2. ARSB - IA Progress and Performance June 2024
Renfrewshire Council · 19 August 2024
Back to Audit, Risk and Scrutiny Board — 19 August 2024 and its agenda
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___________________________________________________________________ To: Audit, Risk and Scrutiny Board On: 19 August 2024 ___________________________________________________________________ Report by: Chief Auditor ___________________________________________________________________ Heading: Internal Audit and Counter Fraud Progress and Performance for Period to 30 June 2024 ___________________________________________________________________ 1. Summary 1.1 The Internal Audit Annual Plan was approved by the Audit, Risk and Scrutiny Board on 18 March 2024. Internal Audit measures the progress and performance of the team on a regular basis using a range of performance indicators. This report monitors progress from 1 April 2024 to 30 June 2024, in terms of the delivery of the Audit Plan for the year and compares actual performance against targets set by the Director of Finance and Resources. 1.2 In terms of Counter Fraud, no formal performance targets for fraud investigation have been established for the following reasons. A major part of their work involves being the single point of contact (SPOC) for the Department for Work and Pension’s (DWP) Single Fraud Investigation Service and the Service Level Agreement for this work contains time targets for completing this work. The types of fraud referrals received to date are wide ranging and the team’s objective is to concentrate on investigating those referrals considered to contain the greatest fraud risk. They are also involved in promoting fraud awareness and assisting with the implementation of adequate fraud prevention measures within the Council. 1.3 All of the Internal Audit Team and Counter Fraud Team are currently working on a hybrid basis and also undertake home/site visits when the need arises. We also provide advice and support where necessary to council services.
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1.4 The report details progress against local and national initiatives involving Internal Audit and the Counter Fraud Team from 1 April 2024 to 30 June 2024. ___________________________________________________________________ 2. Recommendations 2.1 Members are invited to note the Internal Audit and Counter Fraud Team progress and performance to 30 June 2024. _________________________________________________________ 3. Background 3.1 The progress and performance of the Internal Audit Team is subject to regular monitoring using a number of performance measures. The Director of Finance and Resources has set annual targets for the team to demonstrate continuous improvement. In terms of the Counter Fraud team, there are time targets in place for responding to requests from the DWP’s Single Fraud Investigation Service. Due to the diverse nature of fraud referrals no formal performance targets have been established and the outcomes from investigations is regularly monitored by management. In addition, the Counter Fraud Team are heavily involved in fraud prevention measures within the Council. 3.2 Internal Audit and the Counter Fraud Team support a variety of local and national initiatives through participation in professional practitioner groups and co-ordination of national initiatives such as the National Fraud Initiative. 3.3 This report measures the progress and performance of both the Internal Audit and Counter Fraud Team for the period from 1 April 2024 to 30 June 2024. 4. Internal Audit Resource 4.1 The Chief Auditor retired in June 2024. Currently the Assistant Chief Auditor is covering this post. 4.2 Given both the size of the team and the composition, there is some risk that given generally accepted difficulties with the recruitment of professional audit and fraud prevention staff within local government the resilience of the team may be an issue should the situation arise where even one or two staff leave the team. It is likely there would be an immediate impact on the service’s ability to deliver the internal audit plan.
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4.3 Informal discussions have recently been held with the Chief Financial Officers (Section 95 Officers) of Inverclyde Council and West Dunbartonshire Council to consider these risks and to begin to explore possible options which would address the resilience issues all three councils are facing. It should be noted that the delivery of financial savings is not an objective of this exercise, and each Chief Financial Officer is committed to maintaining the current level of resource. 4.4 As a result, a report was submitted and approved by the Finance, Resources and Customer Services Policy Board on 13 June 2024 to enable further development work on potential options in conjunction with these neighbouring councils to be explored. The aim is to develop a list of potential models, highlighting the associated issues, risks and benefits for consideration at a future Finance, Resources and Customer Services Policy Board. 5. Internal Audit Team Performance (a) Percentage of audit plan completed as at 30 June 2024 This measures the degree to which the Audit Plan has been completed. Actual 2023/24 Annual Target 2024/25 Audit Plan Completion Target to 30 June 2024 Audit Plan Completion Actual 30 June 2024 93.2% 90.0% 25% 25.7% The Annual Target for this indicator in prior years was 95% which has not been achieved for a few years. The Internal Audit Section is a small team. It was recognised that any unplanned absence or unplanned work above the budgeted average can have a considerable effect on this indicator. For this reason, the Director of Finance and Resources has agreed for the 2024/25 annual target to be reduced to a more realistic but challenging target of 90%. The current audit plan completion indicator is slightly above target. (b) Percentage of assignments complete by target date This measures the degree with which target dates for audit work have been met. Target 2024/25 Actual to 30 June 2024 95.0% 100% Actual performance is ahead of the target set for the year. (c) Percentage of audit assignments completed within time budget
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This measures how well the time budget for individual assignments has been adhered to. Target 2024/25 Actual to 30 June 2024 95.0% 100% Actual performance is ahead of the target set for the year, although this is likely to reduce over the remainder of the year. (d) Percentage of audit reports issued within 6 weeks of completion of audit field work This measures how quickly draft audit reports are issued after the audit fieldwork has been completed. Target 2024/25 Actual to 31 December 2024 95.0% 100% Actual performance is ahead of the target set for the year, although this is likely to reduce over the remainder of the year. 6. Review of the 2024/25 Internal Audit Plan 6.1 Our 2024/25 Audit Plan is subject to ongoing review in light of any organisational risks arising, and also to determine whether any assignments will have to be amended or cancelled as result of us being unable, for any reason, to undertake the work planned. At this stage we are not recommending any further amendments to the plan. 6.2 Although a vacancy factor was built into the Audit Plan as it was known that the Chief Auditor was retiring, this may result in assignments being completed later than planned and therefore progress will continue to be closely scrutinised by management. 6.3 Any proposed amendments to the audit plan will be brought to this Board for approval. 7 Counter Fraud Team Progress and Performance 7.1 In line with the Service Level Agreement, the Counter Fraud Team act as the Single Point of Contact (SPOC) to route potential housing benefit fraud referrals to the DWP, liaise with the Council’s Housing Benefit Team and DWP Fraud Officers and retrieve the necessary evidence for the DWP Fraud Officers from the Housing Benefit System. Where a suspicion of fraud arises, the team investigate and report their findings to management. Where appropriate, follow-on action is taken, such as reporting the matter to Police Scotland for further investigation, or directly to the Procurator Fiscal. In addition, they also work jointly with DWP Fraud Officers on criminal fraud investigations which focuses on the investigation and prosecution of the Local Authority administered Council Tax Reduction Scheme and Social Security benefit fraud. In addition to investigation work the team also undertake fraud prevention work.
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7.2 During this quarter, we have been working on the various fraud referrals. As part of our fraud prevention work, we are continuing to validate the numerous bank account or remittance contact changes received from the Council’s suppliers and contractors and the details supplied by new Housing Applicants. 7.3 A new Counter Fraud Officer was appointed in May 2024 into a vacant position and the team is now fully staffed. 7.4 The financial and non-financial results for the period (April 2024 to June 2024) are noted in the table below. Financial Outcomes Period to 30 June 2024 (£) Cash savings directly attributable to preventative counter fraud intervention 2,201 Cash recoveries in progress directly attributable to counter fraud investigations 7,413 Notional savings identified through counter fraud investigation, (e.g. housing tenancy and future council tax) 98,727 Housing Benefit Savings Attributable to Joint Working by Counter Fraud and DWP Counter Fraud Officers 7,841 Other DWP Benefit or Tax Credit Savings identified through other Counter Fraud work or through joint working with DWP 5,955 Non-Financial Outcomes Period to 30 June 2024 Housing properties recovered 1 Housing applications amended/cancelled 2 Housing Allocation Priority Changed 0 Blue badge misuse warning letters issued 6 Blue Badges Cancelled 2 Supplier/Contractor Checks Undertaken 45 7.5 Our notional savings are based on the methodology prepared by the Cabinet Office. 8. Local and National Initiatives Scottish Local Authorities Chief Internal Auditors Group 8.1 The Local Authorities Chief Internal Auditors Group met in June and received updates from the Chairs of the various specialised audit focused topic groups including sustainability/climate change group and
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data analytics which have been established. A presentation was also given on the financial sustainability and the role of internal audit. Scottish Local Authorities Investigation Sub-Group 8.2 The Local Authorities Investigation Sub-Group also met in June and received a presentation from Audit Scotland on the forthcoming 2024/25 National Fraud Initiative. 8.3 Preparation work for this exercise has just commenced by the Counter Fraud team. and we will be required to submit the Council’s data in October 2024. External Quality Assessment 8.4 We have also finalised the external quality assessment of Inverclyde Council Internal Audit Service and the final report has been submitted to their management. _________________________________________________________ Implications of the Report 1. Financial - The Council has in place arrangements to recover the any overpayments identified from the work of the Counter Fraud Team and the National Fraud Initiative. 2. HR & Organisational Development - None 3. Community Planning – Safer and Stronger - effective internal audit is an important element of good corporate governance. 4. Legal - None 5. Property/Assets - None 6. Information Technology - None 7. Equality & Human Rights - None 8. Health & Safety – None 9. Procurement - None 10. Risk - The progress and performance reported relates to the delivery of the risk-based internal audit plan and the mitigation of the risk of fraud and error.
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11. Privacy Impact – None 12. COSLA Implications – None 13. Climate Risk - None ________________________________________________________________ Author: Karen Campbell, Interim Chief Auditor – 07768354651