Internal Audit Progress Report
North Lanarkshire Council · 24 November 2022
Back to Audit and Scrutiny Panel — 24 November 2022 and its agenda
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No ☐approval ☒noting Ref KA/ASP/Nov22 Date 24/11/22 Internal Audit progress report From: Ken Adamson, Head of Audit and Risk E-mail: adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary The purpose of this report is to provide an overview of Internal Audit activity and to report the results of Internal Audit outputs finalised since the last update to the Panel in September 2022. A number of Internal Audit reports completed in the period provided only limited assurance and this report highlights these reports and the most significant issues arising from other completed audit work as well as providing updates on other aspects of the work of Internal Audit. Appendix 1 provides a summary of the scope and key findings of each substantive planned audit report and relevant investigative outputs. In line with best professional practice and the Internal Audit Charter and associated reporting protocol, full copies of the relevant audit outputs highlighted in this report are also included in the meeting papers. Recommendations The Panel is invited to: (a) note the findings, conclusions and recommendations of completed Internal Audit reports together with the associated management responses; (b) consider whether there are any issues raised by Internal Audit which the Panel consider are sufficiently significant to require a further report from management to be submitted to a future meeting of the Panel; (c) request that Internal Audit provide a report to future meetings of the Panel reporting progress made by management implementing agreed management actions in relation to all audit recommendations categorised as ‘High’ or ‘Medium’; and (d) otherwise note this report. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements
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1. Background 1.1 The 2022-23 Annual Plan was approved by the Audit and Scrutiny Panel in September 2022. The Internal Audit Charter, most recently approved by the Panel in September 2021, requires that the results of Internal Audit’s work are periodically reported to CMT and the Panel. This report fulfils that expectation. 2. Report Audit reviews completed in the period 2.1 Table 1 below provides an overview of completed Internal Audit reports since the last update to the Panel in September. Work is currently underway on other assignments included in the 2022-23 Plan and this work will be reported to the Panel as it is completed. Table 1: Completed Internal Audit outputs in the period Subject Internal Audit Opinion 1. Housing Benefit and Council Tax Reduction Substantial assurance (Green) 2. Performance management Limited assurance (Amber-Red) 3. Income and cash collection: Cash offices Substantial assurance (Green) 4. Sundry debtors/Debt management Limited assurance (Amber-Red) 5. Equalities Reasonable assurance (Green-Amber) 2.2 In addition to the above reports, work is currently underway on a range of topics including Cyber-security, Supply Teachers, Contract management arrangements, Education quality assurance, Creditors and Housing allocations. Once finalised, these reports will be submitted to a future meeting of the Panel. 2.3 Appendix 1 provides a summary of those reports forming part of the annual programme of planned assurance work and investigation reports as required by the Internal Audit Charter and associated reporting protocol. 2.4 Appendix 2 contains detailed definitions of the categories used by Internal Audit when making recommendations, providing an audit opinion and on the extent of assurance which is being provided to management and Panel members on those systems or areas of Council operations examined by Internal Audit. 2.5 This report excludes audit outputs produced for the North Lanarkshire IJB which are reported directly to its senior management team and audit committee. Commentary on completed planned ‘core’ Internal Audit work 2.6 The nature of Internal Audit exercises means that most audit reviews invariably find some scope for improvement, usually in the form of controls which are weak or only partially effective and, therefore, contain recommendations.
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2.7 Two of the five reports finalised in the period were assessed as providing only limited assurance, while three of the reports finalised in this period provided more positive levels of assurance. All five reports contain a range of improvement actions and made a series of recommendations. 2.8 Our work on Housing Benefit and Council Tax Reduction focused on the adequacy and effectiveness of the Council’s controls and management arrangements associated with ensuring that it continues to comply with relevant legislation and DWP requirements in respect of the processing and administration of Housing Benefit and Council Tax Reduction applications/claims and notification of changes in circumstances. 2.9 Based on results of our work, we have categorised this audit as providing ‘substantial assurance’. We are satisfied that the governance, risk management and controls in place are adequate and appear robust, with the Council’s arrangements for processing claims substantively complying with DWP requirements, being supported by adequate and appropriate documentation and being correctly assessed and calculated. We were also pleased to note that management checks are being undertaken regularly to provide assurance on the quality and compliance of decision making and that regular reconciliations between the housing benefit system and financial ledger are being undertaken. Management has responded positively to the recommendations contained within the report. 2.10 Our work on Performance management was designed to provide assurance on the adequacy and effectiveness of the Council’s approach to performance management, with a focus on the adequacy, robustness and effectiveness of the Council’s Strategic Performance Framework (SPF) and its implementation. 2.11 Our review of the SPF has led us to conclude that the framework substantially complies with recognised good practice and when fully implemented, would facilitate effective oversight, monitoring and review of performance. We are generally satisfied that the SPF comprises a range of relevant performance indicators which are aligned with the Council’s priorities, ambition statements and programme of work items and should enable an assessment of the quality, efficiency and effectiveness of the Council’s day-to-day operations. 2.12 The report also notes, however, that that although progress has been made in all aspects of the SPF, many remain a work in progress having been significantly impacted over the last two years due to the need for Services to respond to, and re-prioritise resources, as a result of the Covid-19 pandemic. This includes full implementation of the expected corporate arrangements for monitoring and recording key strategic and operational performance measures by Services, the effective, timely and regular reporting of performance to the Corporate Management Team and Service Committees and the integration of the framework into the Council’s wider governance arrangements. 2.13 We have therefore categorised this audit as offering ‘Limited Assurance’. We consider that there is considerable scope for improvement in the Council’s performance management arrangements and we have raised several recommendations for management consideration. These include the need to fully implement and integrate the SPF into the Council’s wider governance arrangements to provide more effective oversight of performance and the need to better align indicators contained within the SPF to the Council’s ambitions. We have also commented on the need for Services to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making. Management has responded positively to the recommendations contained within the report.
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2.14 Our report on Income and cash collection: Cash offices is the first of two reports focused on the adequacy and effectiveness of the Council’s management arrangements and key controls in relation to income and cash collection activities. The review focused on First Stop Shops/cash offices and examined whether all cash/income received by the Council is properly recorded in the Council’s financial systems and is regularly reconciled to amounts recorded within the cash receipting system. We also assessed whether all cash/income is held securely and banked timeously and whether there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. A further report in respect of similar controls at leisure sites will be issued at a later date. 2.15 Based on the results of our work, we have categorised this audit as offering ‘substantial assurance’ meaning we consider that the control environment is adequate and has operated substantially as intended, with any control issues or weaknesses identified presenting only a low risk to the control environment. We were pleased to note that all cash/income received by the Council is being properly recorded in the Council’s financial systems and is being regularly reconciled to amounts recorded within the cash receipting system. We also noted that all cash/income is held securely and banked timeously and there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. There were only a small number of areas identified where scope for further improvement exists and management has responded positively to the recommendations contained within the report. 2.16 The purpose of our work on Sundry Debt/Debt management was to provide independent assurance that the Council has adequate, robust and effective management arrangements in place for ensuring that the management of debtors is appropriately and effectively controlled. In particular, we considered whether adequate written policies and associated guidance covering income/debt recovery/collection and write-off procedures exist; whether debt management arrangements are operating effectively in line with relevant written policies and guidance and appear efficient and cost-effective; whether all credit notes and debt write-offs are appropriately authorised; and whether adequate and timely management information is generated in respect of debt and debt recovery to provide a sound basis for the monitoring of performance and associated decision making. 2.17 Members should note that the audit did not consider and/or review the arrangements in respect of debtors/debts associated with Housing Rents, Council Tax or Non-Domestic Rates as these are subject to separate and specific arrangements and are routinely covered by separate audit assignments. 2.18 Based on the results of our work during this review, we are satisfied that Services are generally proactive in seeking to minimise debts wherever possible by requiring payment for goods and services in advance and that generally, effective controls exist in relation to raising invoices and the debt write-off process. However, we have categorised this audit as offering ‘limited assurance’ as we consider that although some aspects of the control environment are adequate and operating effectively, there are significant deficiencies in a number of areas. 2.19 Areas of weakness include inadequate procedures/guidance notes, credit notes lacking sufficient detail as to why they are required and limited performance information and performance monitoring. In addition, there has been little action taken to address many of the recommendations previously raised by Internal Audit. Indeed, in some areas, (such as those relating to the passing of outstanding debts for legal action) controls have deteriorated further since we last reviewed this area.
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2.20 Overall, we consider there is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework and consequently, we have recommended that management formally review all aspects of the Council’s debt management framework, including relevant policy, procedures and detailed operational arrangements with a view to improving the efficiency, timeliness, effectiveness and equity of the Council’s current approach to debt management. Management has responded positively to the recommendations contained within the report, although they consider the ‘limited assurance’ opinion as unwarranted given performance in this area. 2.21 Our work on Equalities was designed to provide assurance on the adequacy and effectiveness of the key controls and management arrangements associated with ensuring that the Council complies with its statutory general and specific equalities responsibilities as laid down in the Equalities Act 2010 (‘the Act’) and Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2016. 2.22 The Council has a statutory duty under the Act and Public Sector Equality Duty (PSED) to mainstream its equalities activities into its day-to-day functions (its ‘general equality duty’). In accordance with this duty, the Council has developed an Equality Strategy 2019-2024, which clearly sets out its commitment to mainstreaming equality and human rights through five working objectives for success, together with identified actions. 2.23 The strategy was approved by Policy & Strategy Committee in September 2019 and is closely aligned with the Plan for North Lanarkshire, the associated Programme of Work and various key corporate strategies. In addition, the Council has committed to build equalities into its key decision-making processes, where appropriate, through its expectations that decisions are informed by the use of Equality Impact Assessments (EQIAs), the results of which require to be included in all committee reports and published on the Council’s website. 2.24 Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’ as we consider that the Council generally has appropriate arrangements in place to demonstrate consideration of the PSED in mainstreaming equalities into its day- to-day functions, that there are robust processes in place for ensuring that the equalities outcomes have been set and monitored in accordance with expected timescales and that key equalities reports have been published in accordance with the Council’s specific equality duties. 2.25 However we did identify a number of issues where we consider that there is a need to significantly improve current arrangements. These included that current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose. We also concluded that significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs) and that improvements are needed to the equalities performance monitoring framework, including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. Management has responded positively to the recommendations contained within the report. 2.26 There are no other issues arising from core Internal Audit work which I consider sufficiently significant to highlight to the Panel. Future follow-up reports will provide the Panel with information on the implementation, or otherwise, of all actions proposed by management in response to audit recommendations categorised as ‘High’ or ‘Medium’. 2.27 There are no completed fraud/irregularity investigations or other matters arising from areas of unplanned or ‘non-core’ work undertaken by Internal Audit in the period that I require to bring to your attention in accordance with the Internal Audit reporting protocol.
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Other Matters – Internal Audit Performance 2.28 In March 2021, the Panel were presented with a revised performance management framework for Internal Audit that was to be implemented from April 2021 for the 2021-22 audit plan (at Appendix 3). The majority of indicators are reported on an annual basis. There are two indicators however that are subject to quarterly reporting. The first is about the implementation of agreed actions arising from Internal Audit reports by the implementation date. 63% of agreed actions have been implemented by the agreed implementation date in the period July to September 2022. Progress in implementing agreed actions is monitored and reported separately to the Panel each cycle. 2.29 The second performance indicator is about client satisfaction and reflects the results of four key questions we ask audit clients at the conclusion of each audit assignment. Results presented to the September meeting of the Panel showed generally positive feedback on the work of Internal Audit with most respondents agreeing that Internal Audit added value by assisting in providing assurance, and that reports were relevant and constructive with findings clearly and accurately communicated. As only a small number of responses have been received in this period, no information is included in this report and this data will be carried forward and reported in more detail in the next update. 2.30 Where management raise concerns over Internal Audit’s work, these matters are discussed with relevant senior management to fully understand the nature of any concerns and, where it is considered appropriate, to identify areas for improvement. We also seek Services’ views on what they liked or disliked about the audit process and comments received are used to inform future action plans for improving the service provided by Internal Audit. 3. Measures of success 3.1 Internal Audit reports annually on its performance to the Panel and is also subject to review annually by the Council’s appointed external auditors. 4. Supporting documentation Appendix 1 Summary of Internal Audit assignments completed in the period Appendix 2 Audit gradings Appendix 3 Internal Audit performance framework Ken Adamson, Head of Audit and Risk
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5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Effective responses by management to the weaknesses, control issues and/or areas of improvement identified by Internal Audit will increase the likelihood of the Council achieving its ambitions and plans by improving control frameworks and more effectively mitigating potential threats to planned outcomes.
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Appendix 1 Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 1. Housing Benefit and Council Tax Reduction Internal Audit Opinion: Substantial assurance (Green) Audit recommendations: High 0 Medium 0 Low 3 The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s key controls and management arrangements associated with ensuring that it continues to comply with relevant legislation and DWP requirements in respect of the processing and administration of Housing Benefit and Council Tax Reduction applications/claims and notification of changes in circumstances. Universal Credit (which is administered by the Department of Work and Pensions (DWP)) continues to replace Housing Benefit with many claimants now in receipt of the former which has resulted in a gradual decline in caseload of the latter. However, the Council is still responsible for administering Housing Benefit and Council Tax Reduction claims for eligible claimants. Based on results of our work, we have categorised this audit as providing ‘substantial assurance’. We are satisfied that the governance, risk management and controls in place are adequate and appear robust, with the Council’s arrangements for processing claims substantively complying with DWP requirements, being supported by adequate and appropriate documentation and being correctly assessed and calculated. We were also pleased to note that management checks are being undertaken regularly to provide assurance on the quality and compliance of decision making and that regular reconciliations between the housing benefit system and financial ledger are being undertaken. We have identified a small number of areas where we consider that there is scope for improvement, and these are detailed in Section 3 of the report. Satisfactory management responses have been received in response to the recommendations contained within the report.
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 2. Performance management Internal Audit Opinion: Limited assurance (Amber-Red) Audit recommendations: High 1 Medium 3 Low 1 The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s approach to performance management, with a focus on the adequacy, robustness and effectiveness of the Council’s Strategic Performance Framework (SPF) and its implementation. In September 2019, the Council approved a SPF which set out a framework for performance measurement at three levels. The SPF was designed to provide an overview of performance to help understand the impact of council activities on improving services and outcomes for the people of North Lanarkshire and to allow day-to-day activities and long-term progress against the long-term vision set out in The Plan for North Lanarkshire (The Plan) to be regularly monitored, reported, assessed and scrutinised. Subsequent reports have been presented to the Panel detailing performance reporting arrangements and schedules and further planned work to assess the effectiveness of the SPF. Business and Digital are responsible for the development, review and oversight of the framework, with Services responsible for the implementation and delivery of the framework through the measurement, monitoring and reporting of the level 2 and 3 performance indicators contained in the SPF. Our review of the SPF has led us to conclude that the framework, developed by Business and Digital, substantially complies with recognised good practice and when fully implemented, would facilitate effective oversight, monitoring and review of performance. We are generally satisfied that the SPF comprises a range of relevant performance indicators which are aligned with the Council’s priorities, ambition statements and programme of work (PoW) items and should enable an assessment of the quality, efficiency and effectiveness of the Council’s day- to-day operations. Although progress has been made in all aspects of the SPF, many remain work in progress as full implementation of the expected corporate arrangements for monitoring and recording key strategic and operational performance measures by Services; the effective, timely and regular reporting of performance to the Corporate Management Team and Service Committees; and the integration of the framework into the Council’s governance arrangements, has been significantly impacted over the last two years due to the need for Services to respond to, and re-prioritise resources, as a result of the Covid-19 pandemic. Consequently, there is also little evidence of effective scrutiny of performance information and/or it being used to guide decision making. We have therefore categorised this audit as offering ‘Limited Assurance’. We consider that there is considerable scope for improvement in the Council’s performance management arrangements and we have raised several recommendations for management consideration. These are detailed in section 3 of the audit report and include: • The SPF needs to be fully implemented and integrated into the Council’s wider governance arrangements to provide more effective oversight of performance; • Indicators contained within the SPF need to be better aligned to the Council’s ambitions and PoW; • Services need to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making; and • Improvements are needed to the quality of performance indicator data. Satisfactory management responses have been received in response to the recommendations contained within the report.
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 3. Income and cash collection – cash offices Internal Audit Opinion: Substantial assurance (Green) Audit recommendations: High 0 Medium 1 Low 3 The purpose of the audit was to provide independent assurance on the adequacy and effectiveness of the Council’s management arrangements and key controls in relation to income and cash collection activities. The review focused on whether all cash/income received by the Council is properly recorded in the Council’s financial systems and is regularly reconciled to amounts recorded within the cash receipting system. We also assessed whether all cash/income is held securely and banked timeously and whether there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. The review comprises two separate exercises – one focused on cash offices and another on leisure sites. The report relates to the review undertaken in respect of cash offices. A further separate report in respect of leisure sites will be issued at a later date. Based on the results of our work, we have categorised this audit as offering ‘substantial assurance’ meaning we consider that the control environment is adequate and has operated substantially as intended, with any control issues or weaknesses identified presenting only a low risk to the control environment. We were pleased to note that all cash/income received by the Council is being properly recorded in the Council’s financial systems and is being regularly reconciled to amounts recorded within the cash receipting system. We also noted that all cash/income is held securely and banked timeously and there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. We have identified a small number of areas where scope for further improvement exists and made a number of recommendations for management attention. Management has responded positively to the recommendations contained within the report.
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 4. Sundry debtors/Debt management Internal Audit Opinion: Limited assurance (Amber-Red) Audit recommendations: High 1 Medium 0 Low 0 The purpose of this audit was to provide assurance that the Council has adequate, robust and effective management arrangements in place for ensuring that the management of debtors is appropriately and effectively controlled. The effective management and collection of debts is an essential contributor to the Council’s financial resources and helps maximise income available to fund essential services. To achieve this, the Council aims to issue invoices, where appropriate, and collect all debt owing to it promptly, effectively and efficiently whilst ensuring fair and equitable treatment to debtors in line with approved policies. During financial year 2021-22, 115,844 invoices totalling £114,361,939 were raised. Although collection rates are generally very high (the debt collection rate for the last four years is 97%), as at 30 September 2022, 33,504 invoices totalling £13 million (raised in any financial year) were outstanding, with £5 million of these outstanding in excess of 12 months. This area was last reviewed in 2019 when it received a limited assurance audit opinion. Based on the results of our work during this review, we are satisfied that Services are generally proactive in seeking to minimise debts wherever possible by requiring payment in advance and that generally, effective controls exist in relation to raising invoices and the debt write-off process. However, we have categorised this audit as offering ‘limited assurance’ as we consider that although some aspects of the control environment are adequate and operating effectively, there are significant deficiencies in a number of areas. Areas of weakness include inadequate or out-of-date procedures/guidance notes, credit notes lacking sufficient detail as to why they are required and limited performance information and performance monitoring. In addition, there has been little action taken to address many of the recommendations previously raised by Internal Audit. Indeed, in some areas, (such as those relating to the passing of outstanding debts for legal action) controls have deteriorated further. Overall, we consider there is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework and consequently, we have recommended that management formally review all aspects of the Council’s debt management framework, including relevant policy, procedures and detailed operational arrangements with a view to improving the efficiency, timeliness, effectiveness and equity of the Council’s current approach to debt management. Management has responded positively to the recommendations contained within the report; although they consider the ‘limited assurance’ opinion as unwarranted given performance in this area.
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 5. Equalities Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 2 Medium 1 Low 0 The purpose of this audit was to provide assurance on the adequacy and effectiveness of the key controls and management arrangements associated with ensuring that the Council complies with its statutory general and specific equalities responsibilities as laid down in the Equalities Act 2010 (‘the Act’) and Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2016 (as detailed in Appendix 2 of the report). The Council has a statutory duty under the Act and Public Sector Equality Duty (PSED) to mainstream its equalities activities into its day-to-day functions (its ‘general equality duty’). In accordance with this duty, the Council has developed an Equality Strategy 2019-2024, which clearly sets out its commitment to mainstreaming equality and human rights through five working objectives for success, together with identified actions. The strategy was approved by Policy & Strategy Committee in September 2019 and is closely aligned with the Plan for North Lanarkshire, its subsequent Programme of Work and various key corporate strategies. In addition, the Council has committed to build equalities into its key decision-making processes, where appropriate, through its expectations that decisions are informed by the use of Equality Impact Assessments (EQIAs), the results of which require to be included in all committee reports and published on the Council’s website. Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’ as we consider that the Council generally has appropriate arrangements in place to demonstrate consideration of the PSED in mainstreaming equalities into its day-to-day functions, that there are robust processes in place for ensuring that the equalities outcomes have been set and monitored in accordance with expected timescales and that key equalities reports have been published in accordance with the Council’s specific equality duties. Responsibility for Equalities transferred to People and Organisational Development in April 2022, since when, a desktop review of the existing equalities strategy and legacy programme of work has been undertaken. The initial findings from this review were presented to CMT in October 2022 and highlighted a requirement for the Council to better articulate the focus of the equalities programme of activities and more clearly link it to the objectives and outcomes within the Equality Strategy. A need to be clearer about the approaches and processes through which progress will be delivered was also identified. The findings of our audit work endorse this assessment and we have identified a number of areas where we consider that there is a need to significantly improve current arrangements. Recommendations for management consideration/action are detailed at Section 3 of the report and include: • current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose; • significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs); and • improvements are needed to the equalities performance monitoring framework including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. Satisfactory management responses have been received in response to the recommendations contained within the report.
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Appendix 2 Audit Gradings Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance There are minimal or minor control weaknesses that present low risk to the control environment. The control environment has substantially operated as intended although some minor errors have been detected. Very few or no improvements are needed. Green-Amber Reasonable Assurance There are some control weaknesses that present a low to medium risk to the control environment. The control environment has mainly operated as intended although errors have been detected. Some improvements should be made. Amber-Red Limited Assurance There are significant control weaknesses that present medium to high risk to the control environment. The control environment has not operated as intended. Significant errors have been detected. Substantial improvements should be made. Red No Assurance There are fundamental control weaknesses that present an unacceptable level of risk to the control environment. The control environment has fundamentally broken down and is open to significant error or abuse. Immediate and major changes need to be made. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but it is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls.
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Appendix 3: Internal Audit performance framework Category Measure Internal Audit management Reported to Chief Executive and CMT Reported to A&SP (Quarterly) Reported to A&SP (Annual) 1. Delivery of Annual Plan Percentage completion of agreed plan X X X 2. Targeting Percentage of key corporate risks and key financial systems over which assurance provided X X X 3. LGBF - Efficiency Cost of Internal Audit per £ million revenue budget X X 4. LGBF - Efficiency % of productive hours delivered v Plan X X 5. Delivery / recommendations Percentage implementation of agreed actions by implementation date (cumulative year to date) X X X X 6. Delivery / other Number of significant irregularity / fraud investigations X X X 7. Customer satisfaction results Scores from customer satisfaction questionnaires (audit assignments) (cumulative year to date) X X X X 8. Customer satisfaction results Scores from key stakeholders (CMT and A&SP) questionnaires (overall performance of the function) X X X 9. Quality / standards Reliance placed by External Audit on the work of Internal Audit X X X 10. Quality/ standards Quality review outcomes – EQAR or internal self-evaluation X X X 11. Delivery of Annual Report Annual opinion /report prepared by 31 May annually X X X 12. Targeting Approval by CMT and A&SP of strategy and annual plan by 31 May annually X X X Internal management performance indicators 13. Efficiency Actual v planned days on completed assignments X 14. Efficiency Time between completion of fieldwork and draft reports being issued X 15. Efficiency Time between draft reports and final reports being issued X
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 1 INTERNAL AUDIT REPORT HOUSING BENEFITS AND COUNCIL TAX REDUCTION SCHEME: NEW AND AMENDED CLAIMS Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Head of Financial Solutions, Business Finance Manager (Resource Solutions) and Business Finance Manager (Strategy & Business Development) Copied to: Chief Executive and Deputy Chief Executive Headlines The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s key controls and management arrangements associated with ensuring that it continues to comply with relevant legislation and DWP requirements in respect of the processing and administration of Housing Benefit and Council Tax Reduction applications/claims and notification of changes in circumstances. Universal Credit (which is administered by the Department of Work and Pensions (DWP)) continues to replace Housing Benefit, with many more claimants now in receipt of the former, which has resulted in a gradual decline in caseload of the latter. However, the Council is still responsible for administering Housing Benefit and Council Tax Reduction claims for eligible claimants. Based on results of our work, we have categorised this audit as providing ‘substantial assurance’. We are satisfied that the governance, risk management and controls in place are adequate and appear robust, with the Council’s arrangements for processing claims substantively complying with DWP requirements, being supported by adequate and appropriate documentation and being correctly assessed and calculated. We were also pleased to note that management checks are being undertaken regularly to provide assurance on the quality and compliance of decision making and that regular reconciliations between the housing benefit system and financial ledger are being undertaken. We have identified a small number of areas where we consider that there is scope for improvement, and these are detailed in Section 3 of this report. Internal Audit Opinion (see definition at Appendix 1) Substantial assurance (Green) Organisational impact (see definition at Appendix 1) Minor Report status FINAL Audit ref 0200/2023/001 Date issued 28/09/22 Audit Team Lesley Armstrong, Paula Hendry and Hugh Shevlin
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 2 1. Executive Summary Objectives This audit exercise was designed to provide assurance on the adequacy and effectiveness of the Council’s key controls and management arrangements associated with ensuring that it continues to comply with relevant legislation and DWP requirements in respect of the processing and administration of Housing Benefit and Council Tax Reduction applications/claims and notification of changes in circumstances. The work was designed to offer an audit opinion on the following: • Is the Council complying with key DWP requirements when assessing claims, including obtaining appropriate supporting documentation? • Are claims being correctly assessed/determined, including calculations, start and end dates and backdating of claims? • Are appropriate and expected management checks in place to provide assurance on quality/compliance and are any issues arising from such checks appropriately actioned/addressed? • Are relevant financial records accurate and up-to-date? Work undertaken included substantive testing and re-calculation of 24 new claims and 20 amended (changes of circumstances) claims selected at random for the period January to March 2022. We also reviewed documentation in relation to management checks and reconciliations between the Open Revenues system and the housing management system (HSMS)/financial ledger (efinancials). This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 0 0 3 Key areas requiring management action (High) No key areas requiring urgent management action have been identified. Good practice identified We noted the following areas of good practice during the audit: • Relevant legislation and DWP guidelines are embedded within the Service’s operating procedures and written guidance and these were generally being complied with; • Awards, start dates, effective dates of change and end dates, where relevant, were generally found to be properly calculated in line with current Housing Benefit/Council Tax Reduction rules; and • The outcome of management checks are monitored by Benefit Managers and Team Leaders and appropriate action is taken to notify staff of any issues arising. Other areas for improvement (Medium) No other areas for improvement were identified.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 3 3. Action Plan Housing Benefits and Council Tax Reduction – New and Amended Claims 0200/2023/001 Ref Finding 1 Management should consider reviewing some aspects of the current arrangements for management checks. To ensure that new claims and changes in circumstances for Housing Benefit and Council Tax Reduction are properly processed in line with expectations, the Quality Improvement Team is responsible for reviewing a sample of cases across all areas of benefit processing and providing feedback to the decision maker when any errors are identified to prevent re-occurrence of such errors. The outcome of these reviews, known as benefit management checks, are recorded on a Benefit Management Checks spreadsheet. There is no written documentation which states the number of expected checks to be undertaken, however, we understand that historically this has been set at a minimum of 150 checks per month. Our review of the Benefit Management Checks spreadsheet for 2022-23 confirmed that the target 150 checks is not currently being met mainly due to staff shortages, however, we noted that the number of monthly checks has increased over recent months and the Team are on track to achieve the set target during September 2022. We understand that there has been no review of the level of management checks required for some time. Although we understand that the level of claims for council tax reduction has remained constant, the ongoing move of benefits claimants to Universal Credit has resulted in a reduction in the number of Housing Benefit claims being received and processed by the Council. As such we consider it timely that management formally review the current level of new claims and changes of circumstances processed to determine whether the minimum of 150 checks per month remains appropriate. Depending on the direction of movement of the claims processed by the Service, it is recognised that the outcome of this review may result in an increase or decrease in the target set. We reviewed the Benefit Management Checks spreadsheet for 2022-23 (to mid-September) and noted that of the 540 claims which were subject to a management check, 14% contained a financial error. Discussions with Service management indicate that this level is within a reasonable tolerance, however we were informed that management have not established a formal acceptable tolerance level for errors identified during management checks. Whilst we are satisfied that the outcomes of these errors are discussed with relevant staff to prevent the same error occurring again, we consider that tolerance levels for errors should be determined and monitored with the outcome reported to management on a regular basis. Implication Recommendation Priority Management response Implementation Month/Year Management may be undertaking too many checks resulting in a poor use of resources. Management may be unable to compare and/or report ‘performance’ arising from management checks against previously agreed targets/expectations. Management should consider reviewing the current arrangements for management checks including: (1) determining whether, given the reduction in housing benefits caseloads, the level of management checks currently undertaken, remains appropriate; and (2) establishing an acceptable tolerance level for errors (financial and non-financial) identified during management check and thereafter regularly reporting the outcome of management checks against these tolerance levels. Low Agree Elaine Cornes (Benefit Manager) (1) Current level of management checks has been re-considered by the Team and it has been determined that the current level is appropriate, however the position will be kept under review. (2) An acceptable tolerance level will be introduced. October 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 4 3. Action Plan (continued) Housing Benefits and Council Tax Reduction – New and Amended Claims 0200/2023/001 Ref Finding 2 A small number of claims selected for testing contained calculation errors and/or had insufficient evidence to support the claim. Our testing involved a review of a random sample of 44 new and amended claims. Whilst we were generally satisfied that there was appropriate documentation to support the benefit awarded and that housing benefit/council tax reduction had been correctly calculated, we identified a small number of instances where the appropriate checks had not been undertaken by Benefit staff, where documentation was not available to fully support the claim and/or calculation errors occurred. In particular, we noted the following: • for three claims (178321, 178321 and 297973), there was insufficient documentation on file to support elements of the claimant’s income (Disability Living Allowance (DLA), Personal Independence Payment (PIP), Employment and Support Allowance (ESA) and earnings) – the documentation for some of these claims has now been added to Workflow360 (document management system); • the bank statements provided for two claims (180550 and 209041) did not contain the balance column, therefore the balance on the account could not be confirmed; • we were unable to determine how the documentation (birth certificate, DWP and private pension letters) was received for one claim (298073). It would appear that the documents were received via the post, however, only the birth certificate and one letter was stamped was date stamped and none of the documentation was stamped as original seen or signed/dated by the officers; • the application form for one claim (286005) appears to have been completed manually by the claimant (i.e. handwritten), however, the document held on Workflow360 has not been stamped with the date of receipt; • one claim (178321) where the rates used for DLA did not match the standard DWP rates (note: there was no effect on the benefit awarded as DLA payments are disregarded); • for one claim (209041), child benefit was not included in the income calculation (note: there was no effect on the benefit awarded as child benefit payments are disregarded) and the student loan and child tax credits were disregarded in error (note: these have now been corrected but there is no effect on the benefit awarded); and • one claim (297818) where we considered that the capital figure used in the calculation of benefit had been recorded incorrectly. The capital varied throughout the period of claim and this has now been reassessed and recorded more accurately. All calculation errors have been notified to the benefits team and have now been corrected. Implication Recommendation Priority Management response Implementation Month/Year Housing Benefit/Council Tax Reduction may not be correctly calculated in line with legislation and DWP rules. Management should remind all staff processing claims of the need to ensure that all data is accurately input into Civica and that appropriate and sufficient documentary evidence to support all claims is received and retained. Low Agree Elaine Cornes (Benefit Manager) Staff will be reminded in writing of the need for accuracy. October 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 5 3. Action Plan (continued) Housing Benefits and Council Tax Reduction – New and Amended Claims 0200/2023/001 Ref Finding 3 Reconciliations are not always completed on a timely basis and details of who undertook reconciliations and when are not always recorded. Reconciliations between Civica (for rent rebates and rent allowances) and efinancials are undertaken by the Support Team within Financial Solutions. At the time of testing (June 2022), these reconciliations were not up to date (last reconciliation was for period 13 in 2021-22), however, we have since been informed that the outstanding reconciliations have now been completed. We understand that the reconciliations are now documented and stored electronically and that reports are no longer printed, signed and dated, however, we consider that, for each reconciliation, a record of the officers who prepared and subsequently checked/authorised it and when, should be retained. Implication Recommendation Priority Management response Implementation Month/Year If reconciliations are not up to date and are not undertaken regularly, any errors or discrepancies in the records held on the two systems may not be identified and correctly promptly. If details of who undertook processes and checks are not recorded, it may be difficult to establish whether and/or by whom and when these processes and checks have been undertaken and errors may not be identified in a timely manner. Management should ensure that: (1) going forward, reconciliations are completed on a timeous basis; and (2) regardless of whether reconciliations are held electronically or in a printed format, an appropriate record confirming the officers who prepared and subsequently checked/authorised each reconciliation and when is retained. Low Agree Jamie McKenna, Revenue and Benefits Manager (Business Development and Performance) A reconciliation timetable will be implemented to ensure reconciliations for each financial period are completed in a timeous manner. The schedule will include both a ‘prepared by’ and ‘authorised by’ column which will be signed by the officer who completed the relevant task. The schedule will be stored electronically and be made available for audit review. October 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 6 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green - Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber - Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 1 INTERNAL AUDIT REPORT PERFORMANCE MANAGEMENT Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: Performance indicators reviewed Appendix 3: National Audit Office – Good practice criteria for performance measurement Issued to: Head of Business and Digital, Business Strategy Manager and Strategy and Performance Manager Copied to: Chief Executive, Deputy Chief Executive and all Heads of Service Headlines The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s approach to performance management with a focus on the adequacy, robustness and effectiveness of the Council’s Strategic Performance Framework (SPF) and its implementation. In September 2019, the Council approved a SPF which set out a framework for performance measurement at three levels. The SPF was designed to provide an overview of performance to help understand the impact of council activities on improving services and outcomes for the people of North Lanarkshire and to allow day-to- day activities and long-term progress against the long-term vision set out in The Plan for North Lanarkshire (The Plan) to be regularly monitored, reported, assessed and scrutinised. Subsequent reports have been presented to the Audit and Scrutiny Panel (ASP) detailing performance reporting arrangements and schedules and further planned work to assess the effectiveness of the SPF. Business and Digital are responsible for the development, review and oversight of the framework, with Services responsible for the implementation and delivery of the framework through the measurement, monitoring and reporting of the level 2 and 3 performance indicators contained in the SPF. Our review of the SPF has led us to conclude that the framework, developed by Business and Digital, substantially complies with recognised good practice and when fully implemented, would facilitate effective oversight, monitoring and review of performance. We are generally satisfied that the SPF comprises a range of relevant performance indicators which are aligned with the Council’s priorities, ambition statements and programme of work (PoW) items and should enable an assessment of the quality, efficiency and effectiveness of the Council’s day-to-day operations. Although progress has been made in all aspects of the SPF, many remain work in progress as full implementation of the expected corporate arrangements for monitoring and recording key strategic and operational performance measures by Services; the effective, timely and regular reporting of performance to the Corporate Management Team and Service Committees; and the integration of the framework into the Council’s governance arrangements, has been significantly impacted over the last two years due to the need for Services to respond to, and re-prioritise resources, as a result of the Covid-19 pandemic. Consequently, there is also little evidence of effective scrutiny of performance information and/or it being used to guide decision making. We have therefore categorised this audit as offering ‘Limited Assurance’. We consider that there is considerable scope for improvement in the Council’s performance management arrangements and we have raised several recommendations for management consideration. These are detailed in section 3 of the audit report and include: • The SPF needs to be fully implemented and integrated into the Council’s wider governance arrangements to provide more effective oversight of performance; • Indicators contained within the SPF need to be better aligned to the Council’s ambitions and PoW; • Services need to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making; and • Improvements are needed to the quality of performance indicator data. Internal Audit Opinion (see definition at Appendix 1) Limited assurance (Amber-Red) Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0900/2022/009 Date issued 13/10/22 Audit Team Lesley Armstrong, Paula Hendry, Elizabeth Sweeney and Hugh Shevlin
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 2 1. Executive Summary Objectives This audit exercise was designed to provide independent assurance on the adequacy and effectiveness of the Council’s approach to performance management with a focus on the adequacy, robustness and effectiveness of the Council’s Strategic Performance Framework (SPF) and its implementation. These arrangements were assessed against the National Audit Office’s ‘Performance measurement: Good practice criteria and maturity model’. The work was designed to offer an audit opinion on the following: • How well does the Council’s SPF reflect recognised good practice? Does it have clear links to the aims of the organisation? Is it integrated with relevant business planning, budgetary and operational processes? And does it incorporate relevant and good quality performance indicators? • Are there effective arrangements for reporting on performance? Have these been implemented? Do arrangements incorporate data quality checks, contextual reporting and presentation with relevant analysis and insight? • How well does the Council use performance information? Is relevant information used to assess performance and guide future decision-making? Work undertaken involved discussions with the Strategy and Performance Manager, a detailed review of documentation to evidence the key processes and procedures operating in 2021-22 and substantive testing across Services on a sample of 12 performance indicators from the SPF (six from Services involved in the pilot exercise and six from Services not involved in the pilot exercise) to assess the accuracy of reporting performance data and, where appropriate, compliance with statutory obligations. It is anticipated that future audits on performance will focus on the arrangements in place within individual Services to implement the SPF. This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 1 3 1 Key areas requiring management action (High) The following key area requiring urgent management action has been identified: • The SPF needs to be fully implemented and integrated into the Council’s wider governance arrangements to provide effective oversight of performance. Good practice identified We noted the following areas of good practice during the audit: • The SPF is one of five frameworks which support the Council’s strategic plan, ‘The Plan for North Lanarkshire’ (The Plan) and associated Programme of Work. The SPF comprises a number of performance indicators, which are aligned with the Council’s priorities, ambition statements and programme of work items, and enable an assessment of the quality, efficiency and effectiveness of the Council’s day-to-day operations. • The SPF contains a reporting schedule detailing which indicators will be reported to which stakeholders and when/how often. This schedule was updated for 2021-22 and is in the process of being updated for 2022- 23 and is expected to be submitted to CMT for approval in November. • Performance indicators have been allocated baselines and targets to enable managers to effectively monitor performance and easily identify any dips or increases in performance at an early stage. • The Council participates in the Local Government Benchmarking Framework (LGBF) co-ordinated by the Improvement Service which is designed to enable comparison of performance with other councils and to encourages councils to examine why variations in costs and performance occur between similar councils.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 3 Other areas for improvement (Medium) Other areas for improvement were also identified: • Indicators contained within the SPF need to be better aligned to the Council’s ambitions and Programme of Work; • Services need to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making; and • Improvements are needed to the quality of performance indicator data.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 4 3. Action Plan Performance Management 0900/2022/009 Ref Finding 1 The SPF needs to be fully implemented and integrated into the Council’s wider governance arrangements to provide more effective oversight of performance. The Council’s strategic plan (The Plan) was approved at the Policy and Strategy Committee in February 2019. It is a high-level strategy which aims to communicate the Council’s five priorities and provide a focus for activities and resources to ensure that employees and stakeholders work towards a shared ambition. The Plan is supported by 25 high level ambition statements which are further supported by a Programme of Work, which is reviewed annually. The Plan and associated Programme of Work are supported by five frameworks and are designed to enable a structured approach to assessing progress, measuring success and identifying areas for improvement. One of these frameworks is the SPF which was approved at the Policy and Strategy Committee in September 2019 and aims to enable the Council to monitor delivery of the supporting Programme of Work and associated activities. The SPF comprises a number of performance indicators at three levels which collectively provides an overview of performance to help understand the impact of council activities on improving the services and outcomes for people and communities in North Lanarkshire. Its aim is to produce evidence that allows the activities of the Council and progress towards achieving the ambitions in the Plan for North Lanarkshire to be regularly monitored, reported, assessed, and scrutinised. Our assessment of the SPF is that the framework developed by Business and Digital substantially complies with recognised good practice and, when fully implemented by Services, would provide for more effective oversight, monitoring, review and reporting of performance. The requirement to stand down a range of activities across all Services due to the need to re-prioritise resources in responding to the public health emergency, including much of the work associated with the implementation of the SPF, has, however, significantly impacted on the operation of the Council’s performance management arrangements over the last two years. In particular, we noted that: • the reporting schedule contained within the SPF generally expects performance to be reported to the Policy and Strategy Committee, Audit and Scrutiny Panel (ASP), Service Committees, CMT and SMT twice a year, however, our review confirmed that this did not occur in 2021-22 and is not currently happening; • reports in relation to all three levels of performance indicators per this schedule are expected to be submitted to CMT in cycle 2 (April-June) and cycle 4 (October - December) each year; however, there has, to date, been very limited reporting to CMT. We noted that a performance review update by each Head of Service was presented to CMT in April/May 2021 and whilst Heads of Service provided an update on work being undertaken by their Services, it did not provide comprehensive information on performance and progress toward achieving related ambition statements and/or programme of work items. Business and Digital management commented that this approach was stood down after Heads of Service failed to comply with the clear guidance given to present a balanced picture of Service performance results to CMT. Following this, the Chief Executive requested a new approach be developed which led to the pilot exercise using spreadsheets for each Head of Service (see next bullet); • performance reports for each Head of Service were expected to be submitted to the relevant Service Committee during cycle 3 (August to September) of 2021 and cycle 1 (January to March) of 2022 however, this did not happen. Instead, Business and Digital undertook a pilot with three Heads of Service for recording performance on performance spreadsheets and reporting to the relevant Committee, with reports being presented to Committee for these cycles. This has now been completed for a fourth Service and we understand that preparations are underway for the process to be rolled out to all Services by June 2022. Given the rate of progress to date, we consider this timescale to be extremely ambitious; • in late 2021, CMT undertook a self-evaluation of its new arrangements that had been introduced in April 2021 and a report the outcome of this self-evaluation was presented to CMT in February 2022. This report recognised that there is a need to enhance the scrutiny role of CMT and the use of performance information in strategic decision making and continuous improvement, and an action to address this was identified for implementation by the Head of Business and Digital by August 2022. We understand that this date has been revised and is now expected to be complete by November 2022; • there has been limited reporting in relation to performance and performance indicators to the Policy and Strategy Committee in the last few years with the last report providing the latest level 1 indicator figures in March 2022; • similarly, there has been limited reporting of performance to the Audit and Scrutiny Panel (ASP) with the focus being largely restricted to presenting the Local Government Benchmarking Framework indicators and the position of North Lanarkshire Council in relation to other Councils; and • there is no clear statement which sets out how and when performance will be reported to the general public and there is currently limited performance information available in any format (paper, online, etc) for the public. Although we recognise the pandemic has majorly impacted on Services’ ability to engage in implementation of the SPF, all of the above, has significantly impacted on the level of reporting to, and scrutiny, analysis and interpretation of performance data by, elected Members and senior management. Effective scrutiny of performance by elected Members forms an important part of the Council’s governance arrangements and this has, effectively, been absent for much of the last two years. (Continued over page)
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 5 3. Action Plan Performance Management 0900/2022/009 Implication Recommendation Priority Management response Implementation Month/Year It may be difficult to clearly demonstrate progress, improvement or achievement of the Council’s ambition statements and programme of work items, which could result in the Council failing to meet its obligations in relation to best value, good governance and public performance reporting. Inadequate and/or irregular performance reporting impacts on the ability of key stakeholders (corporate management and elected members) to review performance and identify where issues are arising and/or action may be needed. The Head of Business and Digital, in conjunction with Services, should ensure that, as a matter of priority, the SPF is fully integrated into the Council’s wider governance arrangements with effective, timely and regular reporting on key strategic and operational performance measures to all key stakeholders (CMT, relevant Service Committees, Audit and Scrutiny Panel and the general public). High Agree Katrina Hassell, Head of Business and Digital The Service is committed to implementing the SPF in full in line with the audit recommendations. This work is underway in a number of phases due to conclude at the end of this financial year. A key dependency is the planned revision to the Programme of Work. The updated SPF will be presented to the CMT in December 2022 with reporting implemented by the end of the financial year. March 2023
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 6 3. Action Plan (continued) Performance Management 0900/2022/009 Ref Finding 2 Indicators contained within the SPF need to be better aligned to the Council’s ambitions and Programme of Work. The SPF comprises a group of performance indicators at three levels – (1) NL context, (2) improving outcomes and (3) day-to-day operations with each indicator designed to be aligned with the Council’s priorities and ambition statements and thereby providing a clear link to The Plan. We consider, however, that the SPF contains an excessive number of level 2 and 3 indicators, many of which, whilst relevant to the Council’s activities/day-to-day operations and Services may be interested in measuring and monitoring for operational purposes, do not always have a clear direct link to The Plan and the ambition statements or Programme of Work items to which they are aligned. Our review also identified that there is no documentation which clearly indicates which Head of Service is responsible for each of the current level 2 and 3 indicators to ensure that clear responsibility for all indicators included in the SPF have been allocated to a Head of Service including responsibility for how these are calculated. Our testing of a small sample of 12 indicators identified one indicator which was not being measured by the Service despite being included in the SPF, as relevant staff were unaware of its existence. We understand that the SPF is currently being refreshed, with all Heads of Service reviewing and reconsidering their performance indicators and making additions/deletions/amendments to better reflect their activities. We consider that this review should include consideration of each existing indicator to determine whether they will have a direct impact on achieving the shared ambition and identification of new indicators which will better measure the impact of actions on outcomes. The refreshed SPF is expected to be presented to Committee in cycle 4 of 2022 (October - December). In addition, best practice (see Appendix 3) states that in developing a performance framework the activity measured should be “capable of being influenced by actions which can be attributed to the organisation” and that the “influence on outcomes that the organisation exerts are separated from the other influences on those outcomes”. Level 1 indicators do not meet this expectation. They provide context to North Lanarkshire overall and whilst it is useful data to monitor and report, it does not provide a direct measure of the Council’s performance. We therefore consider, in line with good practice, that senior management (CMT) and Elected Members would benefit more from receiving performance reports containing a smaller number of ‘primary’ or leading’ indicators (a range of indicators which would be of most significance/interest to senior management to enable monitoring of the progress of ambition statements and the Programme of Work) or forecasts of performance (to reflect how changes in activities or processes may affect performance), enabling them to undertake more meaningful and focused performance monitoring and scrutiny. Implication Recommendation Priority Management response Implementation Month/Year It may be difficult to clearly demonstrate progress, improvement or achievement of the Council’s ambition statements and programme of work items, which could result in the Council failing to meet its obligations in relation to best value, good governance and public performance reporting. The Head of Business and Digital, in conjunction with all Services, should: (1) as part of the refresh of the SPF, ensure that consideration is given to all level 2 and 3 indicators to determine whether improvements in these performance indicators provide meaningful information in respect of progressing/achieving the ambition statements and programme of work items that they are linked to. This review should include the removal of any indicators which are not directly linked to planned outcomes and the identification of new indicators to assist with the monitoring of progress of ambition statements and key programme of work items; (2) consider preparing a document (or adding to existing documentation such as the SPF) which clearly indicates the Head of Service responsible for each performance indicator; and (3) identify a suite of key performance indicators/reporting mechanism(s) that would facilitate effective scrutiny and challenge by CMT and elected members. Medium Agree Katrina Hassell, Head of Business and Digital (1) As part of the refresh of the SPF, consideration is being given to determining the improvements required in terms of the suite of performance indicators. The updated SPF will be presented to the CMT in December 2022. (2) The new approach comprises a spreadsheet for each Head of Service that clearly indicates their responsibilities for each performance indicator within the SPF. (3) The launch of the new approach to CMT in December 2022 will provide more detail in this respect. December 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 7 3. Action Plan (continued) Performance Management 0900/2022/009 Ref Finding 3 Services need to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making. During the audit, for the sample of performance indicators (see Appendix 2) selected, we reviewed and assessed how Services are discharging their responsibilities for performance reporting. Various approaches are taken to service level performance reporting including reporting to Committee/Boards (NLC, Health and Social Care), discussions at management meetings (without Head of Service presence), ad hoc discussions with the Head of Service and discussion with key contractors about their performance. From our review of a sample of 11 performance indicators, we consider that the arrangements in place for reporting to Service management for six of the indicators was insufficient as the evidence provided did not confirm that performance is routinely reviewed and discussed with the Head of Service. As noted at point 1 above, Service Committees have not been presented with performance reports as per the expected reporting schedule but rather a pilot with three Heads of Service for recording performance on performance spreadsheets and reporting to Committee has been undertaken. We undertook a review of the committee reports presented for the pilot by Services to relevant Committees and whilst we were pleased to note that they follow a consistent structure, we identified a number of issues with the content of the reports: • The main body of the report is about two and a half pages long, however, the narrative does not contain much summary information on performance – instead it largely details which ambition statements the Head of Service is responsible for, explains the information contained in the appendix and refers to the performance spreadsheet; • Services do not provide an analysis of performance indicators in the main body of the report to highlight areas of good or poor performance, the reasons for the performance level or, where performance is poor, the actions that will be taken to improve it; • There is no distinguishment in the report to indicate whether individual performance indicators are level 2 or 3; and • The comments contained in the appendix do not always provide clear explanations for changes in trends, not meeting targets or the factors influencing performance. Implication Recommendation Priority Management response Implementation Month/Year Performance information may not be used effectively by senior management or elected members to evaluate the effectiveness of activities and/or inform decisions and/or drive continuous improvement. It will be difficult for stakeholders to understand whether/how well the organisation is progressing towards achieving strategic objectives. The Head of Business and Digital should: (1) Establish, and thereafter communicate to Services, a set of minimum standards for performance reporting within Services, including the requirement to report and discuss performance with the Head of Service, identify areas where performance exceeds/is below target or substantially differs from previous periods to understand/explain the reasons and, where appropriate, identify actions to improve performance and monitor the implementation of these actions; and (2) review and amend as appropriate, the committee template and/or guidance for performance reporting to include summary narrative highlighting areas of good or poor performance, the reasons for performance levels and any actions being taken to address or improve poor performance. Medium Agree Katrina Hassell, Head of Business and Digital and all Heads of Service (1) A set of standards for performance reporting is already contained within the SPF. These will be further reviewed and updated as appropriate in the finalisation of the revised SPF as detailed above. (2) The pilot performance reports to committee have a column for narrative to highlight areas of good and poor performance. This is further substantiated by the use of a RAG status. In the pilots, the narrative column provided information in terms of work being done to address or improve poor performance; this approach will continue and will be reiterated within the refreshed SPF and new approach presented to CMT in November. The use of the narrative column received positive feedback from Heads of Service and Elected Members. November 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 8 3. Action Plan (continued) Performance Management 0900/2022/009 Ref Finding 4 Improvements are needed to the quality of performance indicator data. As part of the Council’s corporate performance arrangements, there is a requirement for Services to nominate a Calculating Officer and Verification Officer for each performance indicator. These roles have been in place for a number of years and two documents detailing the roles and responsibilities of each officer were prepared. These documents are available on Connect, however, they are currently in the process of being refreshed for inclusion in a new ‘How To’ guide which is currently being prepared for staff involved in the calculation and verification of performance information. Given the removal of PerformNL, the standing down of performance reporting during 2020/21 due to Covid, the reconsideration of Committee performance reporting and the number of officers in these roles who have left the Council’s employment, many of the officers undertaking these roles have recently changed, resulting in many new officers who appeared unaware of their roles and responsibilities. This is supported through substantive testing on a sample of six performance indicators (which were subject to the pilot exercise for reporting) where discussions with the nominated Calculating and Verification Officers generally confirmed that they had not been formally made aware of their responsibilities and the corporate expectations and requirements for measuring, calculating, monitoring and reporting performance information. Business and Digital’s Workplan for the SPF includes an action to hold engagement/drop-in sessions with Calculating and Verification Officers on the new SPF arrangements, roles and responsibilities, reporting timescales, etc in October/November once the SPF reporting arrangements have been fully implemented. All performance indicators are required to have a performance information definition sheet, prepared by the relevant Service, which provides a definition of the process and information required to calculate the final indicator results, a worked example showing how the indicator will be calculated, the frequency of the calculation, the data source and details of the Calculating Officer and Verification Officer. Our review of a sample of 11 performance indicators confirmed that a definition sheet had been prepared for each indicator, however, we identified a number of issues including the definition sheets were not always fully completed; the titles of the indicator did not always clearly state what it was measuring; the detailed description for some indicators was vague and did not always clearly describe what was being measured and how; the worked example was not always correctly calculated and/or the data source for some indicators was either unclear or did not match the information provided during our review. We were informed that, as the new performance spreadsheet and committee reporting process is being rolled out, the definition sheets are being reviewed and vetted by Business and Digital, although we noted that some of the issues identified above related to indicators for Services which had already been subject to this process. We also noted that a definition sheet was generally not prepared for the LGBF indicators as the Improvement Service has prepared definitions, however, we consider that a definition sheet should be prepared for these indicators as it will provide further information to staff on corporate expectations re-the calculation methodology to be used, data sources, etc. There was also previously an annual data quality process in place for performance indicators to ensure that indicators were correctly calculated in line with the definition sheet and accurately reported. This process involved the Calculating and Verification Officers completing ‘forms A and B’ once the year-end performance indicator results had been calculated and contained a series of questions requiring ‘sign-off’ by each officer as confirmation of they had undertaken the appropriate checks, recorded the results and provided explanations for variances, as appropriate. We understand that this process has been adapted and will be included as part of the ‘How To’ guide. This process has not yet been implemented, however, Business and Digital management confirmed that completed ‘forms A and B’ have been requested from the four Services who have reported to Committee as part of the corporate process. As this is an annual year-end process, it will not be fully implemented until the 2022/23 year-end. The lack of knowledge by the Calculating and Verification Officers within Services of their roles and responsibilities and the data quality process is substantiated through our detailed review of a sample of 11 performance indicators where we identified issues with the calculations for five of the indicators, including the reported figures not reconciling with the supporting documentation for three indicators; the Service identifying an error in the calculation prior to providing the supporting documentation for two indicators; an error in the calculation of the denominator and omission of some data as the records had not been fully updated for one indicator. This resulted in some of the performance spreadsheets not being updated correctly by Services. We also noted that the definition for two indicators was not consistent with what was actually being measured and that Services did not have any separate procedures/ guidelines explaining how the indicator was to be calculated for 10 indicators. (continued over page)
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 9 3. Action Plan (continued) Performance Management 0900/2022/009 Implication Recommendation Priority Management response Implementation Month/Year If officers involved in the calculation and verification process are not fully aware of their responsibilities, performance information may be of poor quality and/or not prepared on a timely basis. The Head of Business and Digital should ensure that: (1) the guidance in relation to Calculating Officer and Verification Officer responsibilities is completed and issued, and that appropriate engagement is undertaken with all relevant staff in Services to raise awareness of their responsibilities in relation to performance information, including the requirement to ensure the accuracy of calculation of performance indicators; (2) Services are reminded of the need to prepare performance information definition sheets for all indicators (including LGBF indicators), including that these must be fully completed, contain accurate information and be subject to review on a regular basis to ensure they remain up-to-date; and (3) the planned annual data quality process is fully implemented. Medium Agree Katrina Hassell, Head of Business and Digital and all Heads of Service (1) The guidance for Calculation and Verifications Officers roles and responsibilities is now complete. Since the audit, user acceptance testing has taken place with several CO/VOs for ease of use, understanding and implementation. Stakeholder feedback has informed the final version of the guidance. (2) The need to have (and ensure an annual update to) indicator definitions was reiterated to Services when standing back up the data collection process. A set of indicator definitions already exists nationally (developed by the Improvement Service) for the suite of LGBF indicators, and it is not the intention to duplicate this work. Where it is appropriate to do so (the Council is the data owner, and where the data collection process is not part of another already established national process), Services will be asked to produce relevant indicator definitions. (3) Re-establishing the data quality process is in line with timescales agreed with the Chief Executive. Reporting will be re-established to Service committees in cycle 1 of 2023. The process for 2021/22 will be concluded in time for cycle 1 reporting to committee. The 2022/23 process will revert back to having a scheduled set of deadlines. January 2023
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 10 3. Action Plan (continued) Performance Management 0900/2022/009 Ref Finding 5 The use of the Business Intelligence Hub (BI Hub) for interpreting and understanding performance information needs to be fully implemented. The Business and Digital team have developed performance spreadsheets and a corporate template for reporting performance information to Committee and this has been introduced on a pilot basis for four Heads of Service and Business and Digital are currently in the process of rolling this new process out to all other Heads of Service. We understand that this is expected to be completed by June 2022. Business and Digital advised that further improvements are being made to the presentation of performance information for various audiences as part of the development of the Business Intelligence Hub (BI Hub). We were informed that arrangements were well underway for mapping the performance information for one service to the BI Hub, and that once this had been implemented, it would be replicated for all Heads of Service. We were provided with a timeline which states that this exercise is expected to be completed by July 2022. Implication Recommendation Priority Management response Implementation Month/Year Digital solutions to improve the preparation and interrogation of performance data may not be utilised to ensure the efficient and effective use of resources. Business and Digital should review planned progress of the implementation of performance information for all Heads of Service into the BI Hub and ensure a realistic timescale is set for completion of this exercise. Low Partially Agree Katrina Hassell, Head of Business and Digital The development of the SPF sits within a wider project plan for the BI Hub and, as a result, has a number of dependencies. The audit finding presented above only provides part of the picture regarding the integration of the SPF into the wider BI Hub project. The audit recommendation is not presented within the full context of the BI Hub development. Since the audit, phase 1 of the process in terms of data mapping has now been completed and the system integrator is currently undertaking work to further develop these. Internal Audit Comment: we recognise that the BI Hub is a corporate wide project, and the SPF is only a small part of that. For the purpose of this audit review, we only concentrated on the progress of implementation for performance being recorded in the BI Hub. The full extent of the BI Hub project was outwith the scope of this exercise. March 2023
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 11 Appendix 1 – Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green-Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber-Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 12 Appendix 2 – Performance Indicators Reviewed Sample Service Level Indicator Performance indicators selected from Services involved in the pilot exercise 1 Business and Digital 3 Service desk - % of tickets logged through the self-help portal 2 Environmental Assets 2 Volunteering - cash equivalent of number of hours delivered 3 Environmental Assets 3 Cost of street cleaning per 1,000 population 4 Financial Solutions 2 % of income due from NDR that was received by the end of the year 5 Regulatory and Waste 3 Refuse collection complaints, all categories - number of complaints per 1,000 household visits 6 Regulatory and Waste 3 Trading standards, consumer complaints - % dealt with within 14 days of receipt Performance indicators selected from SPF for Services not involved in the pilot exercise 7 Enterprise and Growth (Planning and Regeneration) 2 Town centre vacancy rates - % of vacant commercial units as a % of total units for the local authority town centre 8 Education and Families (Asset and Procurement Solutions) 2 School meal uptake - % uptake over all programmes 9 Adult Health and Social Care 2 Care home placements, age 65+, at end of quarter – placements per 1,000 population 10 Education and Families (Education) 2 Community learning and development programmes - % of adult learners enrolled from the 20% most deprived areas 11 Enterprise and Growth (Planning and Regeneration) 3 Commercial planning applications – cost per application 12 Adult Health and Social Care 3 Home care – cost per hour for people over aged 65 or over
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 13 Appendix 3 – National Audit Office Good Practice Criteria for Performance Measurement Activity Good Practice Criteria Developing a performance measurement framework Aims of the organisation and aims for the framework Statutory and other high-level objectives are translated into more specific and measurable lower-level objectives. There should be a clear line-of-sight from high to low levels. The purpose and building blocks of the framework, and what it does/does not cover, should be clear and well understood. The performance measurement framework focuses on strategic and other main objectives. There should be arrangements with other organisations, where objectives are shared or common. Linking the framework and the business The performance measurement system is well integrated with business planning, budgetary and operational processes The roles and responsibilities of the board and others within the organisation for performance measurement should be clear. There should be clear and open communication channels between different parts of the performance measurement framework. The links between inputs, outputs and outcomes are well understood (through for example logic or causal models). Delivery maps are developed to show how required actions will be delivered. The resourcing needs, including information and information technology requirements, are well understood and considered in decisions about the framework. The costs of the performance measurement framework, including information collection, should be proportionate to the benefits that it provides. Performance indicators It is clear (including externally) what performance indicators are being used. There are stated rationales and clear processes for selecting performance indicators. Performance indicators are prioritised if necessary. Performance indicators are relevant to the outcomes the organisation seeks to achieve. The performance measures give a balanced overall picture of what the organisation is doing, covering all significant areas of work. Performance indicators link overall business performance to the performance of individual business units, teams and activities. The framework incorporates leading indicators or forecasts of performance, where this might be appropriate. The activity measured is capable of being influenced by actions which can be attributed to the organisation. The influence on outcomes that the organisation exerts are separated from other influences on those outcomes. The framework monitors the success of significant change within the business. Feedback and learning The performance measurement framework is tested when first implemented, and where subsequent changes are made to it. There should be processes for managing change to the performance measurement system. Sufficient time should be allowed for the framework to 'bed in' before changes are made. The framework should be robust to withstand organisational changes or personnel leaving. There are mechanisms for learning about performance measurement within and from outside the organisation. Managers and staff at various levels should be involved in planning, implementing and challenging the system. The framework is informed by feedback from external stakeholders.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 14 Appendix 3 (continued) – National Audit Office Good Practice Criteria for Performance Measurement Activity Good Practice Criteria Reporting Performance Information Data quality The measure has a clear, unambiguous definition so that data will be collected consistently, and is easy to understand and use. The performance indicators and supporting information are well documented, to allow for validation. There are systems of control to check that data is accurate, reliable and robust Baselines are set for measuring performance against indicators. Measures are capable of comparison with either past periods or similar programmes elsewhere. Data is produced frequently enough to track progress and quickly enough for the data to still be useful. Management decides on the appropriate balance between timely and accurate data, where these may conflict. The performance measurement framework draws appropriately on different data sources, including external sources where cost-effective. Performance information collected is relevant and proportionate to the purposes of the framework. Reporting in context The organisation articulates success criteria for performance measures, with a stated rationale and clear process for selecting those criteria. Performance against indicators should be benchmarked against, for example, similar organisations or functions. Presenting with analysis and insight The organisation makes sufficient allowance (time and resources) for analysing and interpreting data. The information being collected (and presented) should be appropriate to, and useful for, (each of) the stakeholders who are likely to use it. The organisation has clear and structured rationale and processes for deciding what information to report internally, and what to report publicly. Performance information is presented in a way that is accessible and draws attention to the most important issues. Presentation includes structured analysis of performance information and includes insights into the factors influencing performance, and what the organisation is able to influence. Using Performance Information Linking performance and financial information The performance measurement framework links performance and financial information (for example through Activity-Based Costing). Management uses linkages between performance and financial information to assess value for money. Guiding decision- making The board is committed to performance measurement and has a clear approach to use of the performance measurement framework. The board reviews the performance measurement system periodically to satisfy itself that the board's needs are met and that its benefits exceed the costs. Performance measurement framework outputs feed into objectives and business planning. The framework helps to promote good governance and scrutiny of performance by non-executives and others. There should be processes to check for unintended outcomes (for example matters falling outside of established indicators). Creating a performance measurement culture The organisation should promote and maintain a culture of performance measurement within the organisation
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 1 INTERNAL AUDIT REPORT INCOME AND CASH COLLECTION – CASH OFFICES Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Head of Housing Solutions (points 1 and 2) and Head of Financial Solutions (points 3 and 4) Copied to: Business Finance Manager, Customer Service Manager, Chief Executive and Deputy Chief Executive Headlines The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s management arrangement and key controls in relation to income and cash collection activities. The review focused on whether all cash/income received by the Council is properly recorded in the Council’s financial systems and is regularly reconciled to amounts recorded within the cash receipting system. We also assessed whether all cash/income is held securely and banked timeously and whether there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. The review comprises two separate exercises – one focused on cash offices and another on leisure sites. This report relates to the review undertaken in respect of cash offices. A further separate report in respect of leisure sites will be issued at a later date. Management responsibility for the staffing and operation of cash offices/First Stop Shops lies with Housing Solutions, with the responsibility for banking reconciliations and administration of the cash receipting system lying with Financial Solutions. Our work involved visiting three separate cash offices where we undertook a range of checks on different aspects of cash collection activity with the aim of providing assurance to management on compliance with expected controls and procedures. Testing was also undertaken to assess the adequacy of controls exercised by the Controls and Reconciliations Team who are responsible for reviewing/ monitoring cash collection activity and the reconciliation of monies collected/banked. Based on the results of our work, we have categorised this audit as offering ‘substantial assurance’ meaning we consider that the control environment is adequate and has operated substantially as intended with any control issues or weaknesses identified presenting only a low risk to the control environment. We were pleased to note that all cash/income received by the Council is being properly recorded in the Council’s financial systems and is being regularly reconciled to amounts recorded within the cash receipting system. We also noted that all cash/income is held securely and banked timeously and there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. We have however identified a small number of areas where scope for further improvement exists and accordingly, we have made a number of recommendations for management attention. This includes that management should ensure that monthly discrepancy and reversal reports are produced and reviewed in a timely manner. Internal Audit Opinion (see definition at Appendix 1) Substantial assurance (Green) Organisational impact (see definition at Appendix 1) Minor Report status FINAL Audit ref 0900/2023/007 Date issued 25/10/22 Audit Team Lynn McCrum, Paula Hendry, Hugh Shevlin and Elizabeth Sweeney
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 2 1. Executive Summary Objectives The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s management arrangement and key controls for income and cash collection activities. The key control objectives reviewed and tested during the audit considered whether: • all cash/income received by the Council is properly recorded in the Council’s financial systems and regularly reconciled to amounts recorded within the cash receipting system and other accounting systems as required by relevant Service guidance; • all cash/income is held securely and banked timeously; and • appropriate security arrangements are in place within the cash collection facilities to prevent/discourage thefts and to address the safety and security of staff. Substantive testing was carried out at three cash offices (Bellshill, Motherwell and Kilsyth) using a standard audit programme based on the current cash collection operating practices. We also reviewed the adequacy of the management/monitoring of cash collection activity undertaken by Cash Office management, including management checks on key records, reversals and discrepancies and security related issues. In addition, we assessed the adequacy of the additional monitoring of reversals and reconciliation of income collected undertaken by the Controls and Reconciliations team. In addition to this exercise being carried out for cash offices, testing was also carried out at two leisure sites and a separate report will be issued in due course to relevant Service management for consideration. This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 0 1 3 Key areas requiring management action (High) There have been no key areas requiring urgent management action identified. Good practice identified We noted the following areas of good practice during the audit: • Cash receipting and security procedures have been circulated to all cash office staff and training provided on a regular basis to ensure all staff are aware of their responsibilities and expected controls. • Regular management checks on the completion of key documentation are undertaken by the Team Leaders at each cash office and by cash office management on a rolling basis throughout the year. • All income received is reconciled to transactions processed through the cash receipting system. • Reconciliations between the financial ledger and bank statements, which are appropriately documented and balanced, are carried out promptly after the end of each financial period by staff independent of the cash collection process and reviewed by a senior member of staff. Other areas for improvement (Medium) One area for improvement was identified as follows: • Management should ensure that monthly discrepancy and reversal reports are produced and reviewed in a timely manner.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 3 3. Action Plan Income and Cash Collection (Cash Offices) 0900/2023/007 Ref Finding 1 Management should ensure that monthly discrepancy and reversal reports are produced and reviewed in a timely manner. We reviewed the processes in place for reviewing and checking the monthly discrepancies and reversals reports and noted that at the time of the audit (September 2022) the last reports to be produced and reviewed were for March 2022. We understand that there have been issues with regards to the move to Microsoft Office 365/SharePoint and incompatibility with the existing database which has resulted in the monthly discrepancies and reversals reports being unable to be run. Management have advised that there have been ongoing discussions with Business and Digital to try to resolve the issues and in the interim that work is underway by the Revenue and Benefits Manager (Business Development and Performance) to identify a ‘work-around’ to enable the reports to be run and thereafter reviewed. The reports referenced above enable management to analyse and track reversals and discrepancies by cashier and identify any trends and/or training issues. Although this analysis is not currently being undertaken, the Operations Manager advised that the expected process for recording and reviewing individual discrepancies is still operating with completed forms being forwarded to the Operations Manager. In lieu of this report, a manual review is being undertaken by the Operations Manager to identify any issues or trends and action taken as appropriate. Reversals are actioned as they occur at the cash office and as well as the review of the above-mentioned report, a ‘reversals (wide history) report’ is reviewed by the Controls and Reconciliations team to ensure reversals are appropriately dealt with thereby providing a compensatory control in the interim. Implication Recommendation Priority Management response Implementation Month/Year If reports are not run on a regular basis, discrepancies and reversals may not be identified and the basis and/or underlying explanations for the discrepancies and/or reversals may not be properly investigated and appropriate action taken. The Head of Housing Solutions should ensure that the discrepancies and reversals reports are produced and thereafter reviewed on a monthly basis. This should include the retrospective review of all entries since April 2022 that have not yet been subject to formal review. Medium Agree Lynda Donnelly, Customer Services Manager Due to issues migrating the discrepancy database to Microsoft Teams, the usual automated reports cannot be uploaded, however during this time all discrepancies and reversals have been reviewed manually by Team Leaders and the Operations Manager. Due to the small number of discrepancies, it is feasible to continue with manual reviews. These will now be recorded in an Excel spreadsheet, giving the Team Leaders and Operations Manager an overview of each individual member of staffs performance. The Excel spreadsheet will be set up in early November and will include all discrepancies and reversals from April 2022. November 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 4 3. Action Plan (continued) Income and Cash Collection (Cash Offices) 0900/2023/007 Ref Finding 2 We identified a small number of areas of non-compliance with expected security procedures and/or issues regarding the security arrangements within cash offices. We reviewed the security arrangements in place within the selected cash offices and are satisfied that the procedures are adequate and are generally being complied with. We did, however, note a small number of areas of non-compliance with some aspects of the expected security procedures and/or areas for improvement in the current security arrangements. The most significant of these include: • five occasions where there was no record of the Controls and Reconciliations section having been notified by the cash office that the scheduled uplift of monies to be banked did not take place or the explanation as to why this was the case; • one office (Bellshill) where the door to the secured area housing the safe was open during working hours with the exception of lunchtime when it was closed and locked. • one office (Bellshill) where a mobile phone was observed in the cash office area and not stored in the locked drawer; • one office (Motherwell) where the form used to log the Keypad Battery checks did not include space for a signature when checked; and • two offices (Motherwell and Kilsyth) where the form used to log the Panic Alarm Maintenance checks was not fully completed as the outcome of the checks was not always documented. We also noted one office (Kilsyth) where, due to the location of the CCTV Hard Drive, checks are carried out by Housing staff rather than cash office staff and the cash office do not receive confirmation that the checks have taken place. However, we have been advised that going forward the Team Leader plans on carrying out periodic checks on this and has also requested that Housing staff sign the CCTV check sheet to confirm that the checks have been carried out. Implication Recommendation Priority Management response Implementation Month/Year If security arrangements are not properly adhered to, there is an increased risk of theft and/or misappropriation of monies and/or risks to the safety and security of staff. Where uplifts do not take place as scheduled, insurance limits on the cash office’s safe may be breached. The Head of Housing Solutions should ensure that: (1) staff are reminded of the importance of ensuring that, where an uplift does not take place as scheduled, the Controls and Reconciliations section are promptly notified by e-mail of this including the reason(s) why; (2) staff are reminded of the procedures in place with regards to security access for areas containing the safe and for storing mobile phones outwith the cash office area; (3) the correct forms are being used in all cash offices to log Key Battery checks and Panic Alarm Maintenance checks and remind staff of the importance of ensuring that these forms are fully completed and signed in respect of each check undertaken; and (4) the proposed periodic checks on CCTV Hard Drive at Kilsyth Cash Office are carried out by the Team Leader and CCTV check sheet signed by Housing staff where they carry out CCTV checks. Low Agree Lynda Donnelly, Customer Services Manager (1) Staff will be reminded of the importance to e-mail Controls and Reconciliations section when cash collections do not take place. (2) Staff will be reminded to ensure safe doors must always be secure and mobile phones should not be stored within the cash office. (3) Staff will also be reminded to fully complete the key battery and panic alarm check forms. (4) Staff at Kilsyth Cash Office will be reminded to ensure the periodic checks on CCTV hard drive are carried out by the Team Leader and CCTV check sheet signed by Housing staff where they carry out the CCTV checks. November 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 5 3. Action Plan (continued) Income and Cash Collection (Cash Offices) 0900/2023/007 Ref Finding 3 Reconciliations are not always being undertaken on a timely basis. We reviewed the arrangements in place within the cash offices and Controls and Reconciliations section with regards to cash collection and are satisfied that the procedures in place are generally being complied with. We did, however, note that whilst Cashbook Receipt Journal reconciliations are undertaken for each working day, these are not being undertaken timeously (expected to be completed within a week) and tend to be 2-3 weeks after the date cash was collected. In addition, we identified two cases where the daily ‘End of Day Credit and Debit Card Reconciliation’ was completed but the date of completion was not recorded. Implication Recommendation Priority Management response Implementation Month/Year There is an increased risk that any issues, errors or discrepancies arising would not be identified and corrected in a timely manner. The Head of Financial Solutions should remind Controls and Reconciliations staff that the daily reconciliations should be undertaken timeously and thereafter dated. Low Agree Bernie Rowan, Control & Reconciliations Supervisor At the time of the audit there were a number of vacancies and staff seconded to other finance sections, which meant cashbooks were not being processed as timeously as normal. However, with staffing resources back to normal levels, as well as managing operational requirements, processing of cashbooks is back in line with expectations. The position in respect of timeliness of cashbook reconciliations is kept under continuous review. Staff have been reminded of the requirement to ensure that reconciliations are completed and dated accordingly. October 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 6 3. Action Plan (continued) Income and Cash Collection (Cash Offices) 0900/2023/007 Ref Finding 4 The password parameters for the cash receipting system are not in line with best practice. Best practice states that the minimum recommended length of a password should be at least eight characters and should use a mix of numbers, letters, upper- and lower-case characters. We noted that while the parameters for the password complexity for the cash receipting system generally comply with best practice, it only requires that the password be a minimum length of seven characters. Implication Recommendation Priority Management response Implementation Month/Year If the password parameters are not in line with best practice, there is an increased risk that the password could be compromised. The Head of Financial Solutions should review the password parameters of the cash receipting system to ascertain whether the minimum required length can be increased to reflect best practice and update accordingly. Low Agree Bernie Rowan, Control & Reconciliations Supervisor Service will review the password parameters of the cash receipting system and will update to increase the minimum length of passwords to eight characters to reflect best practice. December 2022
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 7 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green - Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber - Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 1 INTERNAL AUDIT REPORT SUNDRY DEBTORS/ DEBT MANAGEMENT Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: Examples of inefficient/ineffective debt management Issued to: Head of Financial Solutions, Business Finance Manager (Resources and Payments) and Debt Recovery Manager Copied to: Chief Executive, Deputy Chief Executive and all Heads of Service Headlines The purpose of this audit was to provide assurance that the Council has adequate, robust and effective management arrangements in place for ensuring that the management of debtors is appropriately and effectively controlled. The effective management and collection of debts is an essential contributor to the Council’s financial resources and helps maximise income available to fund essential services. To achieve this, the Council aims to issue invoices, where appropriate, and collect all debt owing to it promptly, effectively and efficiently whilst ensuring fair and equitable treatment to debtors in line with approved policies. During financial year 2021-22, 115,844 invoices totalling £114,361,939 were raised. Although collection rates are generally very high (the debt collection rate for the last four years is 97%), as at 30 September 2022, 33,504 invoices totalling £13 million (raised in any financial year) were outstanding, with £5 million of these outstanding in excess of 12 months. Based on the results of our work during this review, we are satisfied that Services are generally proactive in seeking to minimise debts wherever possible by requiring payment in advance, and that generally effective controls exist in relation to raising invoices and the debt write-off process. This indicates that some aspects of the control environment are adequate and operating effectively, and when coupled with the high collection rate noted above, would tend towards us concluding that a ‘reasonable assurance’ audit opinion might be appropriate. However, this review has also identified significant deficiencies in several aspects of the control environment under review. Areas of weakness include inadequate or out-of-date procedures/guidance notes, credit notes lacking sufficient detail as to why they are required, and limited performance information and performance monitoring. In addition, there has been little action taken to address the recommendations raised in the previous audit report issued in 2019 which received a limited assurance audit opinion. Indeed, in some areas, (such as those relating to the passing of outstanding debts for legal action) the control environment has deteriorated further. As a result, we have again categorised this audit as offering ‘limited assurance’. Overall, we consider there is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework and consequently we have recommended that management formally review all aspects of the Council’s debt management framework, including relevant policy, procedures and detailed operational arrangements with a view to improving the efficiency, timeliness, effectiveness and equity of the Council’s current approach to debt management. This recommendation is detailed in section 3 of the audit report. Internal Audit Opinion (see definition at Appendix 1) Limited assurance (Amber-Red) Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0200/2023/002 Date issued 31/10/22 Audit Team Lesley Armstrong, Paula Hendry, Jackie Struthers and Hugh Shevlin
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 2 1. Executive Summary Objectives The purpose of this audit was to provide assurance that the Council has adequate, robust and effective management arrangements in place for ensuring that the management of debtors is appropriately and effectively controlled. In particular, we considered the following: • Adequate written policies and associated guidance covering income/debt recovery/collection and write-off procedures exist; • Debt management arrangements are operating effectively in line with relevant written policies and guidance and appear efficient and cost-effective; • All credit notes and debt write-offs are appropriately authorised; and • Adequate and timely management information is generated in respect of debt and debt recovery to provide a sound basis for the monitoring of performance and associated decision making. Substantive testing was undertaken on the Council’s debt management arrangements across all Services and included assessing whether the Council is proactive in seeking to minimise debts wherever possible. The audit did not consider and/or review the arrangements in respect of debtors/debts associated with Housing Rents, Council Tax or Non-Domestic Rates as these are subject to separate and specific arrangements and are routinely covered by individual audit assignments. This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 1 0 0 Key areas requiring management action (High) One key area requiring urgent management action have been identified: • There is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework. Good practice identified We noted the following areas of good practice during the audit: • The Council uses the ASH debtors system to retain information in relation to debtors’ invoices raised and record debt recovery action taken. • ASH automatically issues an initial reminder at a pre-set timescale where invoices remain unpaid after the payment due date; • All credit notes entered into ASH must be authorised by a second user prior to being applied to the invoice; and • As part of the annual write-off process, Services are required to submit to the Business, Development and Performance Team a Write-Off Mandate signed by the Head of Service or other relevant manager, indicating the number and value of invoices authorised for write-off. The Business, Development and Performance Team reconcile the totals on the mandate to those marked for write-off in ASH prior to processing the write-off. Other areas for improvement (Medium) No other areas for improvement were identified.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 3 3. Action Plan Sundry Debtors/Debt Management 0200/2023/002 Ref Finding 1 There is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework. Internal Audit last reported on our review of the Council’s debt management arrangements in December 2019, where we identified the need for management to review and significantly improve the debt management framework in place. At that time, a commitment was made by management to lead a full review of the Council’s debt management framework by June 2020, however, such a review has not yet been undertaken, partially due to Covid, the retirement of the previous manager/changes in staffing structures and competing priorities. As debt management was included in this year’s audit plan, we agreed with the Service that any review by them would be best put on hold until this audit work was concluded. The Council has a Corporate Debt Policy (which had not been formally updated since 2013) and Debt Recovery Procedure manual which contain a range of information/guidance in relation to policy, procedures and responsibilities for debtor invoices and debt recovery. Financial Solutions management stated that the debt management framework was reviewed and discussed at a Debt Liaison meeting, involving Service representatives, however, this had very little effect on the debt management process and resulted in only minor amendments being made to the Debt Recovery Procedure manual. As a result, this audit identified very similar findings to the previous audit with no significant improvement in the debt management process. Despite there being a 97% debt collection rate on invoices raised during the last four years, the level of total outstanding debt (for all years) as at 30 September 2022 was £13 million. From our review of debt management activity, we consider that the debt collected is largely due to debtors being willing to make payments upon request and not necessarily due to efficient and effective debt recovery activity. We, therefore, consider that the debt management processes require to be reviewed, with full consideration of the objectives, working arrangements, staffing requirements and responsibilities for raising, controlling and recovering outstanding debt, both corporately and within Services, to ensure a more efficient, timely, effective and equitable system of debt management and consequential maximisation of income. Our review of a sample debt management activity identified a number of issues, as follows: • There is generally a lack of evidence of appropriate, effective and timely follow-up/recovery action taken by Services and the Debt Recovery Team (DRT) and many invoices sit for long periods of time without any recovery action being taken; • The event log is not always appropriately and adequately updated to fully reflect/document the recovery action taken by Services and/or DRT; • Instances where there appears to be inequitable treatment of debtors. Where a policy decision has been made to charge for services, the Council welcomes payment from those that pay promptly, but fails to adequately attempt recovery from those that choose for whatever reason not to and often continue to provide services to these debtors; • Outstanding debt is not promptly passed to Legal and Democratic Solutions for legal action when all other attempts to recover the debt have been exhausted. When debt is identified for passing for legal action, it is clearly marked with a ‘legal flag’ and is shaded green on ASH to enable the DRT to undertake the appropriate checks and obtain, from the Service, the documentation required by Legal to pursue the debt. We noted that, for the majority of invoices which had been marked with a legal flag (some of which were marked a number of years ago), the event log did not record whether any further action had been taken. As a result, many of the invoices had not formally been transferred to the Legal module on ASH and therefore, no legal action had been taken; • Our review of performance reporting and monitoring concluded that, although a suite of reports providing performance information in relation to debt management are issued to the Business Finance Manager (who has responsibility for the corporate DRT) and Service representatives on a quarterly basis, there is insufficient reporting and monitoring of performance for debt recovery by management and officers. The reports prepared are high level reports with no detailed content and our work identified that they are generally not utilised by Services with inconsistencies in the generation, review and monitoring of performance information. We also noted that these reports have been in place for a number of years and no review has been undertaken to confirm their continued relevance/utility and identify the most appropriate reports to enable Services to monitor and manage their debt more effectively; • We consider that some of the instalment plans reviewed had excessive repayment terms, and the rationale for determining the level of payment and length of instalment plans was not always clearly documented in the event log on ASH. Additionally, where the debtor defaulted on the payment arrangements, prompt follow-up action was not always taken; • Staff are not always proactive in monitoring dispute codes and trying to resolve them. Whilst there are often valid reasons for some dispute codes being in place for long periods of time (e.g. write-offs, charging orders), we noted a small number of dispute codes which were continuously re-applied over lengthy periods without resolution and/or evidence of proactive monitoring; (Continued over page)
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 4 3. Action Plan (cont) Sundry Debtors/Debt Management 0200/2023/002 Ref Finding 1 (Continued from previous page) • Credit notes and/or the event log on ASH do not generally record the reason for the credit being raised, with credit notes usually restating the details recorded on the original invoice. Additionally, whilst credit notes require to be created and authorised by two different users, there is no management review/oversight of the credit notes raised to ensure that they are valid and appropriate; and • A number of Write-off Mandates were not physically signed and, where they were returned by email, the email did not always indicate authorisation of the mandate. We also noted that the mandate and/or supporting email was not always signed/provided by the Head of Service or other appropriately authorised manager. During the course of our work, we identified a number of examples of inefficient and ineffective debt management and some of these are detailed at appendix 2. We noted that there has been a degree of staff turnover within the DRT within the last few years, with staff seconded to other areas during Covid, and generally when staff leave, the debtors’ accounts/invoices contained in their recovery/legal diaries were not always transferred to other staff and were therefore, not being routinely monitored. Additionally, we understand that the DRT are often in effect ‘fire-fighting’ as their recovery diaries are so full that a number of outstanding debts never get reviewed, resulting in insufficient time for staff to review the debts contained in the legal diaries to ensure that the appropriate documentation has been received from Services to enable the debt to be passed for legal action. Implication Recommendation Priority Management response Implementation Month/Year Policies and procedures may be inadequate, resulting in processes which do not effectively contribute toward maximising income. Debt management arrangements may not be operating efficiently and effectively and may not be applied consistently across the Council, resulting in delays receiving payments, loss of income or inequitable treatment of debtors. Head of Financial Solutions should ensure that a formal review of the debt management framework is undertaken to revisit and refresh all aspects, including policy, procedures and operational arrangements with a view to improving the efficiency, timeliness, effectiveness and equity of the Council’s current approach to debt management. This review should include consideration of the purpose and objectives of debt management activity and cover areas such as: • Establishing which activities are best done at a corporate-level and within Services; • Ensuring between corporate and Service roles and responsibilities are clear and documented; • Examining whether Services are minimising the need for raising invoices by ensuring wherever possible that payment for good and services is obtained in advance of service provision; • Producing clear guidance detailing key requirements for all aspects of the debt management process (e.g. holding appropriate documentation to support debts raised and expectations for monitoring outstanding debt and recording debt recovery action taken); and • Identification of the most effective methods for monitoring compliance and performance of debt management activities. High Agree Nicola Lynch, Business Finance Manager Although Financial Solutions agree with the overall recommendation that a review of the debt management framework is required, we consider that a ‘limited assurance’ audit opinion is unwarranted, as with a 97% collection rate it is unreasonable to suggest that very little of this is as a result of pro-active work being undertaken by the debt recovery team. However, in response to the recommendation made, a review will be undertaken which will focus on the duties which are currently being undertaken within the Corporate Debt Team, how this can link better with the roles of the Service Leads and whether Legal Services should have a more pro-active role in debt recovery. The Debt Recovery guidance will be updated as appropriate following the outcome of this review. April 2023
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 5 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green-Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber-Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls.
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 6 Appendix 2 – Examples of inefficient and ineffective debt management from sample of cases reviewed by Internal Audit Debtor Number Comments 169126 Invoice for care home fees and current outstanding balance at 29/08/22 was £28,963.65. Account was put in dispute on 09/03/21 as family were pursuing guardianship, however, there is no evidence on ASH of this being followed up. We contacted the Service to confirm whether the progress of the guardianship was being monitored and were informed that the solicitor had requested a Mental Health Officer report in March 2021, which was delayed and was not completed before the debtor passed away on 04/05/22. We were advised that the estate has not yet been settled but the Service is in ongoing discussion with the family. Updates on this are not being recorded on the ASH system. 75490 Invoices to NHS and current outstanding balance at 11/10/22 was £621,382 (38 invoices) with 5 invoices totalling £262,414 outstanding since 2019. DRT regularly send a list of all outstanding invoices to this debtor and when they make payment, they select which invoices are to be paid. There is no evidence of specific follow-up action for long outstanding invoices (since 2019). 169034 Invoice for recharge of void repairs totalling £1,905.42 raised 08/04/21. Debtor moved out of council house and provided a c/o address. As no actual address, unable to pursue debt and invoice put into dispute immediately after it was raised. There is no record of any attempt to establish the current address (i.e. checking our internal systems (Open Revenues, HSMS etc.). As a result of our enquiries during this audit, the dispute code has now been removed and recovery action has now commenced. 88192 Invoice to SGN for emergency works - £11,728.27. Phone call received from owner of property invoice was addressed to advising that invoice has been sent to the incorrect address. Invoice was put into dispute using the GA (gone away) code instead of the DH1 (department hold) code. Although Service is working with SGN to resolve payment (SGN’s system keeps rejecting the invoice as not a valid address for the business), the Event Log has not been updated on ASH to reflect this and no-one noticed that the address was incorrectly recorded (75 Burnbank Street, instead of 76). 70532 Invoices for Homecare raised monthly since April 2019 and current outstanding balance at 27/09/22 was £7,050.13. Legal Services were asked to look at possibility of court action, however the Service was unable to provide the required documentation to proceed with legal action therefore Legal Services advised to write the invoices off. 178518, 176283 and 196771 Invoices for overpayment of wages for three different former employees of £3120.63, £1,446.82 and £5,011.53 respectively. Legal flags set 14/05/19, 29/10/18 and 20/03/19 respectively but not formally transferred to Legal Services and therefore no legal action taken. 193186 Invoice for overpayment of former Councillor salary - £4,231.89. Councillor resigned his position but continued to be paid for 4 months resulting in the above overpayment. Legal flag set as passed to Legal Services by Service as solicitor involved. Legal requested further information from Service but Service did not respond and Legal did not pursue. No further recovery action taken by either the Service or Legal. 111574 Invoice for care home fees totalling £3,356.79 raised in 2010. Service contacted Legal Services to advise on legal action as decision made regarding deprivation of capital. Various correspondence between Service and Legal asking for and providing updates. In 2018, Legal confirmed that they do not have a file, the house was no longer in the name of the debtor and the litigation file was closed years ago. Debt marked for write off in February 2022. 184762 Invoice for overpayment of wages for former term-time employee - £750.67. Former employee disputed overpayment. Initially disputed as DH1 on 19/02/21 and as removed after 3 months, continually applied by Service as dispute not resolved. Service contacted Legal Services for advice and whether able to pursue and were informed need evidence of notification to term-time employees of potential overpayment when employment ceases. Service confirmed that this account had fallen off their radar and due to the lapse in time they are likely to recommend it is written off.
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 1 INTERNAL AUDIT REPORT EQUALITIES Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: Equalities - statutory responsibilities and duties Issued to: Head of People and Organisational Development and Equalities Manager Copied to: Chief Executive and Deputy Chief Executive Headlines The purpose of this audit was to provide assurance on the adequacy and effectiveness of the key controls and management arrangements associated with ensuring that the Council complies with its statutory general and specific equalities responsibilities as laid down in the Equalities Act 2010 (‘the Act’) and Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2016 (as detailed in Appendix 2 of this report). The Council has a statutory duty under the Act and Public Sector Equality Duty (PSED) to mainstream its equalities activities into its day-to-day functions (its ‘general equality duty’). In accordance with this duty, the Council has developed an Equality Strategy 2019-2024, which clearly sets out its commitment to mainstreaming equality and human rights through five working objectives for success, together with identified actions. The strategy was approved by Policy & Strategy Committee in September 2019 and is closely aligned with the Plan for North Lanarkshire (TPFNL), its subsequent Programme of Work and various key corporate strategies. In addition, the Council has committed to build equalities into its key decision-making processes, where appropriate, through its expectations that decisions are informed by the use of Equality Impact Assessments (EQIAs), the results of which require to be included in all committee reports and published on the Council’s website. Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’ as we consider that the Council generally has appropriate arrangements in place to demonstrate consideration of the PSED in mainstreaming equalities into its day-to-day functions, that there are processes in place for ensuring that the equalities outcomes have been set and reviewed in accordance with expected timescales and that key equalities reports have been published in accordance with the Council’s specific equality duties. Responsibility for Equalities transferred to People and Organisational Development in April 2022, since when, a desktop review of the existing equalities strategy and legacy programme of work has been undertaken. The initial findings from this review were presented to the Corporate Management Team (CMT) in October 2022 and highlighted a requirement for the Council to better articulate the focus of the equalities programme of activities and more clearly link it to the objectives and outcomes within the Equality Strategy. A need to be clearer about the approaches and processes through which progress will be delivered was also identified. The findings of our audit work endorse this assessment and we have identified a number of areas where we consider that there is a need to significantly improve current arrangements. Recommendations for management consideration/action are detailed at Section 3 of the report and include: • current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose; • significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs); and • improvements are needed to the equalities performance monitoring framework including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. Internal Audit Opinion (see definition at Appendix 1) Reasonable assurance (Green-Amber) Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0900/2023/005 Date issued 3/11/2022 Audit Team Jacquie Howden and Paula Hendry
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 2 1. Executive Summary Objectives The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s key controls and management arrangements associated with ensuring that the Council complies with its statutory general and specific equalities responsibilities as laid down in the Equalities Act 2010 (‘the Act’) and Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2016. In particular, the audit sought to consider whether the Council has: • taken reasonable steps to embed the Public Sector Equalities Duty (PSED) (‘the general equalities duty’) within its governance arrangements and the planning and delivery of its services; and • addressed, or has clear plans to address in line with relevant deadlines, the key specific duties under the Act. Section 149 of the Equalities Act 2010 sets out the three needs of the Public Sector Equality Duty (PSED) in mainstreaming its equalities activities in the day-to-day functions of the Council. The associated Regulations also impose specific duties on the Council to comply with its general equality duty. These are covered in Appendix 2 of this report. Equalities is currently being progressed through the programme of Work P086 – ‘Equalities’ as well as through a number of other related POW and activities undertaken by the Council. This includes being incorporated into key decision-making processes through expectations that, where appropriate, decisions are informed using Equality Impact Assessments (EQIAs). Work undertaken during the audit included a review of the governance arrangement for equalities, together with consideration of the processes for ensuring that the Council can demonstrate that is has had ‘due regard’ to the needs of the PSED in mainstreaming equalities and for ensuring that the key equalities reports (as detailed in the specific equalities duties) are published in accordance with the statutory timescales. We also considered the adequacy of the process for setting, monitoring and reviewing the equality outcomes. Some limited substantive testing was also undertaken on a sample of corporate policies and strategies to assess the extent to which EQIAs are being completed in accordance with corporate expectations. As part of this work, we have not sought to specifically assess the adequacy or effectiveness of the Council’s identified objectives for success or its equality outcomes in mainstreaming its equalities activities. This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 2 1 0 Key areas requiring management action (High) The following key areas requiring urgent management action have been identified: • Current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose; and • Significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs). Good practice identified We noted the following areas of good practice during the audit: • The Council’s equality agenda is being progressed through a number of Programmes of Work, including P086 – Equalities, with regular reports due to be presented to Committee in accordance with the agreed committee cycles; • The Council’s Equality Strategy 2019-2024 is closely aligned with the Plan for North Lanarkshire (TPFNL), its subsequent Programme of Work and various key corporate strategies. The strategy was approved by Policy & Strategy Committee in September 2019 and clearly sets out the Council’s commitment to mainstream equality and human rights into its day-to-day business, through five working objectives for success and associated actions;
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 3 Good practice identified (continued) We noted the following areas of good practice during the audit: • The Council’s Equalities Strategy contains clearly defined roles and responsibilities for key actors in the Equalities agenda. The arrangements include an Equalities Champion, responsible for providing leadership and scrutiny and driving change in the equalities arrangements; working groups with specific responsibilities for leading on the Equally Safe at Work and Disability Confident leader workstreams. The Council also has a small Equalities team which is responsible for ensuring that the Council is complying with its general and specific duties under the Equalities Act 2010; • In accordance with the PSED, the Council has set its evidence-based Equality Outcomes for the four-year period 2021-2025, which are aligned to Council’s business priorities (as set in TPFNL) and the three needs of the general equality duty. The outcomes were approved at CMT and then by Committee in June 2021. The Council’s Equality Outcomes are evidence based and are set every four years, with progress being reported every two years; • The Council has committed to undertaking Equality Impact Assessments (EQIAs) for all proposed, new or revised policies and practices, where appropriate, in accordance with its specific statutory duty and to publish the results of the assessment on its website. The Council’s approach to undertaking EQIAs also incorporates the Fairer Scotland Duty, which requires the Council to consider how it can reduce and tackle socio-economic disadvantages experienced by people when making strategic decisions; • In addition, EQIAs have been formally built into the Council’s committee reporting formats and consideration of the completion of the EQIAs require to be included in all committee reports. Guidance on how to complete an EQIA, together with proforma EQIA templates, are published on Connect and have been notified to Services; • In accordance with the Council’s specific duties, the council has published a Mainstreaming Equalities report, which sets out the Council’s approach to mainstreaming equalities into its day-today business; an Equality Outcomes progress report (2017-2021), an Equality Outcomes report (2021-2025), an Employment Gathering Information report and an Equal Pay statement. Reports require to be published every two years, with the next reports due to be published by 30 April 2023; and • The council has made its equality reports accessible to the public in accordance with the specific duty in the PSED, with information available on Connect, MARS and the Council’s website. Other areas for improvement (Medium) One other area for improvement was also identified: • Improvements are needed to the equalities performance monitoring framework, including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders.
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 4 3. Action Plan Equalities 0900/2023/005 Ref Finding 1 Current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose. The Equality Strategy 2019-2024 sets out the Council’s formal governance hierarchy for equalities, together with clearly defined roles and responsibilities for each group from Committee through elected members and the Corporate Management Team (CMT) to working groups, employees and Trade Unions. We were pleased to note that there is a designated Equalities Champion whose responsibilities include providing leadership and scrutiny, driving change in equalities activities and for providing representation at a political level on regional and national forums where equality matters are concerned. In addition, there is a dedicated Equalities Team, which has been tasked with ensuring that the Council is complying with its general duty under the Equalities Act 2010 and for ensuring that appropriate arrangements are in place around the specific equalities duties to allow the Council to mainstream equalities in its day-to-day operations. From our work, we were satisfied that the team is at the core of advancing all the Council’s equalities activities including collating and reporting key equalities information; liaising with Services; involvement in the working groups tasked with taking forward elements of the equalities work; developing/reviewing the Equality Strategy, objectives for success and the equalities outcomes; and preparing guidance for staff on the completion of EQIAs. Our audit testing, however, also highlighted a number of areas where we consider that there is significant scope for improvement in the current governance arrangements as follows: • The Equality Networking Group is responsible for ensuring all equality matters are advanced and fit for purpose. However, our audit testing highlighted that the group has not met since 2020 (when the Covid pandemic hit) and has since been stood down. We understand that initial discussions have been held with the Head of People and Organisational Development (POD) to replace this group with an Equality Board, but that this has not been formally taken forward to date; • There are currently two live working groups (Equally Safe at Work and Disability Confident Leader), both of which are chaired by the Head of POD and both of which are tasked with taking forward specific elements of the equalities agenda. In addition, a short-life member/officer working group (Black Lives Matter) (BLM) was stood down in February 2022. We understand, however, that the legacy actions identified for the BLM working group are currently being taken forward by the Equalities Manager and Head of POD and will be included in the advancing race equalities plan; • None of the working groups had clearly defined terms of reference and there was scope for the action plans used for each group to define the current and planned actions more clearly, the expected outcomes from each action, the performance measures to be considered in each case, the name of the officer responsible for taking any action and the timescales for taking this action. We also noted that there is no overarching comprehensive action plan encompassing all aspects of the equalities agenda; • The Equality Strategy does not currently set out the Equalities Team’s roles and responsibilities; and • Despite the role of the Equalities Team to ensure that the Council is complying with its general and specific duties under the Equalities Act 2010 to mainstream equalities in its day-to-day operations, there is currently no over-arching monitoring/compliance role being undertaken by the team in respect of the Council’s equalities activities. The Equalities Team transferred to People and Organisational Development in April 2022. Since the transfer, a desktop review of the existing equalities strategy and legacy programme of work has been undertaken with the aim of assessing the current level of progress and identifying any gaps in provision and approach. Initial findings from this review were presented to the Corporate Management Team (CMT) in October 2022 and highlighted a requirement for the Council to better articulate the focus of its equalities activities and more clearly link this to the objectives and outcomes within the Equality Strategy. Whilst it is evident that there is much activity underway by the Equalities Team and the CMT report highlights a number of current and potential future work streams, we consider that with the recent transfer of responsibility, it would be appropriate and timely for there to be full consideration and prioritisation of actions considered necessary to advance work in the equalities area. The CMT report recognises that equality cannot be solely delivered by the Equalities Team and that it is the responsibility of all. As part of this audit, we considered the extent to which Services could demonstrate that they were considering the Council’s five equality objectives for success in their service planning and delivery arrangements. We received responses from only five of the 10 Heads of Service selected. Whilst the responses received generally indicated that equalities and human rights were considered in the relevant Service’s planning/delivery processes, in the absence of any formal monitoring of compliance with key aspects of the Equalities strategy and associated procedures, we were unable to determine whether/the extent to which this is replicated across the Council. We consider that the absence of any formal monitoring process in place at a corporate level to ensure that Services are adequately addressing the Council’s equalities duties, whilst not necessarily indicating that the Council is failing to discharge its equalities duties, does mean the Council may not always be able to adequately demonstrate this. (continued over page)
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 5 3. Action Plan (continued) Equalities 0900/2023/005 Implication Recommendation Priority Management response Implementation Month/Year Without appropriate scrutiny/challenge or monitoring processes, the Council’s equalities arrangements may not be fit for purpose. Without clearly defined terms of reference, members of the relevant groups and other key stakeholders may not be fully aware relevant roles and responsibilities in respect of the equalities agenda and/or be taking appropriate actions in respect of these roles and responsibilities. There would be no effective process in place for ensuring that actions taken to address issues are being properly managed on a timely basis and/or monitored for impact. Management may not be aware of the extent of compliance with expected processes and actions. The Head of People and Organisational Development should ensure that: (1) the current governance arrangements for equalities are reviewed and updated (having due regard to the issues raised above) to ensure that the Council can better demonstrate compliance with its general and specific duties for equalities under the PSED. As a minimum, consideration should be given to establishing an Equalities Board (or equivalent) to ensure that equalities activities are being progressed and regularly reviewed/monitored at both corporate and service level; (2) an action/workplan capturing all required work around equalities, including responsible officers and timescales, is prepared and suitable monitoring arrangements are put in place to ensure any actions are appropriately progressed in line with expected timescales; and (3) a framework is developed to appropriately monitor compliance with key aspects of the Equality strategy and associated procedures. High Agree Audrey Cameron, Equalities Manager (1) It is the intention of the service to establish a new vehicle to ensure better overarching governance and a focus on the delivery of our Equalities Strategy. This is likely to be in the form of an Equalities Delivery Board with a focus on the Equalities Delivery Framework, engagement across services, and supporting our annual plan of activities in this area. We envisage that the board would meet quarterly with onward progress reporting to CMT and Committee twice yearly. This board will also be our primary vehicle for an ongoing improvement in the effectiveness of our EQIA processes and compliance. (2) The corporate action plan currently being delivered by the Equalities team is due to be presented to Committee in February 2023 (cycle 1). The action plan will be updated to also include individual service actions and will include named responsible officers identified to take appropriate actions at service and corporate level together with the relevant timescales for taking that action. The Action Plan will be monitored through the Delivery Board. (3) As per (1) above, the Delivery Board will be responsible for monitoring the progress on the Equalities Delivery Framework on a quarterly basis. Terms of reference including membership of the board to be drafted and agreed by end February 2023. First Board meeting to be arranged by the end of March 2023. March 2023 and ongoing First Board meeting to be arranged by the end of March 2023.
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 6 3.Action Plan (continued) Equalities 0900/2023/005 Ref Finding 2 Significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs) We were pleased to note that the Council has committed to undertake EQIAs for all proposed, new or revised policies and practices and to publish the results of these assessments on its website in accordance with its specific equality duties. We were also pleased to note that EQIAs have been formally built into the Council’s committee reporting formats and consideration of the completion of the EQIAs require to be included in all committee reports. Guidance on the completion of EQIAs has been developed, together with proforma assessment templates, in accordance with the Equality and Human Rights Commission (EHRC) guidance document – ‘Assessing impact and the PSED’, which incorporate both the general equality duty and the Fairer Scotland Duty. A presentation was provided to the extended Corporate Management Team in June 2019 setting out the Equality Strategy and the need to complete EQIAs. We reviewed the Council’s guidance in this area and were generally satisfied that it reflected the good practice contained in the EHRC guidance above. We did identify a small number of areas where we considered that there was scope to improve the guidance, and these have been notified separately to the Equalities Manager for further consideration. As of June 2022, there were only 16 assessments published on the Council’s website, which is lower than we would have expected give the number of council policies and procedures in place and key decisions made. In particular, we were surprised to note that none of the published EQIAs related to Adult Health and Social Care activities. From discussions with the Equalities Manager, we noted that there is currently no formal scrutiny process in place to ensure that EQIAs are being completed in accordance with corporate procedures, to check the accuracy/completeness of any such assessments and/or to ensure that appropriate documentation is being retained by service to support these assessments. In addition, there is also no formal requirement for Services to notify the Equalities Team of any EQIAs undertaken to ensure that these are published on the website in accordance with the corporate expectations. We reviewed a sample of five corporate strategies reviewed as part of the latest SPF review and noted that EQIAs had only been completed in three cases, only two of which were then subsequently published on the Council’s website. We also selected a sample of five recently reviewed policies from MARS and noted that only one had a completed EQIA, which had not been published on the website. Reasons provided by Services for non-completion/publication of the EQIAs indicated a lack of understanding of the need to complete an assessment for all such policy and strategy reviews. A recent desktop review of this area by the Equalities Team also identified a lack of consistency in the application of EQIAs with many completed after decisions have been made, if at all, and that many of those undertaken do not adequately explore potential equality impacts. The Team has intimated an intention to develop a range of training opportunities for equalities covering both staff and Elected Members including a mandatory module for all staff who may be required to consider and/or complete an EQIA. This concurs with our findings above, and we consider that raising awareness and ensure all relevant staff undertake appropriate training in relevant aspects of equalities should be a priority. Implication Recommendation Priority Management response Implementation Month/Year EQIAs may not be completed in accordance with corporate expectations and/or the Council’s equality duty. EQIAs may not be fully and/or accurately completed leading to decisions being made without potential equalities impacts being considered. Without appropriate or sufficient evidence that the Council is complying with its legal responsibilities, it risks legal challenges and/or reputational damage. The Head of People and Organisational Development should: (1) review, and refresh as necessary, the arrangements for EQIAs including ensuring that relevant corporate guidance and supporting documentation is up-to-date and fit for purpose; (2) thereafter, seek to raise awareness/understanding of corporate expectations. This should include reviewing current equalities training, including formalising what training, if any, requires to be made mandatory and ensure that arrangements are put in place to monitor uptake of these courses by relevant staff as appropriate; and (3) periodically review compliance with corporate expectations regarding the completion of EQIAs. High Agree Audrey Cameron, Equalities Manager (1) An immediate review of current EQIA arrangements will be undertaken by the Equalities Manager. All user communications will be issued based on the CMT recommendation for all staff undertaking EQIA’s to undertake a mandatory e-learning module. (2) A wider review of EQIA arrangements will be undertaken to agree a revised and improved approach. This will be finalised in conjunction with the Equalities Delivery Board and rolled out into services thereafter. It is also the service’s intention to appoint Equalities leads within each service who will take responsibility for ensuring the effectiveness of EQIA use within their service. A revised programme of EQIA training will be developed to support the roll out of the new process. (3) The Equalities Manager will develop a process for the periodical review of compliance within services, working in conjunction with each service equalities leads. November 2022 June 2023 August 2023 August 2023
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 7 3.Action Plan (continued) Equalities 0900/2023/005 Ref Finding 3 Improvements are needed to the equalities performance monitoring framework, including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. In accordance with the requirements of the PSED the Council is required to report progress on its Equality Outcomes every two years (next due April 2023). We reviewed the arrangements for setting/prioritising, monitoring and measuring progress on the equality outcomes. We did not, for the purposes of this audit, specifically assess the adequacy or effectiveness of the Council’s identified equality outcomes in mainstreaming its equalities activities. We noted that, whilst various sources of qualitative and quantitative information are collated, the process for setting/prioritising the final Equality Outcomes is not fully documented. In addition, we noted that there is currently no robust process in place for measuring and monitoring performance in respect of progressing the outcomes and for determining whether the actions taken by the Service/Council are appropriate and having the expected impact (either for the Council’s role under the PSED or in respect of the council’s role for Education and Licencing). A Performance Management Framework (PMF) has been developed to facilitate the tracking and measurement of impact and progress for each outcome. The PMF, however, currently only records the expected impact of the outcome, actions identified to progress the outcome and some generic performance measures for each year e.g. ‘people at risk of homelessness are provided support’ or ‘number of women/men/children re-housed’. There are no specific targets set for performance each year and no timescales have been set for achieving these targets (other than by year end). We understand that the Equalities team is currently in the process of reviewing the PMF to ensure that the Council can better monitor progress against each of the outcomes. However, we understand that there is currently no definitive date set for its completion/update. We reviewed the reports presented to committee via the programme of work for equalities (P086) and were satisfied that the reports for 2021/2022 were all presented to the relevant committees in accordance with the agreed timescales. We understand, however, that, due to the revised Committee structure following the Council elections in May 2022, changes to the reporting timescales for the 2022/2023 have been made, with the Equalities Outcome Progress report now due to be presented to the new Wellbeing and Tackling Poverty Committee as part of the 2023 Mainstreaming report (possibly in cycle 2), which may be after the 30 April statutory reporting timescales. In addition, we noted that the reports required by the specific equalities duties of the PSED were presented to Policy & Strategy Committee in a composite report dated June 2021, again after the 30 April statutory reporting timescale. We understand that the individual reports were published on the Council’s website in draft by the statutory deadline, with committee approval sought retrospectively, due primarily to the information not being available in time for the March 2021 committee cycle. Services are responsible for ensuring that accurate and up-to date-information is provided to the Equalities Manager to ensure that the statutory reporting timescales are met. However, we understand that information provided by Services is not always robust and/or provided on a timely basis. In addition, we understand that there currently no further checks on the accuracy/completeness of the information provided to the Equalities team prior to the reports being presented to committee/published on the Council’s website. Implication Recommendation Priority Without an effective performance management framework, management would not be able to measure whether the Equality Outcomes and the actions taken to address these were having the expected impact. and/or may not be able to take appropriate action to address areas of ‘under- performance’. Without formal processes, reports may not be published in accordance with the agreed committee and/or statutory timescales. The Head of People and Organisational Development should ensure that: (1) a robust performance monitoring framework is developed that will allow management to measure performance and impacts more effectively and accurately against the equality outcomes and allow for periodic assessments to be undertaken. This should include identifying clear and realistic targets for each outcome and consideration of current and future planned actions which are designed to contribute to the achievement of these outcomes; (2) ensure that robust arrangements are in place to enable accurate and up to date information to be collated and reported to key stakeholders in accordance with the committee and statutory timescales; and (3) seek to ensure greater transparency underpins the process for identifying/setting/prioritising Equalities outcomes/targets and associated activities and actions. Medium
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 8 3. Action Plan (continued) Equalities 0900/2023/005 Management response Implementation Month/Year Agree Audrey Cameron - Equalities Manager (1) The review and updating of the current performance framework and reporting arrangements will be prioritised as a key work area for the Equalities Delivery Board. The Council’s Mainstreaming report, including progress on the equalities outcomes, is due to be published in April 2023 and this will inform the future work of the Board. (2) It is envisaged that improved arrangements and a revised framework will be devised in conjunction with Business Solutions and members of the board during 2023, linking to a wider review of the Strategic Performance Framework to ensure that the two are fully linked. This might involve the introduction of an annual reporting cycle to ensure that the performance data on outcomes is gathered on a more regular basis. This would ensure that we are able to meet the statutory reporting timelines for future years. (3) As part of the above arrangements, the process for setting/prioritising the Council’s equality outcomes and targets will be fully documented. Re (1) and (2) Mainstreaming report – April 2023. New approach to be agreed by the board by September 2023 for reporting in December 2023 and annually thereafter. (3) Equalities outcomes are not due to be amended until 2025 and the review process will be discussed with the Equalities Board during 2023 and 2024.
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 9 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green-Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber-Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls.
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 10 Appendix 2 – Equalities - statutory responsibilities and duties The Council has a range of general and specific responsibilities and duties with regard to Equalities placed upon it by legislation. The purpose of the key public sector equality duty is to ensure that public authorities and those carrying out a public function consider how they can positively contribute to a more equal society through advancing equality and good relations in their day-to-day business, to: • take effective action on equality; • make the right decisions, first time around; • develop better policies and practices, based on evidence; and • be more transparent, accessible and accountable; • deliver improved outcomes for all. The general equality duty requires public authorities, in the exercise of their functions, to have due regard to the need to: • eliminate unlawful discrimination, harassment and victimisation and other prohibited conduct; • advance equality of opportunity between people who share a relevant protected characteristic and those who do not; and • foster good relations between people who share a protected characteristic and those who do not. In terms of specific duties, each listed authority is required to: • report on mainstreaming the equality duty; • publish equality outcomes and report progress; • assess and review policies and practices; • gather and use employee information; • use information on members or board members gathered by the Scottish Ministers; • publish gender pay gap information (where they have at least 20 employees); • publish statements on equal pay (where they have at least 20 employees; • consider award criteria and conditions in relation to public procurement; and • publish in a manner that is accessible. The Equalities and Human Rights Commission has published a range of guidance for public bodies in relation to equalities duties at Public sector equality duty in Scotland | Equality and Human Rights Commission (equalityhumanrights.com).