ITEM BV7 - ANNEX A

BEST VALUE COMMITTEE – 11 SEPTEMBER 2002

Audit & Risk Management Services – Work Programme 2002/03

Progress Statement as at August 2002  -  Risk Assessed Activities

Activity	Opinion	Recommendations
Made	Summary of Main Findings 
and Recommendations	Response from Director	

1.	Strategic Review of Best Value Performance Indicators	
Limited assurance	
8 priority 1

4 priority 2	
The main conclusion from this review is the need for greater corporate direction to ensure that officers accountable for producing BVPI’s have clear instructions on accuracy and production within timetables.  Standards in terms of working paper production and appropriate supporting documentation is required, also responsible officers need to provide assurance as to the accuracy of the BVPI.  An independent verification mechanism needs to be introduced as a means of independently verifying assurance statements.  Reporting quarterly on BVPI’s is also suggested	
Director for Strategy has responded in the following way:

CCMT at their end September meeting are due to consider the revised protocol, taking on board the issues in the review. The Performance & Review Unit will be responsible for quarterly management of the whole process with a programme of independent testing undertaken annually by Audit & Risk Management Services.  The protocol will clearly state accountabilities	

Activity	Opinion	Recommendations
Made	Summary of Main Findings 
and Recommendations	Response from Director	

2.	Review of Debtors Key Controls	
Substantial
Assurance	
2 Priority 2

2 Priority 3	
The key control review found that the system for debtors was basically sound.  However, there were a number of areas that could be enhanced in order to minimise further exposure to risk.  

These included weekly reminders of debts under £1,000 being informed to originating departments to ensure that overdue debts could be adequately monitored.

Also, the authorised debt write-off signatory list should be kept up-to-date and write-offs actioned in accordance with council policy.  There should be clear evidence that age debtors is being monitored adequately.  Lastly, log-in and passwords, including those with view-only access to the system, should be unique	
The Senior Assistant County Treasurer, Treasury Services has confirmed that all the recommendations have been actioned	

Activity	Opinion	Recommendations
Made	Summary of Main Findings 
and Recommendations	Response from Director	

3.	Review of main accounting system key controls	
Substantial Assurance	
3 Priority 2

1 Priority 3	
The system for main accounting is generally sound with some minor enhancements suggested to minimise further exposure to risk.  Recommendations have been made in respect of more effective communication of legislative policies and procedures as they apply to accounting.  

The policy to create new accounting codes should be reviewed.  (This will be addressed by MIS implementation).  

More regular reconciliation of data holding accounts in respect of dual monitoring should be undertaken.  

The number of manual journals sent for processing should be verified against the actual period processed in order to ensure that there are no copies 	
The Senior Assistant County Treasurer has responded to say that the recommendations have been implemented	

Activity	Opinion	Recommendations
Made	Summary of Main Findings 
and Recommendations	Response from Director	

4.	Review of Payroll System Key Controls 2001/2002
	
No assurance	
11 Priority 1

10 Priority 2
  
8 Priority 3	Payroll services covered by this review will be provided under contract to 30 September 2002 to the Council by Liberata (formerly CSL).

This review examined the payroll system designated as a ‘fundamental system’ by the external auditor.  It draws conclusions, recommendations and therefore an assurance opinion, from the features of that system.

There are, of course, other compensating controls (e.g. budgetary control routines), which can counter perceived, or actual, system weaknesses.  The standards of those ‘user’ controls are outside the scope of this specific review.
	The District Auditor has a duty as part of his opinion work for 2001/02 final accounts to evaluate any implications from this review.

This review examined the existing controls prior to the planned introduction on 1 October 2002 of the Council’s new MIS.  The priority 1 recommendations require the closest attention and clearly demonstrate that the existing controls are weak.  However, they should be viewed in the light of how they will be addressed by the new MIS system.

It is understood that of the 11 priority 1 recommendations

-	3 are agreed to still be relevant.

-	4 are not relevant in the new system.(different process)

-	4 are relevant to the new system and will be resolved by SAP workflow and other processes.

By way of example the priority recommendations demonstrate the existing controls are weak in preventing fraud or incorrect payments and separation of duties is poor with payroll officers being responsible for updating all areas of their payroll without any independent review.	
The Director for Business Support (via a Senior Assistant County Treasurer) has provided an assurance that the priority 1 (and some of the other recommendations) will be addressed by the new MIS system.

Project Management Standards (for MIS introduction)

Progress to address and eliminate agreed weaknesses is being monitored by Director for Business Support as part of MIS implementation project.

Independent Assurances

In view of the “ no assurance” ARMS opinion, specific anti-fraud work is now planned for September 2002.  An independent assurance (to be sought via ARMS) that MIS has addressed the control weaknesses identified from this 2001/02 review is now regarded as a priority task.	

Activity	Opinion	Recommendations
Made	Summary of Main Findings 
and Recommendations	Response from Director	

5	Review of Insurance System Key Controls	
Substantial Assurance	
3 Priority 2

3 Priority 3	
Insurance administration is generally sound.  The main concerns were around prompt reporting of incidents by departments and ensuring that advice on insurance matters is updated on the intranet site.

Quarterly reporting to Directors on claims that arise frequently so that action can be taken, thus reducing the incidence of claims in the future	
All recommendations have been accepted with implementation dates all before end of the current financial year