Agenda item

This report provides Members with an update on the work, outputs and performance of the Audit & Counter Fraud Team for the period 1 April 2018 to 31 August 2018. 

Discussion:

Members considered a report which provided an update on the work, outputs and performance of the Audit and Counter Fraud Team for the period 1 April to 31 August 2018.

The following issues were discussed:

Circulation of audit reports to Members – it was suggested that full audit reports also be circulated to the Chairman of the Audit Committee, the relevant Portfolio Holder and the opposition spokesperson on the Committee.

Ethics review – regarding the area of improvement identified relating to the review and circulation of policies to ensure staff had read and understood appropriate policies, it was suggested that this needed to be better embedded into the employee induction scheme.

With regard to the recommendation relating to gifts and hospitality, a Member suggested that in the interests of transparency and also to achieve consistency with the requirements for Members to disclose gifts and hospitality, senior officers should also be required to publicly disclose and publish gifts and hospitality. It was further suggested that the level for this should be set at the threshold for senior officer remuneration disclosure. It was further suggested that a more consistent approach to the registering of gifts and hospitality across the Council should be sought. Officers advised that the recommendations in the audit report were designed to address the inconsistencies referred to. The Chief Legal Officer undertook to report back on this issue and would also look at the approach adopted by other councils as well as the issue of Council employees appointed to serve as Directors. In relation to the latter issue, a Member suggested Council owned companies should be prohibited from offering hospitality to council employees.

Medway Commercial Group (MCG) - a Member expressed concern that the provision of governor services by Medway Commercial Group was now being delivered by Kent County Council. Therefore effectively a company controlled by the Council had decided to cease providing a council service without any apparent democratic process or oversight. It was queried what had happened to the staff who had TUPE’d over from the Council to MCG. Another concern was that MCG could possibly decide to stop providing the other 5 council services it had been commissioned to deliver, none of which were statutory and the ability of the Council to prevent this happening was queried. The Chief Legal Officer advised that the Council had established MCG as a fully commercial operation with a degree of commercial freedom to make decisions about services that did not apply in the case of Medway Norse or the Medway Development Company. Scrutiny of MCG took place via Overview and Scrutiny and performance reports were considered by Cabinet. In response a Member noted that there had been no reference to this service no longer being delivered in any reports so no pre-decision scrutiny had been possible. The situation regarding staffing was not known. Further information was requested on the MCG decision making process and whether any discussions about this decision had taken place with the Council and whether any detailed discussion were taking place with schools about the change.

Noting that the audit report had concluded that the financial relationship between MCG and the Council was weak, a Member queried how that had come about when it was a council owned company and asked for further information on this issue.

CCTV – a Member referred to the expected report on the review of CCTV provision by MCG and noted that this was a service provided by an arm’s length company which involved the monitoring of citizens and queried whether MCG had made any operational decisions which the Council was unaware of.

Deferral of audit review of Looked after Children Reviews – a Member expressed some concern that such a high profile issue had been deferred and the message this could send. In response officers undertook to look into whether a member of the Audit and Counter Fraud Team could join the project group set up to monitor the action plan and report back to the Committee.

Shared service with Gravesham Borough Council – in response to a query the Head of Audit and Counter Fraud advised that he was not aware of any significant issues affecting Gravesham Borough Council which could impact on the delivery of the audit plan by the shared service.

IT asset management – in response to a query officers advised that the review would include software as well as hardware but not cover business continuity arrangements.

Non-payment of Council Tax – a Member asked what steps the Council took to publicise prosecutions for non-payment of Council Tax. Officers advised that any successful prosecutions for fraud were publicised by the Council. Cases on non-payment which were not a result of fraud were not publicised but the Council had collected an additional £68,000 of Council Tax in the previous year through proactive work.

Management responses to audit recommendations – regarding the references to no management response to outstanding recommendations in some reviews, the Head of Audit and Counter Fraud reported that monthly reminders were sent. The position in the report had probably been affected by some managers being on annual leave for summer holidays and unable to respond in time for the deadline for the report.

Implementation of recommendations – concern was expressed at the number of outstanding recommendations, in particular in relation to the review of child sexual exploitation. The Head of Audit and Counter Fraud Manager advised that future update reports to the Committee would include an update from the service where recommendations were still outstanding more than 6 months after their implementation date.

Traded Services (staffing agency) – a Member noted that the £1m savings assumption would not be achieved and expressed concern that similar assumptions were being built into next year’s budget. The Head of Finance Strategy explained that the business case was robust but during the transfer process, many of the agency staff were offered permanent contracts and this reduced the levels of income accordingly leaving a budget pressure. Going forward work had started earlier on the Medium Term Financial Strategy and this included a more detailed look at the assumptions being built into the draft budget.

Decision: 

The Committee agreed to:

(1)      note the outputs and performance of the Audit and Counter Fraud Plan for Medway for the period 1 April to 31 August 2018 as detailed at Appendix 1 to the report;

(2)      approve the amendments to the 2018-19 work plan as detailed in section 6 of Appendix 1 to the report;

(3)      request a report back on the issue of publishing gifts and hospitality received by senior officers;

(4)      request a report on the change in the arrangements for the provision of Governor Services by Medway Commercial Group; invite the Council appointed Director on MCG to attend the meeting of the Committee when this item is discussed and ask that this issue be raised with the Children and Young People Overview and Scrutiny Committee;

(5)      request that full audit review reports be circulated to the Chairman of the Committee, the Opposition Spokesperson and the relevant Portfolio Holder.