FIFE COUNCIL
Standards and Audit Committee
13 January 2009
Agenda Item No.
FINANCE AND PROCUREMENT SERVICE –
AUDIT and RISK MANAGEMENT SERVICES DIVISION
SUMMARY OF AUDIT REPORTS ISSUED
Contact:
Geoff McDonald
Audit and Risk Management Services Manager
Finance and Procurement
T: 01592 555555 ext446079
E: Geoff.McDonald@fife.gov.uk
January 2009
SERVICE, REPORT and PURPOSE
1.
Environmental Services


Public Protection - Missing Money
(Management Letter No. 40)
Review the controls over collection,
recording, security, handling and
crediting of client assets for burials
under the National Assistance Act
1948 (NAA 1948).
SUMMARY OF REPORT
This review examined the controls over collection, recording, security, handling and crediting
of client assets for burials under the NAA 1948. A cash count was also performed and
controls over the use and administration of petty cash imprest examined.
The level of assurance provided by this function merits a Grade 5. Audit’s assessment of the
materiality of the systems is a Grade 3, accordingly the overall risk is assessed as high.
Findings included two staff undertaking property searches and counting client cash, client
assets recorded on return to the office and client assets held in office safe.
Issues arose relating to the absence of documented procedures detailing good practice,
inadequate recording and security of client assets, the absence of a signed discharge for
transfer of client assets to Legal Services and inadequate controls over petty cash.
Satisfactory actions have been agreed to rectify all of the control weakness identified.
Recommendations:
Legal Services
2.


Public Protection - Missing Money
(Management Letter No. 41)
Review the controls over collection,
recording, security, handling and
crediting of client assets for burials
under the National Assistance Act
1948 (NAA 1948).
2 Substantial and
12 moderate.
This review examined the controls over collection, recording, security, handling and crediting
of client assets for burials under the NAA 1948.
The level of assurance provided by this function merits a Grade 4. Audit’s assessment of the
materiality of the systems is a Grade 3, accordingly the overall risk is assessed as medium.
Findings included a documented procedure for burials under the NAA 1948, two members of
the Accounts / Support Team count client cash and issues receipts and Collection Summaries
are forwarded promptly to Income Control.
Issues arose relating to the documented procedure being insufficiently detailed, weaknesses
in security and cash handling arrangements including the lack of a signed discharge for
transfer of client assets both from Environmental Services, and the lack of a formal process for
realising client assets to cover funeral and administrative costs and disposing of client assets.
Satisfactory actions have been agreed to rectify all of the control weakness identified.
Recommendations:
8 moderate.
3.
SERVICE, REPORT and PURPOSE
Corporate
SUMMARY OF REPORT
This review examined how well Services control the use of consultants and ensure compliance
with current regulations and guidance.
 Use of Consultants (Report No. 42)
The level of assurance provided by this function merits a Grade 2. Audit’s assessment of the
materiality of the systems is a Grade 5, accordingly the overall risk is assessed as medium.

Review the controls over the use of
consultants and ensure compliance
with current regulations and
guidance.
Findings included an awareness of managers and staff of available guidance on the use of
consultants, evidence of options appraisal prior to using consultants, evidenced approval of
decisions to use consultants by appropriate personnel, selection and monitoring in accordance
with Council policies, procedures and guidelines, results from the monitoring process are
acted upon accordingly and lessons learned appropriately recorded to inform future decisions,
regular monitoring that consultancy costs are coded correctly is undertaken and action taken
to correct any miscoding, and consultancy costs are monitored to ensure that they
demonstrate best value.
Issues arose relating to the guidance not covering a review of all options to ensure that using
a consultant will provide best value, procedures on use of consultants either had not
documented or requiring updating, two Services not having a formal process for recording the
decision to use a consultant and reasons for doing so, budget monitoring procedures were not
documented in one Service, and classification and coding of inconsistent consultancy costs
across Services, making meaningful reporting of consultancy costs at a corporate level
difficult.
Satisfactory actions have been agreed to rectify all of the control weakness identified.
Recommendations:
5 moderate.
Asset & Facilities Management
and Housing Services
This review examined the circumstances surrounding the reinstatement of a retaining wall,
part owned by the Council.

Reinstatement of Retaining Wall
(MLs Nos. 37 and 38)
Findings included that action was taken to safeguard the public following the collapse of the
wall, the Council acted legally in reinstating the wall and an appropriate tender exercise was
carried out.

Review the controls exercised over
the reinstatement of a retaining wall,
part owned by the Council.
Issues arose relating to documented procedures not being clear, work being started on the
wall before liability was established, communication with the co-owners of the wall and
between Council Services was not adequate and approval to start work was not given at an
appropriate level.
4.
Satisfactory actions have been agreed to rectify all of the control weakness identified.
Recommendations: 4 Substantial and 7 moderate.
5.
SERVICE, REPORT and PURPOSE
IT Services
 Risk Management (Report No. 39)

Review the controls over the
management of business risks.
SUMMARY OF REPORT
This review examined the controls in place in IT Services to manage the Service’s risks. The
results of reviews of services’ risk management will be used to inform Audit Services’ strategic
planning.
Using the scoring system advocated by the Institute of Internal Auditors, a service’s risk
maturity is measured against a 5 point scale. IT Services’ risk maturity is assessed as Risk
Defined, the mid point on the scale.
Findings included that the Service has identified its objectives, which contribute to the
Council’s objectives, controls introduced are appropriate and risk registers are kept for major
projects.
Issues arose relating to documented procedures not being comprehensive, staff not being
aware of team plans, risks and controls not being regularly reviewed and emphasis not being
placed on risk in committee reports, documented procedures and meetings.
Satisfactory actions have been agreed to rectify all of the control weakness identified.
Recommendations: 4 Substantial and 3 moderate.
Housing Service
6.
 Asbestos Incident (Report No. 8)

Review the controls to ensure
compliance with the Fife Council
Scheme of Tender procedures and
the Control of Asbestos Regulations
2006
This review examined the controls in place in Housing Service to ensure compliance with the
Fife Council Scheme of Tender procedures and the Control of Asbestos Regulations 2006.
The level of assurance provided by this function merits a Grade 5. Audit’s assessment of the
materiality of the systems is a Grade 5, accordingly the overall risk is assessed as high.
Findings included that Housing has issued procedures for the issue of tender documents and
for dealing with asbestos in Council houses, staff are aware of these procedures, a specialist
company was commissioned to undertake an asbestos survey in common areas of domestic
premises, survey information is maintained in a Housing asbestos register and, where
asbestos carrying materials are found, they are risk assessed and an automatic review date is
set within the system.
Issues arose relating to the Housing procedure for issue of tender documents not being in line
with the Fife Council Scheme of Tender procedures, the Housing procedure not always being
adhered to when commissioning works and no checks by Housing to ensure compliance.
There was a lack of control over the authorisation process in the Housing Management
Information System, the survey undertaken did not include the roof spaces as they were
inaccessible, asbestos information relating in communal areas is maintained in a manual
register as the current system does not allow communal areas to be recorded, no
comprehensive asbestos register information is available out of hours, no programme of
routine monitoring of asbestos containing materials.
6.
SERVICE, REPORT and PURPOSE
Housing Service cont.
 Asbestos Incident (Report No. 8)

SUMMARY OF REPORT
The contractor was not informed that an asbestos survey had not been carried out or provided
with any documented evidence on whether asbestos was present and, in the absence or an
appropriate survey, materials which could have been reasonably expected to contain asbestos
should have been presumed to do so by Housing and treated as such for the works.
Review the controls to ensure
compliance with the Fife Council
Scheme of Tender procedures and
the Control of Asbestos Regulations
2006
Local Services
Satisfactory actions have been agreed to rectify the control weaknesses identified.
Recommendations: 2 Significant 12 Substantial and 4 moderate.

Petty Cash Administration (Report
No. 44)

Review the petty cash procedures at
a Local Services Centre (LSC).
Local Services has appropriate documented procedures for controlling petty cash. Failure to
follow these procedures resulted in a small amount of cash not being accounted for. Total
petty cash expenditure at the LSC was in line with expectations.
7.
Local Services contacted Audit Services to ask for advice following the breakdown of petty
cash procedures at a LSC.
The Service has agreed to implement all recommendations.
Recommendations:
3 Moderate
Community Services
This review examined the controls exercised over banking and the management of the
collections in the Council’s museums.

Museums (Report No. 45)

Review the controls exercised over
banking and the management of the
collections.
The level of assurance provided by this function merits a Grade 3. Audit’s assessment of the
materiality of the systems is a Grade 4, accordingly the overall risk is assessed as medium.
8.
Findings included that documented procedures for dealing with the collections have been
prepared and issued to all members of staff, there is segregation of duties between collection
and banking of income, income awaiting banking is held securely, objects are stored and
displayed in appropriate conditions, high value items are adequately insured and there is
adequate insurance cover for items borrowed from third parties.
Issues arose relating to up-to-date documented procedures for banking have not been
prepared for all locations, documented procedures for managing collections do not cover all
internal controls, income is not always banked regularly, objects are not always accessioned
(formally recorded) timeously, equipment for monitoring environmental conditions is not
maintained appropriately in all locations, museums staff do not ensure that borrowers have
adequate insurance and lenders do not sign to confirm their object has been returned to them.
The Service has agreed to implement all recommendations.
Recommendations: 4 Substantial and 7 moderate.
9.
SERVICE, REPORT and PURPOSE
Local Services


Financial Assistance to a
Community Land Association (ML
No. 46)
Review the circumstances of a
payment by the Council to a
Community Land Association.
SUMMARY OF REPORT
This review examined the circumstances surrounding a payment made from the Local
Community Planning Budget to a Community Land Association.
Findings included that the payment was made in accordance with the criteria for the Local
Community Planning Budget and the money was used for the intended purpose.
Issues arose relating to an absence of clarification that matching funding from other sources
was in place and the payment being treated as a contribution rather than a grant so that the
requirements of the Monitoring and Evaluation Framework were not followed.
Satisfactory actions have been agreed to rectify all of the control weakness identified.
Recommendations: 2 moderate.
Fife Constabulary
This review examined the controls exercised in Fife Constabulary for the budget monitoring,
ordering, receipting and payment processing of goods and services.

General Purchasing (Report No. 47)

Review the controls exercised over
the purchasing of goods and
services.
The level of assurance provided by this function merits a Grade 2. Audit’s assessment of the
materiality of the systems is a Grade 4, accordingly the overall risk is assessed as medium.
10.
Findings included that up-to-date lists of authorised signatories/employees have been
prepared, authorised and made available to all appropriate staff, there is segregation of duties
between ordering, receipting and payment processing of goods and services, goods are
ordered only when necessary and there is sufficient budget available, goods and services are
ordered only from approved suppliers, purchasing cards have sensible credit limits and
unusual/unexpected expenditure is investigated promptly.
Issues arose relating to Service specific documented procedures not being produced, the
frequent ordering of goods and services via copy requisition has resulted in the late payment
of some invoices, there is not always evidence to confirm that purchasing cards have been
authorised by an appropriate officer before being issued to the cardholder, there is not always
evidence to confirm that Cardholders have checked their statement before payment is
authorised, there is not always evidence to confirm that goods have been checked on receipt
and delivery notes are not always obtained or retained as evidence of receipt
The Service has agreed to implement all but one of the recommendations made. The
recommendation not implemented relates to Service specific procedures. The Service prefers
to rely on the OneWorld procedures on FISH. The non-implementation of this
recommendation does not pose a significant risk.
Recommendations: 9 moderate.