claim/Return
(deadline)
Issue
Recommendation
Management response
Responsibility
(Implementation
date)
are set out in the qualification
letter.
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Appendix C
Matters arising from the certification work
Matters arising
from the
certification
work
Matters Impacting the Housing Benefit & Council Tax Benefit Subsidy Claim
form
1. Cell 011: Rent Rebate – Non-HRA -Total expenditure (Benefit Granted)
Cell Total: £30,978
Cell Population: 52
Headline Cell: £30,978
Testing of the initial sample identified:
2 cases where expenditure relating to rent allowances benefit had been
incorrectly classified as non-HRA benefit (Error Type 4)
Each of these errors is dealt with below, along with the results from additional testing.
Expenditure misclassification (Error Type 4)
Testing of the initial sample identified 2 cases totalling £370.25 where overpayments
associated with the claims have been classified as non-HRA benefit. However, the
overpayments actually relate to rent allowance benefit. The impact of these errors is
to overstate cell 11 by £50.96, cell 26 by £48.35 and cell 28 by £2.61. The
corresponding understatements are cell 094 by £50.96, cell 108 by £48.35 and cell
109 by £2.61.
The reasoning behind the expenditure misclassifications was discussed with the
Authority. It appears that an error had occurred specifically for overpaid benefit where
the system had failed to identify a change in benefit type resulting from claimants
transferring to a rent allowance property. Focusing on these attributes identified a
sub-population of 12 cases which were tested for benefit expenditure classification.
This additional testing identified a further case with a total value of £0.10 where the
same issue outlined above results in cells 011 and 28 being overstated by £0.10 and
cells 094 and 109 being understated by £0.10.
The HBCOUNT guidance states that where benefit expenditure has been
misclassified the headline cell is not adjusted but the extrapolation must remove
expenditure from the detail cell(s). However as the benefit expenditure
misclassification identified in our testing covers different benefit types, and thus
impacting different headline cells, if an adjustment is not made to the headline cells,
extrapolations within the detail cells will cause the in-year reconciliation cells to fail.
Such extrapolations are prohibited in the HBCOUNT guidance. Due to the nature of
the qualification methodology we cannot extrapolate our results without breaching the
HBCOUNT guidance, and therefore have not calculated an extrapolation.
2. Cell 094: Rent Allowances – Total expenditure (Benefit Granted)
Cell Total: £23,138,693
Cell Population: 7,403
Headline Cell: £23,138,693
Testing of the initial sample identified:
1 case where the original claim could not be located by the Authority (Error
Type 2);
1 case where benefit had been underpaid as a result of the Authority
miscalculating the claimant's rent liability (Error Type 1);
1 case where the Authority had overpaid benefit as a result of incorrectly
assessing claimant income (Error Type 3); and
3 cases where the Authority did not obtain evidence of payment of rent from
the people on pass ported benefit (Error Type 5).
Each of these errors is dealt with separately below, along with the results from
additional testing.
Original claim form not traced (Error Type 2)
Testing of the initial sample identified 1 case (total value £3,492.32) where the
original claim form could not be traced by the Authority. Should the Department
decide that the failure to locate the original claim form means that subsidy has been
overpaid, the effect of this error is to overstate cell 094 with a corresponding
overstatement within cell 102.
Initial testing within other benefit types did not identify any further cases where the
original claim forms could not be traced by the Authority and we have not reported
similar findings in previous qualification letters. This instance therefore appears to be
isolated and as such 40+ testing methodology has not been applied.
The results of our testing are set out in the table below:
Sample:
Movement /
brief note of
error:
Initial
Cell 094
sample - 20 overstated
cases
due to 1
missing claim
form
Adjustment Cell 102 is
overstated.
Total
Total
Correspon overstateme
ding
nt
adjustment
Original cell
total:
(£’)
Sample
error:
(£’)
Sample
value:
(£’)
[CT]
[SE]
[SV]
(3,492)
57,841
(6.0%)
[SE/SV
[RA]
times CT]
(1,388,322) 21,750,371
(3,492)
57,841
(6.0%)
(1,388,322)
23,138,693
23,138,693
Percent
age
error
rate (to
one
decimal
place):
[SE/SV]
Cell
adjustment
:
(£’)
Revised
cell total if
cell
adjustment
applied:
(£’)
(1,388,322)
Note: The figures in the table were rounded to nearest £.Percentage error rate was rounded to one
decimal place.
The percentage error rate in the sample reflects the individual cases selected. The
benefit period covers the full financial year of 52 weeks. We have not reported similar
findings in previous qualification letters.
Underpaid benefit (Error Type 1)
Initial testing identified 1 case with a total value of £2,848.12 where the incorrect
assessment of rent liability results in an underpayment of benefit of £237.60.
Testing of an additional sample of 40 cases selected from cell 094 identified a further
4 cases where the Authority has underpaid benefit as follows:
Total claim £2,632.76 understated by £7.28 due to incorrect assessment of
rent liability;
Total claim £2,054.90 understated by £208.48 due to incorrect calculation of
claimant earnings;
Total claim £3,513.94 understated by £126.40 due to incorrect assessment of
tax credits; and
Total claim £143.08 understated by £5.88 due to incorrect assessment of
wages.
As there is no eligibility to subsidy for benefit which has not been paid, the 5
underpayments identified do not affect subsidy and have not, therefore, been
classified as errors for subsidy purposes.
Similar findings were included in our qualification letter last year.
Overpaid benefit (Error Type 3)
Testing of the initial sample identified 1 case with a total value of £3,383.96 where
the Authority had incorrectly assessed earned income and working tax credits. The
effect of these errors is to overstate cell 103 by £5.24 with a corresponding
understatement in cell 108; there is no effect on cell 094.
Testing of an additional sample of 40 cases selected from cell 094 identified a further
case with a total value of £2,924.98 where the Authority had incorrectly assessed self
employed earnings. The effect of this error is to overstate cell 099 by £10.68 with a
corresponding understatement in cell 108; there is no effect on cell 094.
The results of our testing are set out in the table below:
Sample:
Movement /
brief note of
error:
Original cell
total:
(£’)
Sample
error:
(£’)
Sample
value:
(£’)
[CT]
[SE]
[SV]
Percenta
ge error
rate (to
three
decimal
place):
[SE/SV]
Cell
adjustm
ent:
(£’)
[SE/SV
times
CT]
Revised
cell total if
cell
adjustmen
t applied:
(£’)
[RA]
Initial sample Income
23,138,693
(5)
57,841
- 20 cases
miscalculatio
n
Additional
Income
23,138,693
(11)
113,869
sample – 40
miscalculatio
cases
n
Combined
Income
23,138,693
(16)
171,710 (0.009%)
(2,082)
Sample – 60 miscalculati
cases
on
Adjustment
Combined
23,138,693
(11)
171,710 (0.006%)
(1,388)
sample. Cell
99 is
overstated.
Adjustment
Combined
23,138,693
(5)
171,710 (0.003%)
(694)
sample. Cell
103 is
overstated.
Total
Total
2,082
Correspondi understatem
ng
ent of cell
adjustment
108
Note: The figures in the table were rounded to nearest £.Percentage error rate was rounded to three
decimal place.
The HBCOUNT guidance states that the percentage error rate should be rounded to
one decimal place. However due to the values identified in our testing rounding to
one decimal place would result in a percentage error rate of 0.0% and as such an
extrapolation would not be calculated. We have therefore rounded to three decimal
places in this instance in order to be able to calculate an error rate.
The percentage error rate in our sample reflects the individual cases selected. The
value of the errors found range from £5.24 to £10.68 and the benefit periods range
from 6 weeks to 293 days. Similar findings were included in our qualification letter
last year.
Given the nature of the population and the variation in the errors found, it is unlikely
that even significant additional work will result in an amendment to this cell that will
allow us to conclude it is fairly stated.
Evidence to validate payment of rent (Error Type 5)
In carrying out tests such as those in the helptext of Cell 94 on rent allowances it has
been noted that the Authority do not, in every case, establish liability for rent by
confirming that the claimant is making payments.
The helptext gives the following guidance:
“5. Rent liability - rent liability has been established. The authority should have
evidence that a claimant is both 1) liable for rent and 2) resident. For example, for 1)
a tenancy agreement, evidence of a legal contract or a rent account; for 2) a rent
book, a bank statement or rent receipts. Note that a tenancy agreement or contract
can provide evidence of the rent liability and usually show any service charges
included, but does not provide evidence that rent is being paid. Conversely, a rent
book, bank statement or rent receipts can provide evidence that rent is being paid but
not what it is being paid for, for example, what service charges are included.”
The Authority maintains that it is not a requirement to establish a liability for rent by
verifying actual payments have been made and therefore accept a current tenancy
agreement as sufficient evidence. The Authority sought clarification on this issue from
the DwP and have been advised that paragraphs 3.350 – 3.356 of section A3
‘Liability to make payments and occupying the home’ HB/CTB Guidance Manual
indicate that they are not required to prove that rent is being paid. This clarification
was set out by DwP in an e-mail sent to the Authority dated 12 August 2010.
We requested clarification on this issue from the Audit Commission and were
informed to bring this matter to your attention by laying out the facts in our
qualification letter. Our initial testing identified 3 cases totalling £15,195.40 of housing
benefit in the financial year where, the supporting evidence maintained on file, does
not provide sufficient evidence for us to validate that rent is being paid by the
claimant to the landlord. Further details of these cases are laid out in the table below:
Case Reference
Case 36125
Case 35322
Case 22817
Evidence of rent
liability
Tenancy
agreement
Tenancy
agreement
Rent Spreadsheet
Evidence of
residence
Tenancy
agreement
Tenancy
agreement
Rent Spreadsheet
Evidence of rent
payment
No evidence
No evidence
No evidence
3. Cell 109: Rent Allowance – Eligible Error Overpayments (Current Year)
Cell Total: £325,155
Cell Population: 1,355
Headline Cell: £23,138,693
Incorrect classification of overpayments (Error Type 4)
Testing of the initial sample identified 1 case totalling £1,851.60 where an eligible
overpayment associated with the claim for £12.85 should have been classed as an
LA error overpayment. The effect of this error is to overstate cell 109 by £12.85 with
a corresponding understatement in cell 108; there is no effect on cell 094.
Testing of an additional sample of 40 cases, selected from cell 109, identified a
further 6 cases where eligible overpayments should have been classed as LA error
overpayments resulting in an overstatement of £845.69 in cell 109 with a
corresponding understatement in cell 108. In addition we identified that for 1 case an
element of the overpayment had been incorrectly classified as LA error as opposed
to eligible overpayment, this was because the Authority had incorrectly input the
decision date. As a result cell 109 is understated by £42 with a corresponding
overstatement in cell 108. The effect of these errors combined is to overstate eligible
overpayments (cell 109) by £803.69 with a corresponding understatement of £803.69
in LA error overpayments (cell 108); there is no effect on cell 094.
The results of our testing are set out in the table below:
Sample:
Movement /
brief note of
error:
Initial sample Cell 109
- 20 cases
overstated.
Cell 108
understated.
Additional
sample – 40
cases
Combined
sample – 60
cases
Adjustment
Cell 109
overstated.
Cell 108
understated.
Cell 109
overstated.
Cell 108
understated
Cell 108 – LA
error and
administrativ
e delay is
understated
Original
cell total:
(£’)
Sampl
e
error:
(£’)
Sample
value:
(£’)
[CT]
[SE]
[SV]
323,155
(13)
340
323,155
(804)
8,098
323,155
(817)
8,438
Percentag
e error
rate (to
one
decimal
place):
[SE/SV]
(9.7%)
Cell
Revised
adjustmen cell total if
t:
cell
(£’)
adjustmen
t applied:
(£’)
[SE/SV
[RA]
times CT]
(31,346) 291,809
31,346
Note: The figures in the table were rounded to nearest £.Percentage error rate was rounded to one
decimal place.
The percentage error rate in our sample reflects the individual cases selected. The
value of the errors found range from £0.56 to £463.94 and the benefit periods range
from 6 days to 32 weeks. Similar findings were included in our qualification letter last
year.
Given the nature of the population and the variation in the errors found it is unlikely
that even significant additional work will result in an amendment to this cell that will
allow us to conclude it is fairly stated.
4. Cell 142: Council Tax Benefit – Total expenditure (Benefit Granted)
Cell Total: £9,190,896
Cell Population: 10,871
Headline Cell: £9,190,896
Testing of the initial sample identified:
2 cases where benefit had been underpaid as a result of an incorrect benefit
assessment (Error Type 1);
1 case where the prior year overpayment cell is overstated as a result of the
Authority incorrectly calculating state pension (Error Type 5) ; and
1 case where the Authority had overpaid benefit as a result of failing to
remove a family premium applicable amount (Error Type 3).
Each of these error types is dealt with separately below, along with the results from
additional testing.
Underpaid benefit (Error Type 1)
Initial testing identified 2 cases where the Authority has underpaid benefit as follows:
Total claim £76.51 understated by £2.93 due to incorrect calculation of self
employed earnings; and
Total claim £149.09 understated by £0.33 due to incorrect assessment of tax
credits.
Testing of an additional sample of 40 cases selected from cell 142 identified 1 further
case with a total value of £581.79 where benefit has been underpaid by £9.39 due to
the incorrect assessment of pension income.
As there is no eligibility to subsidy for benefit which has not been paid, the 3
underpayments identified do not affect subsidy and have not, therefore, been
classified as errors for subsidy purposes.
Similar findings were included in our qualification letter last year.
Prior Year Overpayment (Error Type 5)
Initial testing identified a claim with a total value of £767.12 where the Authority had
incorrectly input the state pension income amount in the assessment of prior year
overpayments. This error results in the expenditure recovered in cell 154 (Excess
Council Tax Benefit (Prior Years)) being overstated by £0.30. As this appears in the
prior year overpayment cell, it is not included in the headline cell or any other detail
cell(s), as such a corresponding understatement does not appear on the claim form.
40+ testing did not identify any further exceptions of this nature. Given the value of
the error is below £1 an adjustment would have no impact upon the claim form once
rounded.
Overpaid benefit (Error Type 3)
Testing of the initial sample identified 1 case with a total value of £76.51 where the
Authority had failed to remove the family premium applicable amount after the
claimant’s entitlement to this disregard had ceased. The effect of this error is to
overstate cell 144 by £70.93 with a corresponding understatement in cell 147; there
is no effect on cell 142.
Testing of an additional sample of 40 cases identified a further case with a total value
of £874.55 where the Authority has not updated the claimant’s annuity. The effect of
this error is to overstate cell 144 by £21.40 with a corresponding understatement in
cell 147; there is no effect on cell 142.
The result of the testing is set out in the table below:
Sample:
Initial sample
- 20 cases
Additional
sample – 40
cases
Combined
Sample – 60
cases
Adjustment
Total
Correspondi
ng
adjustment
Movement /
brief note of
error:
Income
miscalculation
Income
miscalculation
Original
cell total:
(£’)
Sample
error:
(£’)
[CT]
[SE]
Sample Percenta
Cell
value:
ge error adjustme
(£’)
rate (to
nt:
one
(£’)
decimal
place):
[SV]
[SE/SV]
[SE/SV
times CT]
(71)
14,067
9,190,896
9,190,896
(21)
38,108
Income
miscalculation
9,190,896
(92)
52,175
(0.2%)
(18,382)
Combined
sample. Cell
144 is
overstated.
Total
understateme
nt of cell 147
9,190,896
(92)
52,175
(0.2%)
(18,382)
Revised
cell total
if cell
adjustme
nt
applied:
(£’)
[RA]
18,382
Note: The figures in the table were rounded to nearest £.Percentage error rate was rounded to three
decimal place.
The percentage error rate in our sample reflects the individual cases selected. The
value of the errors found range from £21.40 to £70.93 and cover the full financial
year. Similar findings were included in our qualification letter last year.
Given the nature of the population and the variation in the errors found, it is unlikely
that even significant additional work will result in an amendment to this cell that will
allow us to conclude it is fairly stated.
Technical overpayment cannot be reconciled (Error Type 5)
During the additional testing of 40 cases selected from cell 094, we identified 1 claim
with a total value of £1,701.95 where we have been unable to verify the accuracy of
a technical overpayment associated with the claim in cell 149 of £727.03. Supporting
documentation only supports £442.71 of this overpayment. The Authority has not
been able to provide us with assurance over the accuracy of the entries on the claim
form for this claimant.
As we are unable to determine how the remainder of this overpayment has been
calculated, the impact of this error cannot be determined.
5. Cell 148: Council Tax – Eligible Error Overpayments (Current Year)
Cell Total: £143,761
Cell Population: 2,382
Headline Cell: £9,190,896
Testing of the initial sample identified 1 case total value £491.39 where an eligible
overpayment associated with the claim for £3.11 should have been classed as an LA
error overpayment. The effect of this error is to overstate cell 148 by £3.11 with a
corresponding understatement in cell 147; there is no effect on cell 142.
Testing of an additional sample of 40 cases, selected from cell 148, identified a
further 22 cases where eligible overpayments should have been classified as either
LA error or technical overpayments resulting in an overstatement of £1,048.19 in cell
148 with corresponding understatements in cell 149 of £963.16 and cell 147 of
£85.03; there is no effect on cell 142.
In addition, we identified that for 1 case an incorrect date entry results in the
overpayment period being too short. As a result, cell 148 is understated by £10.89
with a corresponding overstatement in cell 144. This is because this payment is not
eligible benefit and has been overpaid. The classification remains as eligible error as
the benefit period precedes the Authority being provided the necessary information to
process the change in circumstance. We noted a further case where the incorrect
assessment of earnings results in the overpayment in cell 148 being understated by
£0.31p with a corresponding overstatement in cell 144. The net effect of these two
errors is to understate cell 148 by £11.20 with a corresponding overstatement in cell
144. There is no effect on cell 142.
There is no effect on cell 142.
The results of our testing are set out in the table below.
Sample:
Movement /
brief note of
error:
Initial sample Cell 148
- 20 cases
overstated.
Cell 147
understated.
Additional
sample – 40
cases
Cell 148
overstated.
Cells 147 and
149
understated.
Additional
Cell 148
sample – 40
understated.
cases
Cell 144
overstated
Combined
Combined
sample – 60
sample. Cell
cases
148
Adjustment
Combined
sample cell
147 is
understated.
Adjustment Combined
sample cell
149 is
understated
Adjustment
Correspondi
ng
adjustment
Cell 144 is
overstated
Total
Combined
correspondin adjustment
g adjustment cells 147,
Original
cell total:
(£’)
Sampl
e
error:
(£’)
Sample
value:
(£’)
[CT]
[SE]
[SV]
143,761
Percentag
e error
rate (to
one
decimal
place):
[SE/SV]
Cell
Revised
adjustmen cell total if
t:
cell
(£’)
adjustmen
t applied:
(£’)
[SE/SV
[RA]
times CT]
(3)
198
(1.5%)
143,761
(1,048)
2,093
(50.1%)
143,761
11
2,093
0.5%
143,761
(1,040)
2,291
(45.4%)
(65,268)*
143,761
88
2,291
3.9%*
5,607
143,761
963
2,291
42.0%
60,380
143,761
11
2,291
(0.5%)
(719)
65,268
78,493
Sample:
Movement /
brief note of
error:
Original
cell total:
(£’)
Sampl
e
error:
(£’)
Sample
value:
(£’)
[CT]
[SE]
[SV]
Percentag
e error
rate (to
one
decimal
place):
[SE/SV]
Cell
Revised
adjustmen cell total if
t:
cell
(£’)
adjustmen
t applied:
(£’)
[SE/SV
[RA]
times CT]
149 and 144
Note: The figures in the table were rounded to nearest £.Percentage error rate was rounded to one
decimal place.
*Rounded up so that corresponding adjustments agree to the rounding on cell 148.
The percentage error rate in our sample reflects the individual cases selected. The
value of the errors found range from £0.02 to £429.31 and the benefit periods range
from 5 days to 44 weeks. Similar findings were included in our qualification letter last
year.
Given the nature of the population and the variation in the errors found it is unlikely
that even significant additional work will result in an amendment to this cell that will
allow us to conclude it is fairly stated.
Other matters
6. In-year reconciliation cells
Cells 037, 076, 125 and 160 should agree to the entries in cells 011, 055, 094 and
142 respectively. The following difference has been noted:
Claim Cell
Amount
Claim –
reconciliation
cell
Amount
Difference
011 – Non
HRA Rent
Rebates
£30,978
037
£30,977
£1
We have been informed by the Authority that the difference is due to system
rounding.
7. Module 2 – Parameter checks
In accordance with paragraph 13 of the certification instructions, we are required to
complete HB Count Module 2. The Authority uses standardised percentage
increases to uprate the parameters within the benefit system on an annual basis. As
a result, we have been unable to confirm that all parameters have been uprated to
the amount specified in Module 2. During testing of individual claimants we agreed all
applied applicable amounts to Module 2 with no exceptions noted. For the claimants
tested therefore, we have assurance that the parameters used in the benefit
calculations are in accordance with Module 2.
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