Agenda item

Follow Up Report on Internal Audit Recommendations

To provide members with the position on the progress made by management in implementing agreed Internal Audit recommendations as at 11 November 2020 (report of the Head of Internal Audit for SHDC enclosed).


Consideration was given to the report of the Internal Audit Manager, which provided members with the position on the progress made by management in implementing agreed Internal Audit recommendations as at 11 November 2020.


In 2017/18, a total of 85 recommendations were raised by both internal audit providers.  Of those, 82 had been implemented by management, three were outstanding (one urgent and two important).  The management responses in relation to the outstanding urgent and important outstanding recommendations could be seen at Appendix 2 of the report.


In 2018/19, a total of 76 recommendations were raised by both internal audit providers.  Of those, 67 had been completed and 9 (two urgent, six important and one needing attention) were overdue.  The management responses in relation to the outstanding important recommendations could be seen at Appendix 3 of the report.


In 2019/20, a total of 77 recommendations were agreed.  Of these, 44 had been completed, 12 were outstanding (four urgent, four important and four needing attention).  A total of 21 were not yet due.


The information within the report was considered, and the following issues were raised:


·         It was disappointing that there were still some outstanding actions that were 2-3 years behind the original date, and rather than submitting comments on the report, managers should be asked to attend the meeting.

  • The Chairman confirmed that the Strategic Housing Manager was in attendance to answer questions from the Committee.


·         The Strategic Finance and Compliance Manager advised of the three areas outstanding from the 2017/18 audit recommendations: 1) Asset Management programme review of all leases – there was some movement with this item in line with a report that had been presented to the last Cabinet meeting, but the officer could attend the next meeting if the Committee wished; 2) Accounts Payable Key Controls (Finance system) – the recommendation was predicated on the implementation of the new system which had been delayed until 2021; and 3) Welland Homes – the Strategic Housing Manager had been invited to the meeting to provide an update.


·         The Strategic Housing Manager provided the following update regarding the outstanding action to devise a service level agreement to formally record the services provided by the Council to Welland Homes, and to the terms on which those services were provided, including service charges.  It was anticipated that the final contract would be presented to a meeting of the Board on 26 January 2021.  A draft report had been submitted to a Board meeting in August 2020, this had been broadly agreed, and officers were therefore in the latter stages of finalising this action.  The main reason for the time taken to finalise the document had been in the understanding and content of the contract and agreeing that between the Council and the Company.  At the time the recommendation was made, Welland Homes had one housing project that had been delivered for the Company by SHDC officers.  Also at that time there was not an established Housing Development Team of officers.  Now that a Team was in place, they were setting out the parameters of what the service provision should look like. In terms of the services the Authority provided to the Company, there were two distinct functions – the first was around core services and included company administration, accounts, budgets, statutory returns, servicing the Board meeting and overseeing the property portfolio.  The core services were more straightforward in that the Authority had an accountant and a company secretary, and the work was more standard and cyclical.  The second function related to project management around new housing development activity.  This had to be agreed and clearly understood between both parties. For example, the Company’s Business Plan was to have 60 properties in the Company’s ownership by 2022.  Welland Homes Company Directors wanted to be involved in the selection of the new development, so clear understanding of roles and responsibilities in this regard were important.  Some matters specifically to be considered within the contract were around project management fees to be charged to the company – this was essential as they needed to be State Aid compliant.  The Authority therefore had to make sure that the fees charged were reasonable in accordance with the market, and had therefore undertaken a benchmarking exercise to ensure set parameters for a charging schedule that was acceptable to both the Company and the Authority.  With regard to scheme selection, agreement had to be reached on a process for selecting new housing schemes to ensure that the Board had a fair opportunity to rule out or consider housing schemes.  Other matters also needed considering such as Key Performance Indicators, clarification over how fees would be refreshed and agreed going forward, and the parameters around which decisions officers could make on behalf of the Company (operating decisions). It took some time to form the basis of a contract, but a draft agreement had been reached which included all of the main points raised that were agreeable to both parties.  This was presented to the Welland Homes Board in August, the Executive Manager Governance was forming the agreement into a contract and it was anticipated that this would be presented back to the Company in January 2021.


·         In Appendix 4, it was noted that a number of actions relating to Private Sector Housing had been closed in error and given revised completion dates.  How could this happen in an area to receive ‘No Assurance’, and how confident were officers of a resolution?

  • Members were advised that the removal of the actions was an error, and the result of a technical problem with the software used to monitor progress of recommendations.  This had now been resolved.  The Manager had attended the Committee to provide an update 18 months ago, and he would be invited to attend the next meeting of the Committee to provide a progress report.


·         With regard to the Allocations Policy in Appendix 3, the reasons for delay relating to Housing Needs and the revision of the Council’s Common Housing Allocations Policy were disappointing.  Despite the Covid pandemic, meetings were still taking place.


·         With regard to the Financial Services Key Controls – Purchase Order exemption list to be reviewed and updated item, it was assumed that this was still outstanding due to the new system not yet being in place.  Had all mitigation around the purchase order system been considered until the new system came into place?

  • As part of the project implementation, the Finance Team and Project Team were considering a Purchase Order system and also rejecting invoices without a purchase order.  Work was going on behind the scenes that would be implemented with the new system.

·         Why had the paper side of the system not been sorted, even though the computerised side was still ongoing?

  • There were some limitations around the processes within the current purchase order system which was why there was a move to a new financial system.  The exemption list of items where there would be no expectation of a purchase order being raised was quite short and static in its content so in terms of action, the exemption list would not change significantly.  The main issues were around how the purchase order would be managed.


·         With regard to the action that all service areas at both Councils, along with their Data Protection Champions provide the Information Governance Officer with their completed Information Asset Registers, who was actually responsible for this?  Was it Managers or the Information Governance Officer?

  • Officers would need to find who had overall responsibility for this and would report back to the Committee.    




That the information detailed within the report be noted

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