`FIFE COUNCIL
Agenda Item No
FINANCE AND ASSET MANAGEMENT SERVICE - AUDIT and RISK MANAGEMENT SERVICES DIVISION
SUMMARY OF AUDIT REPORTS ISSUED
Standards and Audit Committee
5 June 2007
SERVICE, REPORT and PURPOSE
1. Housing Service

Management of Information (Report
No. 441)

Review and assess the controls in place covering the collection, holding and use of information.
SUMMARY OF REPORT
This review identified and examined the internal controls in place within Housing Service covering the collection, holding and use of information, including compliance with the Data
Protection and Freedom of Information Acts.
The level of assurance provided by the systems in place is satisfactory. Audit’s assessment of the materiality of the systems is moderate, therefore the risk of loss or error is assessed as being low.
Findings included Freedom of Information issues are dealt with properly, data is collected, held and used in line with the Data Protection Act, the Service has a Records Management
Co-ordinator and a File Plan and, in relation to information, has made adequate arrangements for disaster recovery.
Issues arose relating to a lack of documented procedures, access to the Excelsis computer system is not password controlled and there is no retention schedule for electronic records.
2. Law and Administration


Property Deeds (ML No. 246)
Issue relating to property deeds for
Council property
Satisfactory actions have been agreed to rectify all of the control weakness identified.
As part of the review of Community S ervices’ asset management, Audit services were made aware that the Council does not hold title deeds for all of its properties.
The Head of Law & Administration was already aware of this situation and explained that the
Council’s title to property is not diminished because it does not hold title deeds and the cost of obtaining deeds for all properties would be significant. If the deeds are needed, e.g. if the property is to be sold, they can be obtained from Register House.
Audit Services has accepted this explanation.

SERVICE, REPORT and PURPOSE
3. Procurement & Supplies

Plant, Equipment, Furniture & Fittings
(Report No. 442)
Review and assess the controls in place covering plant, equipment, furniture and fittings.
SUMMARY OF REPORT
This review identified and examined the internal controls in place within Procurement &
Supplies covering the plant, equipment, furniture and fittings.
The level of assurance provided by the systems in place is poor. Audit’s assessment of the materiality of the systems is moderate, therefore the risk of loss or error is assessed as being medium.
Findings included that written procedures are available to all staff, accurate inventory records are maintained by appropriate personnel, satisfactory segregation of duties, consistent method of recording Health & Safety inspections, satisfactory arrangements for maintenance and insurance contracts, and sound monitoring of the budget at establishment level.
Issues arose relating to written procedures not covering all requirements of the Financial
Regulations, security of inventory records, lack of standard layout and inconsistent recording of changes to the inventory, no annual checks performed in some locations and lack of adherence to the procedure in relation to disposals.
Satisfactory actions have been agreed to rectify all of the control weakness identified.
4. Community Services

Payroll and Expenses (Report No.
445)
Review and assess the controls in place to control payroll to gross pay and the checking and authorisation of expenses.
This review identified and examined the internal controls in place within Community Services covering payroll to gross pay and the checking and authorisation of expenses.
The level of assurance provided by the systems in place is satisfactory. Audit’s assessment of the materiality of the systems is significant, therefore the risk of loss or error is assessed as being medium.
Findings included that written procedures are available to all staff, authorised signatory lists are maintained, new starts are prope expenses forms are properly authorised. rly authorised, all leavers’ forms are actioned and
Issues arose relating to leavers’ forms not always being completed timeously, timesheets not always being authorised, a significant number of employees receive their payslips by post and
Disclosure Scotland confirmation is not always received before employees start work.
Satisfactory actions have been agreed to rectify all but 3 of the control weakness identified.
The 3 recommendations not agreed do not pose a significant risk.

SERVICE, REPORT and PURPOSE
5. Policy & Organisational Development

Community Planning (Report No.
443)

Review and assess the arrangements in place for Community Planning.
6. Development Services

Best Value and Corporate
Governance (Report No. 446)

Review and assess the commitment to securing best value and continuous improvement.
SUMMARY OF REPORT
This review examined whether the arrangements for Community Planning are in accordance with the Local Government in Scotland Act 2003, Part 2.
Audit Services provided Policy & Organisational Development with a position statement as at
February 2007 in respect of their progress towards achieving soundly based arrangements for community planning.
Many parts of the Community Planning process are well developed whilst others are being addressed to meet the requirements of the Act. Most areas for improvements have been identified by the Community Planning Partnership itself and plans have and will be put into place to ensure continuous improvement.
This r eview examined Development Services’ commitment to securing best value and the mechanisms in place to support continuous improvement.
Audit Services provided Development Services with a position statement as at November
2006 in respect of the Service’s progress towards achieving the individual principles of Best
Value as defined within the guidance approved by Scottish Ministers as per the Local
Government in Scotland Act 2003.
Audit Services found that Development Services are actively working towards securing best value in all areas and embedding mechanisms to support continuous improvement.
7. Education

School Fund (ML No. 247)

Assess the financial standing and controls over of a primary school fund, which had needed support from the Council.
Following a request from a newly appointed primary school Head Teacher, Audit Services reviewed the school’s school fund. Following this review the Council made an ex-gratia payment to the fund to clear its deficit. Control of the fund had been poor and the existing records were insufficient to identify how the deficit had arisen.
Education has issued a revised Standard Circular that gives Head Teachers good high level advice on the control of school funds. In Audit Services’ opinion the Standard Circular should be backed up by detailed procedures, which Audit Services drafted.
The one recommendation in the ML was that Education should adopt a version of the procedures drafted by Audit. However, Education considers the procedures to be too onerous, especially for smaller schools and intends, instead, to carry out a self assessment exercise at all schools. Audit Services considers this to be an acceptable solution and is advising on the exercise.

SERVICE, REPORT and PURPOSE
8. Environmental Services

Waste Management (Report No. 449)
Review and assess the controls in place to control the receipt of landfill site income from external contractors, operation of the landfill sites and fuel usage by Council staff.
SUMMARY OF REPORT
The Operational Audit Plan for 2006/07 included a review of the Area Waste Plan. However, following allegations of misconduct by employees at the Council’s landfill sites, it was agreed with the Head of Environmental Services that Audit Services would instead review the operation of the landfill sites. The review of the Area Waste Plan has been carried forward to
2007/08.
This review identified and examined the controls within Environmental Services covering the receipt of landfill site income from external contractors, operation of the landfill sites and fuel usage by Council staff.
There was no evidence to support any of the allegations of misconduct.
The level of assurance provided by the systems in place is poor. Audit’s assessment of the materiality of the systems is moderate; therefore the risk of loss or error is assessed as being medium.
Findings included that waste is correctly classified when weighed and onsite, disposals are properly charged for, Landfill Tax is applied correctly, fuel is adequately controlled at the landfill sites and contracts for the operation of the landfill sites are let properly.
Issues arose relating to a lack of documented procedures, the presence of vehicles on the weighbridge is not recorded without manual intervention, there is a lack of independent checks relating to weighbridge operations, invoice and tax calculations and fuel usage, members of the public are scavenging at one landfill site, fuel transfers at the waste transfer station are poorly controlled, charges for leachate disposal are not reconciled to weighbridge records and there is no formal contract for the disposal of leachate.
Satisfactory actions have been agreed to rectify all but 1 of the control weakness identified.
Because of agreement to implement other recommendations, the recommendation not agreed does not pose a significant risk.

SERVICE, REPORT and PURPOSE
9. Education

General Purchases (Report No. 450)
Review and assess the controls in place to control the purchase of goods and services outwith schools.
10. Catering & Cleaning

Cashless Catering (Report No. 451)
Review and assess the controls in place covering the cashless catering system in secondary schools.
SUMMARY OF REPORT
This review identified and examined the internal controls in place within Education covering the purchase of non-school goods and services.
The level of assurance provided by the systems in place is not satisfactory. Audit’s assessment of the materiality of the systems is moderate; therefore the risk of loss or error is assessed as being high.
Findings included that the Service’s scheme of delegation sets out authorisation levels, staff movements are promptly changed in OneWorld, manual ordering stationery is held securely and purchasing budgets are appropriately monitored.
Issues arose relating to an absence of documented procedures, authorised signatory lists are not up to date, a lack of evidence to show who initiated a purchase, receipt of goods is not always properly recorded, Appropriate OneWorld reports are not always produced to monitor the progress of purchases and VAT is not always correctly treated.
Satisfactory actions have been agreed to rectify all but 1 of the control weakness identified.
The recommendation not agreed does not pose a significant risk.
This review identified and examined the internal controls in place within Catering & Cleaning covering the cashless catering system in secondary schools.
The level of assurance provided by the systems in place is satisfactory. Audit’s assessment of the materiality of the systems is moderate; therefore the risk of loss or error is assessed as being low.
Findings included that documented procedures are available to all relevant staff, satisfactory systems for topping up cards, collection and recording of income, security of unbanked income, cash handling, uplift of income by Securitas, reconciliation of income and budgetary control.
Issues arose relating to a lack of documented procedures covering the reconciliation process, emergency slips evidencing the issue of credit and subsequent repayment of debt are not retained and the system for controlling free school meals for supervision does not cover staff on dinner duty.
Satisfactory actions have been agreed to rectify all of the control weakness identified.

SERVICE, REPORT and PURPOSE
11. Education

Equipment, Furniture and Fittings
(Report No. 452)
Review and assess the controls in place to control the management of equipment, furniture and fittings in schools.
SUMMARY OF REPORT
This review identified and examined the internal controls in place within Education covering the management of equipment, furniture and fittings in schools.
The level of assurance provided by the systems in place is not satisfactory. Audit’s assessment of the materiality of the systems is minor; therefore the risk of loss or error is assessed as being medium.
Findings included that a designated person, who is not involved in the purchase or disposal of items, is responsible for each inventory, computerised inventory records are backed up,
Health and Safety checks on electrical equipment are up to date and appropriate limits have been set for purchase.
Issues arose relating to documented procedures being inadequate and out of date, inventories not always including all items, inventory records not held securely, a lack of independent checks, inventories not always being submitted to HQ, inadequate control over disposals and no records of Health and Safety checks on non-electrical equipment.
Satisfactory actions have been agreed to rectify all of the control weakness identified.
Geoff McDonald
Audit and Risk
Management Services
Manager
1 June 2007