Agenda item
Certification of Grants and Returns
The Audit Commission requires its external auditors to prepare an annual report on the claims and returns it certifies for each client under the Audit Committee regime. This letter is KPMG‘s (external auditors) annual report for the certification work undertaken for 2013/14.
Minutes:
The Committee received a report from KPMG (external auditors) which set out the certification of work undertaken by KPMG for 2013/14. This was a requirement by the Audit Commission for the external auditors to prepare an annual report on the claims and returns it had certified for the Council. Steve Lucas (Audit Manager) introduced the report.
In relation to the HB subsidy claim, Steve Lucas identified that HB subsidy was a complex area and over 50% of councils have their claim qualified. He continued that for the Housing Benefit Subsidy claim, the Authority identified 83 cases referred to them by Brent Mental Health Service totaling £1,177,334. This had been misclassified within the claim but was later corrected and resulted in an increase of subsidy due to the Authority of £332,439.
Councillor Filson asked whether officers should be praised for identifying this underclaim. Phil Johnstone (KPMG) pointed out that officers were correcting their own errors.
As part of separate testing, KPMG tested the accuracy of 60 claims and identified 5 errors.. The errors either relating to classification on the claim or the amount paid to the claimant. These included incorrect non-dependent deductions made, an extended payment incorrectly awarded; and errors in the calculation of self-employed income. The Authority tested a further 80 cases and identified errors in 33 cases. This primarily concerned self employed cases where either an incorrect amount was used for expenses or there was no evidence to support the basis for the expense amount. This resulted in four overpayments, nine errors which did not change the value of the individual claims and 20 which would have resulted in underpayments based on the information on file. As a result of KPMG’s testing the Housing Benefit Subsidy claim was qualified with the total extrapolated error, based on the errors found approximately £100,000.
Members heard that the Authority had addressed two of the three recommendations made in 2012/13 relating to the housing benefit grant claim. The third recommendation on removing errors in rent and income figures used had not been addressed as there was a significant increase in the number of cases which could either not be evidenced or disagreed to the evidence available this year. The main area was self-employed income, including eligible deductions.
Andy Monkley (Subsidy and Policy Manager) was in attendance to answer queries on housing benefit subsidy. Andy Donald, Strategic Director R&G, was also present. Andy Monkley explained that this was the first time that the Council had identified that level of errors with self employed income assessment. Mr Monkley explained that the majority of errors related to a lack of audit trail for the calculations. He added that the department would carry out a review of procedures by the end of January 2015. . The review would involve a standard template for self employed cases; standard note entries as part of the documentation clarifying income and expenses; and training for senior officers. Andy Monkley undertook to submit the results of the review to the Committee within 6 months. This approach was endorsed by Phil Johnstone (Director, KPMG) and the Chair who also added that it was unusual for any Council to receive a priority 1 recommendation.
In the ensuing discussion, members acknowledged that although self employed income assessment is a complex area, the level and quantity of identified error was unacceptably high. Members also thanked officers for continuing to review the claim after the submission date, which resulted in identifying the correction.
Members queried whether KPMG felt these errors were human error or procedural. Phil Johnstone indicated that he felt there must be a systemic weakness due to the large number. Councillor Davidson requested that the Chief Finance Officer undertake a review of the whole process of assessing claims. Members raised their concerns about the very high number of errors with both Cllrs Davidson and Aslam Choudry requesting their concerns be noted.
Conrad Hall (Chief Finance Officer) clarified that although errors had been identified the more significant issue was absence of documentation. He highlighted this issue as a recurring theme for the committee to focus on, as without evidence of why decisions were made the council would be unable to respond effectively to, for example, complaints. He added that as the problem was confined to a particular area of self employed cases, he was not minded to initiate a wider review at this point in time. He advised members to obtain an action plan from the officers concerned, against which they should review progress in approximately six months' time to give reassurance to members.
Councillor Filson raised the issue of recommendations made in the previous audit in relation to not implementing the recommendations.
Mr Monkley explained that the errors identified this year were different and no errors had been found in relation to rent errors.
RESOLVED:
(i) that the Annual Audit Letter be noted;
(ii) that the Subsidy and Policy Manager circulate an action plan to the Committee before the end of the month;
(ii) that the progress against the action plan and the review of self employed income assessment in relation to housing benefit claims be reported to the Committee within 6 months.
Supporting documents: