Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Appendix 7 (a)
Internal Audit & Investigations
Annual Report 2005-6
Contents
Page
1.
Annual opinion statement ............................................................................................. 2
2.
Fourth quarter summary ............................................................................................... 2
Corporate Issues .......................................................................................................... 2
Business/Operational Issues ........................................................................................ 2
3.
Progress against 2005-2006 business plan actions ...................................................... 3
4.
Performance................................................................................................................. 4
Internal audit performance results for 2005/6 year to date ............................................ 4
Investigations performance results for 2005/6 year to date........................................... 4
Standards and quality assurance ................................................................................. 5
Appendix A: Performance & Summary Tables for Quarter 1st January – 31st March 2006 .... 6
Internal audit reviews completed & final reports issued in period .................................. 6
Internal audit reviews currently in progress .................................................................. 8
Outstanding Priority 1 recommendations ...................................................................... 9
Frauds, irregularities and whistle blowing incidents investigated in period .................... 9
Investigations Team Statistics .....................................................................................10
Page 1 of 10
Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
1.
Annual audit opinion statement
1.1
Opinions on individual audits have been reported to the SDMC, and latterly the Audit
Committee, on a quarterly basis during the financial year. Where requested copies of
reports themselves or expanded summaries have been made available to members.
1.2
Overall the internal control environment of the Council is sound, reflected in the score
of 3 (out of 4) in the Audit Commission’s use of resources assessment during the
year. Audit reports have identified some areas where overall improvement is
required, these will be monitored and any significant recommendations not
implemented reported to the Audit Committee.
1.3
Internal audit compliance work on the Council’s core financial systems did not
highlight any significant control weaknesses. No reliance has been placed on work
by other assurance bodies in arriving at the overall opinion.
1.4
Where areas requiring improvements at statement of internal control level have been
identified these have been made known to the Director of Finance. There are no
issues concerned significant by the Chief Internal Auditor that have been excluded
from the draft statement being submitted to members for approval.
1.5
The level of completion of the audit plan exceeded the minimum target set by the
Audit Commission of 90%. As can be seen in section 4 of this report performance of
the service in terms of quantity and quality of output is in line with expectations.
2.
Fourth quarter summary
Corporate Issues
2.1
The sanction reward regime for benefit fraud investigations has been replaced by a
fixed administrative grant system. This is likely to penalise high performing teams like
Blackpool, though the Council will continue to maintain a strong and effective fraud
team.
2.2
The service is complying with corporate budget requirements and has presented a
plan to the Director of Finance to ensure that expenditure is reduced without
compromising the ability to deliver a high quality audit and investigation service.
Business/Operational Issues
2.3
Internal audit have been asked to assist in the development of a corporate approach
to project management. This will be done in conjunction with staff from Economic
Development.
2.4
Investigations have met a number of requests arising out of their success in the IRRV
Fraud Team of the Year award and successful caseload. This has included Stephen
Dunstan and Tony Cooke speaking at a national event in Bolton, and Mike Spencer
contributing to a feature in the Blackpool Evening Gazette.
2.5
Audit and investigations staff have once again contributed to the National Fraud
Initiative data matching project. This has so far generated fourteen completed
Page 2 of 10
Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
sanctions with a further seven cases still being progressed, demonstrating the value
of this exercise to the authority.
Staffing
2.6
Niki Riley was the national prizewinner in CIPFA’s Strategic Business Management
Paper in the final stage of her professional exams. It is a major achievement for the
Council to have a national prizewinner in the examinations of a national public
institute.
2.7
Keith Tootell, Mark Dutch, Deb Wills and Kath Stevens have all successfully
completed their BTec Professional Certificate in Investigations. This means that
seven of the eight investigators in the team now have higher professional
qualifications.
2.8
Ian Barnes has been successful in obtaining the post of Accountant in Leisure,
Culture and Community Learning, and will leave internal audit during May 2006.
Gloria Ziebart is being seconded from audit to an external placement with the
National Asperger’s Society for six months from June to November.
3.
Progress against 2005-2006 business plan actions
3.1
Action - Development of value for money work as part of the annual audit plan.
Progress – Both value for money reviews completed.
3.2
Action – Use new fraud management system and increased admin support to
increase investigator caseloads by 5%.
Progress – 5% improvement greatly exceeded.
3.3
Action – Effective follow-up of all significant recommendations, including an effective
tracking mechanism and appropriate escalation measures.
Progress – All Priority one recommendations due were followed up and progress
reported appropriately. Non-implementation of priority one recommendations is now
reported to Strategic Directors and ultimately to the Audit Committee.
3.4
Action – Enhancement of assurance provided by financial compliance testing work
through revision of approach and scope and more effective marketing of the benefits
and results of the work.
Progress – All financial system documentation reviewed, tests reviewed to ensure still
relevant.
3.5
Action – Enhancement of the audit section’s involvement in corporate governance,
including annual review of the CIPFA SOLACE guidance.
Progress – Self-assessment undertaken and action plan reported to SDMC.
Complete.
3.6
Action – Further develop fraud awareness by training other relevant Council staff
outside Benefits and introducing new methods of promoting fraud awareness to the
citizens of Blackpool.
Progress – online fraud awareness training successfully rolled out to relevant
departments during the year, with 272 staff completing the exercise.
3.7
Action – Develop effective customer feedback mechanisms for the investigations
service.
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Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
Progress – New customer satisfaction survey introduced.
4.
Performance
Internal audit performance results for 2005/6 year to date
PI Ref.
(BVPI, Local,
PSA)
Performance Indicator
(Description of measure)
2005/06 2005/06
Target Actual
Local IAPI1
Percentage audit plan completed (annual target).
90%
90.5%
Local IAPI2
Percentage draft reports issued within deadline.
80%
91%
Local IAPI3
Percentage audit work within resource budget.
80%
86%
Local IAPI4
Percentage of positive satisfaction surveys.
85%
88%
Local IAPI5
Percentage compliance with quality standards for audit
reviews.
95%
96%
Investigations performance results for 2005/6 year to date
PI Ref.
(BVPI, Local,
PSA)
Performance Indicator
(Description of measure)
BVPI76b
Number of fraud investigators employed per 1,000
caseload.
BVPI76c
2005/06 2005/06
Target Actual
0.41
0.37
Number of fraud investigations, per 1,000 caseload.
50
73.18
BVPI76d
Number of prosecutions and sanctions, per 1,000
caseload.
11
23.73
Local IPI1
Percentage cases closed resulting in changes to
benefit.
63%
45%
Local IPI2
Percentage cases closed resulting in changes to
benefit with sanction rewards.
59%
74%
Local IPI3
Value of income as percentage of investigations team
costs
100%
459%
Local IPI4
Percentage internal investigation cases closed
resulting in management action.
100%
100%
Page 4 of 10
Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
Standards and quality assurance
4.1
The Audit Commission review of the internal audit service is now at the draft report
stage. Although the action plan is still to be completely finalised the main conclusions
are that they are able to rely on the work of internal audit and that the internal audit
service is an effective part of the Council’s arrangements for ensuring economy,
efficiency and effectiveness.
4.2
The Audit Commission report has identified a number of areas of good practice in the
internal audit section, and some areas where improvements may potentially be made.
These will be brought to the attention of the Audit Committee when the full report is
tabled.
Stephen Dunstan ACA
Chief Internal Auditor
01253 478560
stephen.dunstan@blackpool.gov.uk
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Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
Appendix A:
Performance & Summary Tables for Quarter 1st January – 31st March 2006
Internal audit reviews completed & final reports issued in period
Directorate
Business Services
Business Services
Page 6 of 10
Review Title
Corporate Procurement
Individual Performance
Appraisal (IPA)
Assurance Statement
Since the introduction of the council’s
procurement team, good progress has been
made in determining the council’s direction in
terms of procurement, developing codes of
practices, the establishment of corporate
contracts and providing procurement advice to
council departments. This has resulted in the
council moving towards a more unified
approach to procurement and also obtaining
better value for money, resulting in savings
across the council.
However, the procurement service is still
relatively new and there is a lot more work to
do to ensure that the council adopts a
corporate approach to procurement. This
includes the development of procedures, the
delivery of the procurement strategy,
introduction of further corporate contracts,
improved communication and the
implementation of a contract database.
We consider that the service is adequately
controlled to address the level of business
risk. Our testing revealed a satisfactory level
of compliance with the controls.
IPA provides a platform for good
management practice and positive
organisational relations. However, we believe
that it is important to demonstrate that the
introduction of IPA has shown tangible benefit
to Council performance and that the
investment made represents value for money.
Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
Directorate
Business Services
Business Services
Business Services
Children & Young
People
Review Title
Electronic
Communications
Assurance Statement
We consider that the service is adequately
controlled to address the level of business
risk but our testing revealed lapses in
compliance with the controls.
ICT have developed corporate policies
covering e-mail use and monitoring but these
are not being fully applied in practice. We
believe that senior management should
decide and communicate to ICT and HR how
they want the E-mail Usage Policy to be
applied and enforced.
Licensing
We consider that the established licensing
systems and procedures are generally well
controlled to address the level of business
risk. We have made recommendations
relating to future development of the service,
its procedures and supporting infrastructure.
Our testing revealed a satisfactory level of
compliance with the controls.
Contract Audit – Form
of Contract
We consider that the service is adequately
controlled to address the level of business
risk. This report highlights some opportunities
that could be taken to strengthen controls.
Our testing revealed minor lapses in
compliance with the controls.
Outdoor Visits
We consider that the service is adequately
controlled to address the level of business
risk.
Our testing revealed minor
compliance with the controls
lapses
in
We consider that the service is adequately
controlled to address the level of business
risk. However, in terms of developing the use
of the Bromcom and EMS systems little
progress has been made.
Children & Young
People
Page 7 of 10
Pupil Welfare Service
To increase efficiency the service should use
electronic records to help with case
management and analysis of data. There is a
need to identify the needs of the service,
assess the potential of the systems and then
implement project plans to ensure the smooth
transition to further use of the systems.
Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
Directorate
Children & Young
People
Review Title
Assurance Statement
We consider that the service is adequately
controlled to address the level of business
risk.
The biggest challenge faced by
Governor Services is to continue to deliver a
quality service as demand for the service
increases. Continued pressures on resource
compound this.
We have made recommendations to support
these findings, aiming to help the service
address staffing, budget, efficiency and
income generation issues.
Governor Services
We consider that the service is adequately
controlled to address the level of business
risk.
Housing & Social
Services
Housing Banding and
Choice Based Lettings
(CBL)
We have concerns that the composition of the
waiting list is not reviewed, in particular to
ensure that each applicant has been
appropriately allocated a banding as well as
the number of applicants in each band and
offers made to applicants etc.
In addition, we were concerned that at the
time of our review there were no documented
processes in place regarding the roll out of
CBL. This has now been addressed with key
activities allocated to appropriate members of
staff.
We consider that the service is inadequately
controlled to address the level of business
risk.
Tourism &
Regeneration
Estates and Valuations
Our testing revealed lapses in compliance
with the controls in the area of monitoring
team performance and in following up on the
information contained in the priority review
and expiry lists.
Internal audit reviews currently in progress
Directorate
Review Title
Stage of Completion
Business Services
Capital monitoring
Fieldwork
Business Services
Customer First
Fieldwork
Business Services
Pericles system implementation
Fieldwork
Business Services
(contract audit)
Open Book accounting
Draft report
Page 8 of 10
Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
Directorate
Review Title
Stage of Completion
Business Services
(contract audit)
Sandcastle changing rooms
Fieldwork
Business Services
(contract audit)
Squires Gate works
Fieldwork
Children & Young People
Children’s Participation
Draft report
Children & Young People
Youth Offending Team
Planning
Corporate
Best Value Performance Indicator
(BVPI) validation
Fieldwork
Corporate
Public Sector Agreement validation
Fieldwork
External
Sandcastle
Draft report
Housing & Social
Services
Commissioning
Fieldwork
Regeneration &
Corporate
European Regional Development
Funding
Fieldwork
Regeneration &
Corporate
Estates and Investment Portfolio
Draft report
Outstanding Priority 1 recommendations
All Priority 1 recommendations followed up during the period have been implemented or significant
progress has been made and a clear action plan identified for remaining actions.
Frauds, irregularities and whistle blowing incidents investigated in period
Directorate
Nature of Incident
Investigation Outcome
Business Services
Alleged theft of time
Control improvements
recommended
Business Services
Conflict of interest
Control improvements
recommended
Children & Young
People
Breach of agreement
Control improvements
recommended
Leisure, Cutlure and
Community Learning
Misuse of position
Control improvements
recommended
Leisure, Culture and
Community Learning
Missing money
Control improvements
recommended
Housing & Social
Services
Alleged theft of time
Ongoing
Page 9 of 10
Blackpool Borough Council: Internal Audit & Investigations
Assuring Quality Services for Blackpool
Quarterly Report October-December 2005
Investigations Team Statistics
Weekly
Sanctions
Incorrect
Month
Completed
+/Sanction
Benefit Cautions Admin
Total Target
Penalties Prosecutions
Target Rewards
Savings
32
3
11
Mar
£2,915
£2,275
£4,538
32
58
12
3
TOTAL
£9,728
122
18
Jan
Feb
7
4
46
51
65
25
25
25
21
26
40
£103,600
£129,200
£108,800
22
162
75
87
£341,600
Overal WIB savings during the year came to £29,538. Sanction rewards obtained were provisionally
£930,800 in all for the year, compared with £439,200 in 2004/5.
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