Agenda item

Certification of grants and returns 2013/14

Annual report (report of KPMG enclosed)


Consideration was given to KPMG’s Certification of grants and returns 2013/14.  In 2013/14, certification work was carried out on the following claims/returns:


·         Housing Benefit Subsidy Claim – Certified value £18,974.66

·         Pooling of Housing Capital Receipts – Certified value £585,619


 Housing Benefit Subsidy


As in previous years, KPMG’s certification work identified a range of issues in relation to the Housing Benefit Subsidy claim as follows:


·         Due to issues identified in the previous year and, as a result of KPMG’s initial testing of a sample of non-Housing Revenue Account (HRA) rent rebate cases, testing of the accuracy of 100% of the cases within this section of the claim was performed. This resulted in a number of small amendments to the claim being necessary, without any effect on the subsidy claimed.

·         KPMG had to issue a qualification letter due to various issues identified as a result of sample testing from which no conclusion could be reached as to whether the claim was fairly stated. These issues included errors relating to the misclassification of overpayments within the subsidy claim form and errors relating to the incorrect processing or application of:

o   weekly earnings resulting in both under and over paid benefit for rent rebates;

o   pension savings credits resulting in both under and over paid benefit for rent rebates;

o   termination date of a claim resulting in overpaid benefit for rent rebates;

o   the appropriate Local Housing Association (LHA) rate resulting in underpaid benefit for rent allowances;

o   eligible rent resulting in both under and over paid benefit for rent allowances; and

o   weekly earnings resulting in both under and over paid benefit for rent allowances.


As there are no specific causes for these errors, with all arising from general processing errors, KPMG had made no recommendations to the Authority to improve its claims completion processes in respect of this claim for this year.

In their 2012/13 Certification Annual Report two recommendations had been raised relating to:


·         The need for refresher training for staff involved in the completion of Audit Commission housing benefit workbooks; and


·         The requirement for the S151 Officer to produce, and for Members to approve, an annual report on the Authority’s Risk Based Verification policy.


KPMG were satisfied that the Council has improved its arrangements and had addressed both of these recommendations. Full details were included in Appendix 1, attached to the report.


Pooling of Housing Capital Receipts


KPMG’s certification work in respect of this claim identified a small number of errors in relation to the Authority’s overpayment of pool-able capital receipts in relation to Housing Act Advances repayments, resulting in an adjustment of £479 to the return.


The Authority had identified the cause of this error and had already put in place corrective action to ensure that it did not re-occur. Consequently KMPG had made no recommendations to the Authority in respect of this claim for this year.


The Executive Director Place advised the committee that there was a risk with regard to the Local Authority Subsidy Claim Certification.  The Department of Work and Pensions (DWP) had penalised the Authority in the amount £99,286.  The Executive Director had written to the DWP to state that the error rate resulting in the penalty was ultimately as a result of a small value error, which was isolated.  In addition, the auditors had not highlighted this as a major issue as no changes had been recommended. However a response had been received from the DWP yesterday rejecting the mitigating circumstances, and advising that there was no further recourse for appeal available to the Authority. 


Members considered the information and raised the following issues:


·         With regard to the Local Authority Subsidy Claim issue, were systems robust enough to ensure this situation did not arise again?

o   Errors could not be eliminated completely.  The DWP did allow for a certain margin of error as it acknowledged that benefits was a complex area.  The errors in this particular situation were as a result of where overpayments had been made.


·         What was the risk level for the current year to date?

o   The Authority was currently at risk. The Local Authority error rate had been reported – it was currently slightly above the lower threshold but slightly below the higher threshold.


·         Had the situation arisen due to input errors?

o   The situation had not necessarily been caused by input errors alone.  It was a complex area, errors seemed to be one-off errors in a number of places and there was no pattern to them.

o   If the issue was simply down to poor performance in the Benefits department, this would have been backed up within the Auditor’s recommendations, and this had not happened.


·         How could the system be made more robust?

o   Error rates should be checked from the start of the year, internal quality control should be improved, independent of auditors, and more detailed checks should be undertaken.  SHDC would expect assurance from CPBS with regard to quality control in the future.

o   In addition, SHDC calculated its benefit on a weekly basis whilst East Lindsey District Council (ELDC), (for whom CPBS also provided a service) did this monthly.  This created a greater risk for SHDC as it meant that the risk of error was four times higher. 


·         Why did SHDC calculate benefit on a weekly basis?

o   The weekly payment was an historical system limited to the HRA tenants only.

o   The weekly payment had no major impact on the errors.




That the Certification of grants and returns 2013/14 be noted.


(The Chief Executive joined the meeting during discussion of this item.)

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