Agenda item

To report to the Committee the outcomes of the annual grant work by Grant Thornton and to obtain approval for the action plan resulting from the report of the auditors.

The committee received a report from Grant Thornton, the Council’s appointed external auditors, on its Grant certification work .Each year the council is required to obtain certification for a number of its external grant claims. This is part of the process for the council continuing to receive subsidy for its benefit claims from DWP. In order for this certification to be provided it involves investigation, analysis and verification of benefit claims processed, by the councils appointed auditors .The committee were now asked to consider these findings which provided detail of the council’s overall performance in relation to grant claims.

Paul Dossett, of Grant Thornton, explained that Housing and Council Tax benefit claims is far the most complex in local government. The DWP will usually take a robust view about errors identified during the audit process. They further use an extrapolation process for assessing the overall impact of errors that is reflective of their requirements, rather than the overall judgement used by accountants and auditors in considering the accuracy of numbers produced by Councils. There is no concept of materiality in assessing errors under the audit regime which governed Grant Thornton’s work on this claim.   Following on from the certification work completed in 2008/09 and the issues identified, account was given in the 2009/10 certification work to measures taken by the Council to remedy the level of errors in benefit claims. Further work continued in this area and a better performance was expected for the 2010/11.

Concern was expressed at the formula of the report by Grant Thornton as key information was not provided at the start but in the appendices, such as the 50k overspends in budget allocated to external audit work, the ratio of cases that contained errors.  There further needed to be  at the fore front information on the key risks to the council as result of the audit findings i.e. was there a risk to subsidy  and what was the level of risk .  The director of Corporate Resources explained that there were certain thresholds that were met for subsidy payments to councils and the council would still continue to receive a subsidy for claims of over 1.3million.  The Director of Corporate Resources agreed to provide members of the committee with a short written explanation of the thresholds for subsidy   outside of the meeting. In terms of the 2009/10 year and the error rate in claims the council was £3000 below the threshold number and were close to the tipping point. However this data was still subject to DWP extrapolation.

Other key information important to members was the cost of the remedial action being undertaken by officer to limit benefit claim errors and whether this was a higher cost then the benefit to be accrued by the council. The chair of the committee asked that this cost be kept under review and reported back to the committee in the returning report in 3 months time.

 Reference was made to paragraph 1.8 and understanding sought of the scale of the council errors compared to other demographically similar borough and overall concern was expressed at the ratio of benefit claims that were found to have errors by the external auditors and clarification sought on the actions being undertaken to address this. The committee noted that training had since been targeted to areas where the most errors had occurred.  The errors relating to the inclusion of child benefit income in claims had been dealt with.  Appendix A of the cover report set out the actions being taken each year which had helped reduce error levels dramatically. The area of how earned income is calculated was being reviewed to progressively isolate the risk of error. There was further internal audit completed, which showed that error rate was reducing. Focus on this area with the impending reductions in staff would continue. A further internal audit would be undertaken in two months time to assess the continued progress.

It was important for the committee to understand the rate of progress as the number of claims could go up but the rate or error could go down. Members noted that the council had 37½000 benefit claims in 2009 and 41½000 live cases in 2010. They further noted the council received 35000 papers in relation to benefits to process each month.

RESOLVED

1. That the management responses contained in the attached action plan be agreed.

2. That a report back on the endeavours being made to reduce the rate of error in benefit claim processing be reported back to the committee in 3 months time.