Summary Report - Grant Claims and Returns 2009-10

Authors: Melvyn Jones and Geraint Norman Ref: 154A2011

March 2011

Carmarthenshire County Council

The quality and accuracy of grant claims and returns need to improve and grant arrangements are not yet robust.

Contents

Summary and Recommendations

4

Detailed Report

The quality and accuracy of grant claims and returns need to improve and grant arrangements are not yet robust

6

There has been some improvement in the quality and accuracy of the grant claims and returns

6

Action needs to be taken to improve grant arrangements

7

Internal control arrangements can be enhanced, which will lead to improved audit results and help reduce audit fees

8

Appendices

Grant Audit Fees 2009-10

9

Action Plan 2009-10

11

Status of this report

This document has been prepared for the internal use of Carmarthenshire County Council as part of work performed in accordance with statutory functions, the Code of Audit Practice and the Statement of Responsibilities issued by the Auditor General for Wales.

No responsibility is taken by the Wales Audit Office (the Auditor General and his staff) and, where applicable, the appointed auditor in relation to any member, director, officer or other employee in their individual capacity, or to any third party.

In the event of receiving a request for information to which this document may be relevant, attention is drawn to the Code of Practice issued under section 45 of the Freedom of Information Act 2000. The section 45 Code sets out the practice in the handling of requests that is expected of public authorities, including consultation with relevant third parties. In relation to this document, the Auditor General for Wales (and, where applicable, his appointed auditor) is a relevant third party. Any enquiries regarding disclosure or re-use of this document should be sent to the Wales Audit Office at infoofficer@wao.gov.uk.

Summary

1. Carmarthenshire County Council (the Council) is responsible for submitting the claims and returns to which it is entitled and for ensuring that they are:

0completed accurately and in accordance with the scheme’s terms and conditions;

1supported by systems of internal control, including systems of internal financial control and internal audit;

2supported by adequate working papers; and

3subject to proper supervision and control.

2. Under Section 2 of the Public Audit Wales Act 2004, the Auditor General is responsible for making arrangements for certifying some but not all of the claims submitted in respect of grants or subsidies from a wide range of other public bodies. A series of certification instructions set out the required audit tests. The tests’ scope depends on a risk assessment of the Council’s internal control environment.

3. The Wales Audit Office is required to audit the claims and returns of the Council and conclude whether each is fairly stated and in accordance with the relevant terms and conditions.

4. Last year, we reported that the quality of grant claims and returns submitted for audit and the grant arrangements needed to be improved. A number of improvements were made, including increasing the powers of the Grants Panel, formalising the Grants Manual and providing training for staff. So far, these improvements have not delivered the desired improvements.

5. In 2009-10, the Council submitted 36 grant claims or returns to us for audit which covered a range of services and included grant due to the Council of just over 133 million. As reported last year we have concluded that the quality and accuracy of grant claims and returns need to improve and grant arrangements are not yet robust.

6. We also found that internal control arrangements need to be enhanced. These enhancements will lead to improved audit results, reduce the risk of grants being clawed back by sponsoring bodies and help reduce audit fees.

7. The cost of our grant audit work to date is some 127,000 (144,000 last year) as set out in Appendix 1.

8. Further guidance is available on the Wales Audit Office’s Good Practice Exchange which can be found at www.wao.gov.uk/1821.asp .

Recommendations

R1 Address the issues raised in the individual 2009-10 grant claims audits in future years.

R2 Improve grant project management through ensuring that:

there is an agreed corporate approach to project management;

project managers have the skills required to manage the grant schemes;

systems are in place to monitor the performance of project managers; and

project managers are accountable for poor performance.

R3 Improve arrangements to compile, record and monitor grants, particularly:

improve arrangements to quality control grant claims prior to audit;

ensure consistent control and monitoring of grants to third parties;

ensure Service Level Agreements (SLAs) with other organisations are agreed and signed by both parties before the grant commences;

ensure virements to approved/allocated expenditure are approved by the grant-paying body in accordance with the terms and conditions of the scheme;

ensure only eligible expenditure is claimed;

ensure expenditure is incurred in accordance with the Council’s procurement arrangements; and

ensure working papers supporting grant claims are as set out in the Council’s ‘Project Grants Manual’.

R4 Provide further evidence to support the internal control environment and include this as part of standard working papers.

The quality and accuracy of grant claims and returns need to improve and grant arrangements are not yet robust

There has been some improvement in the quality and accuracy of the grant claims and returns

9. Last year, we reported that the quality and accuracy of grant claims and returns (grant claims) had deteriorated. A number of improvements were made for 2009-10 including increasing the powers of the Grants Panel, formalising the Grants Manual and providing training for staff. The results of our 2009-10 work suggest there has been some improvement.

10. For 2009-10, we received 36 grant claims to audit and out of these we amended 10 (28 per cent) and qualified 14 (39 per cent), compared to 16 (44 per cent) and 12 (33 per cent) last year.

11. Exhibit 1 sets out the analysis across departments and shows the Council’s performance is below the Welsh average compared to last year.

Exhibit 1: Grant claim errors and qualifications across services

Service area

Number of claims submitted

Claims amended

Claims qualified

Education and Children’s Services

6

4

2

Social Care, Health and Housing

7

0

3

Chief Executive

2

1

0

Technical Services

5

1

1

Regeneration and Leisure

13

3

7

Resources

3

1

1

Total

36

10

14

Percentage of total 2009-10

28%

39%

Percentage of total 2008-09

44%

33%

Welsh average 2008-09

10%

25%

12. The net effect of our amendments is a decrease in grant due to the Council by some 4,557. Although not significant in terms of the value of grants received, there are a number of significant issues within our qualification letters which could further impact on grant funding. It should also be noted that our testing is undertaken on a sample basis and for a number of the larger claims we just report facts rather than amending claims.

Action needs to be taken to improve grant arrangements

13. Overall there are a number of examples of non-compliance with the Council’s own Grants Manual and standing orders. The more detailed issues can be grouped into the following main categories which we reported last year:

0Non-compliance with standing orders and tendering procedures – Staff must ensure expenditure is incurred in accordance with the Council’s procurement arrangements. There are instances of staff not obtaining the required number of quotes or tenders which help ensure value for money is obtained.

1Poor controls over grants to third parties – There is no corporate approach to awarding grants to third parties and follow-up arrangements are at best variable. There needs to be consistent control and monitoring of grants to third parties.

2The SLA with other organisations not agreed and signed by both parties before the commencement of the grant/financial year – All SLAs with other organisations should be agreed and signed by both parties before the grant/financial year commences. Again, there is no agreed corporate approach to agreeing SLAs and there is confusion over delegated powers within the Council.

3Non-compliance with virement procedures – All virements made to approved/allocated expenditure within grant schemes should be approved by the grant-paying body in line with the terms and conditions of the scheme. For a number of claims, there was no evidence that virements had been approved.

4Errors in claim form completion – A number of basic errors have been made when compiling claims. Arrangements to quality control grant claims need to be improved.

5Claiming ineligible expenditure – A number of claims included ineligible expenditure. Only eligible expenditure should be claimed, arrangements to quality control grant claims therefore need to be improved.

6Insufficient supporting working papers – Working papers supporting grant claims need to be as set out in the Council’s ‘Project Grants Manual’ but too often this was not the case. Again, quality control arrangements need to be improved.

7Meeting audit deadlines - The Council must ensure that the timescales to deliver Convergence schemes for audit, are adhered to, in order that the certification deadline can be met.

14. These improvements will improve controls, reduce officer time and the elapsed time of the audits and reduce the audit fee.

Internal control arrangements can be enhanced, which will lead to improved audit results and help reduce audit fees

15. As part of our risk-based approach, we undertake an assessment of each grant claim and its internal control arrangements in order to determine the scope of our audit testing. This includes:

0the complexity of claim/volume and value of transactions;

1issues from previous audits;

2changes in the scheme or in the method of preparation;

3expertise and knowledge of preparers (including the adequacy of supervision and review);

4evidence of monitoring of compliance with terms and conditions;

5effectiveness of internal financial controls (eg, journals, budgetary control, internal audit);

6quality of supporting working papers; and

7results of analytical review.

16. As reported last year, better evidence of the control environment including the extent of supervision and review and other monitoring controls would help us to target our work more effectively and concentrate on higher risk areas. The inclusion of evidenced analytical review, comparison of outturns against budget and ensuring that independently certified accounts are available to support partner expenditure will again help to reduce the audit time and fee.

Grant Audit Fees 2009-10

Grant Scheme

Audit Fee

2009-10

Audit Fee

2008-09

EDU14

Better Schools Fund

5,645

5,818

EDU17

School Buildings Improvement Fund

1,508

1,386

EDU43

Learning Pathways

2,054

2,947

EYC01

Flying Start

6,263

4,475

EYC14

Cymorth

5,270

7,491

HC03

Mental Health and Illness Strategy

905

1,997

HLG01

Pooled Budgets

1,809

-

HLG03W

S28A – annual voucher WANLESS

2,211

3,465

HLG03W

S28A - annual voucher Emergency pressures

   

HLG13

Joint Working Special Grant

1,106

1,848

HOU03

Housing Subsidy – 2009/10 claim delayed until late 2011

4,335*

4,211

SOC09

Performance Management Development Fund

2,544

2,525

SOC26

Telecare

-

2,013

SOC27

Community Equipment

-

1,848

SOC07

Social Care Workforce Development Programme

1,223

3,003

SOC28

Promoting Independence and Wellbeing

1,323

2,376

CIV41

Safer Communities Fund

1,970

1,419

HC02

Substance Misuse Programme

1,953

1,650

LA12

Sustainable Waste Management

1,920

3,023

TRA15

Transport grant

3,469

4,297

TRA06

Local transport services

-

2,145

TRA23

Free Concessionary travel

1,160

2,033

TRA25

Capital Road Maintenance

1,718

1,221

Grant Scheme

Audit Fee

2009-10

Audit Fee

2008-09

EUR01

Bwcabus

2,075

2,868

EUR01

Business Finance (80030)

5,680

10,083

EUR01

Works (80518)

6,394

 

EUR01

Convergence General

1,546

 

EUR01

Collaborative (80138)

3,855

 

EUR01

PDF (80356)

3,023

 

RG02

Communities First - Felinfoel

10,234

10,890

RG02

Communities First - Glanymor and Tyisha

   

RG02

Communities First - CST

   

RG02

Communities First - Pantyffynon

   

RG02

Communities First - Pantyffynon Youth worker

   

RG02

Communities First - Debt and Benefit Special Project

   

RG15

Derelict Land grant

-

693

RG17

Ammanford Gateway

2,981

1,518

RG17

Penyfan Quarry

   

RG65

Joint Ventures –Llanelli

-

3,617

RG66

Joint Ventures – Cross Hands

-

2,792

RG73

Physical Regeneration Fund

-

2,799

BEN01

Housing Benefit

23,525

29,390

LA01

National Non Domestic Rates

3,384

3,891

PEN05

Teachers’ pension Return

3,695

4,135

Grants meetings, grant control and general

9,352

7,445

Grants reporting

3,196

3,135

Total Grants Audit Fee

127,326

144,447

* - Estimated

Action Plan 2009-10

Recommendation

Agreed

Responsibility and actions

Completion date

R1 Ensure the issues raised in the individual 2009-10 grant claims audits are addressed in future years.

Yes

Grants Panel

Work continues to be ongoing to ensure compliance and to provide training as required.

Ongoing

R2 Improve grant project management through ensuring that:

there is an agreed corporate approach to project management;

project managers have the skills required to manage the grant schemes;

• systems are in place to monitor the performance of project managers; and

• project managers are accountable for poor performance.

Yes

Grants Panel

Further grants training to be provided to project teams particularly in areas of procurement, audit arrangements and collation of project files.

Task and Finish (12 month period) Project Management Coordinator has been seconded from the Assembly Government to undertake review of current management practices within the authority and to make recommendations for future best practice.

Project Management protocol to be continuously updated on CCC portal, BRIAN which includes the Grants Manual.

Ongoing

September 2011

Recommendation

Agreed

Responsibility and actions

Completion date

R3 Improve arrangements to compile, record and monitor grants, particularly:

• improve arrangements to quality control grant claims prior to audit;

• ensure consistent control and monitoring of grants to third parties;

ensure SLAs with other organisations are agreed and signed by both parties before the grant commences;

ensure virements to approved/allocated expenditure are approved by the grant-paying body in accordance with the terms and conditions of the scheme;

• ensure only eligible expenditure is claimed;

ensure expenditure is incurred in accordance with the Council’s procurement arrangements; and

ensure working papers supporting grant claims are as set out in the Council’s ‘Project Grants Manual’.

Yes

Grants Panel

Standard practices are included in the Project Grants Manual and is continually updated, when appropriate.

Ongoing

R4 Provide further evidence to support the internal control environment and include this as part of standard working papers.

Yes

Grants Panel

This has been implemented within the Project Grants manual update 2010.

Completed

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