Certification of Grants and Returns 2013-14

Carmarthenshire County Council

Audit year:2013-14

Issued: March 2015

Document reference: 217A2015

Status of report

This document has been prepared for the internal use of Carmarthenshire County Council as part of work performed in accordance with the statutory functions.

No responsibility is taken by the Auditor General, the staff of the Wales Audit Office or, 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, the Wales Audit Office and, where applicable, the appointed auditor are relevant third parties. Any enquiries regarding disclosure or re-use of this document should be sent to the Wales Audit Office at infoofficer@wao.gov.uk.

The team who delivered the work comprised Richard Harries, Geraint Norman, Jason Blewitt, Leanne Malough, Andrea Williams, Ian Griffiths, Michelle Davies, Derek Jenkins, Neall Hollis and Mair Evans.

Contents

Arrangements for the production and submission of grant claims still need to be strengthened. This would avoid exposing the Council to potential risks of loss of funding or increased audit fees.

Summary

Headlines

Arrangements for the production and submission of grant claims still need to be strengthened. This would avoid exposing the Council to potential risks of loss of funding or increased audit fees.

The majority of claims are now submitted on time

Over half of claims audited are now qualified and the percentage of claims qualified remains high

Almost half of the claims audited were amended

There are weaknesses within grant management arrangements which need to be strengthened

Our overall fee for certification of grants and returns for 2013-14 has increased from 2012-13 but with less grants audited

Summary of certification work outcomes

Summary of claims qualified and amended

Recommendations

Appendices

Audit fees

Summary

1. 1. Under Paragraph 20 of Schedule 8 to the Government of Wales Act 2006, the Auditor General shall, if required by a local government or other grant-receiving body, make arrangements for certifying claims and returns (referred to as grant claims hereafter).

2. 2. We undertook our work with the aim of certifying individual claims and to answer the question: ‘does Carmarthenshire County Council (the Council) have adequate arrangements in place to ensure the production of co-ordinated, accurate, timely and properly documented grant claims?’

3. 3. We have certified 28 grant claims during 2013-14 and have also reviewed the grants management arrangements within the Council by documenting and walking through the system and key controls as part of our financial audit work.

.14. We have completed our audit and conclude that arrangements for the production and submission of grant claims still need to be strengthened. This would avoid exposing the Council to potential risks of loss of funding or increased audit fees. Our conclusion is based on the following overall findings:

.2• the majority of claims are now submitted on time;
• over half of claims audited are now qualified and the percentage of claims qualified remains high;
• almost half of the claims audited were amended;
• there are still some weaknesses within grant management arrangements which need to be strengthened; and
• our overall fee for certification of grants and returns for 2013-14 has increased from 2012-13 but with less grants audited.

4. 5. For 2013-14 we certified 28 grant claims (38 in 2012-13) with an aggregate value of 164 million (175 million in 2012-13). Overall the audits resulted in amendments to expenditure of 551,714 (2,273 in 2012-13) – of this 470,699 was income received which had been omitted from this year’s claim in error and so is a technical adjustment rather than an actual loss of funding to the Council. In addition, a range of issues, some significant, some less significant, are highlighted in our qualification letters and there could be a financial consequence arising from these.

5. 6. The Council submitted 22 (79 per cent) of its 2013-14 grant claims to us on time (88 per cent in 2012-13). We have certified all of the claims, at a total audit cost of some 166,000 (161,000 last year). There is scope for the audit fees to reduce if the Council is able to improve its grant management arrangements.

6. 7. In addition, due to concerns identified, we have also issued separate reports on the awarding of two grants under the EUR01 Property Development Fund grant. We await a response from the Council and will summarise our findings in a separate report.

7. 8. Across Wales, there are a range of grant claims and returns but on average one in three grant claims were qualified in 2012-13 and one in six claims were amended with a similar position in 2013-14. In comparison, for the Council we have qualified over three in five grant claims for 2013-14 and amended nearly half of the claims.

8. 9. A summary of the qualifications and amendments is shown below:

.110. There are areas where the Council needs to address the recommendations made in this report in order to improve the grant certification arrangements and reduce the financial and non-financial risks arising. There are also some common themes including: • ensuring compliance with procurement rules;

.2• robustly evidencing apportionments to claims; and • ensuring that approved plans, Memorandum of Agreements or Service Level Agreements are in place where applicable.

9. 11. Internal Audit has also reported weaknesses in grants management which highlight similar issues to what we have reported.

Headlines

Arrangements for the production and submission of grant claimsstillneed to be strengthened. This would avoid exposing the Council to potential risks of loss of funding or increased audit fees.

Page 6 of 26 -Certification of Grants and Returns 2013-14 -Carmarthenshire County Council

The majority of claims are now submitted on time

Page 7 of 26 -Certification of Grants and Returns 2013-14 -Carmarthenshire County Council

Over half of claims audited are now qualified and the percentage of claims qualified remains high

Page 8 of 26 -Certification of Grants and Returns 2013-14 -Carmarthenshire County Council

Almost half of the claims audited were amended

Page 9 of 26 -Certification of Grants and Returns 2013-14 -Carmarthenshire County Council

There are weaknesses within grant management arrangements which need to be strengthened

Our overall fee for certification of grants and returns for 2013-14 has increased from 2012-13 but with less grants audited

Page 10 of 26 -Certification of Grants and Returns 2013-14 -Carmarthenshire County Council

Summary of certification work outcomes

1. 12. Detailed below is a summary of the key outcomes from our certification work on the Council’s 2013-14 grants and returns, showing where either audit amendments were made as a result of our work or where we had to qualify our audit certificate.

2. 13. We are required to report on all issues as there is a ‘zero materiality’ threshold set by the paying departments. A qualification means that issues were identified concerning the Council’s compliance with a scheme’s requirements that could not be resolved through adjustment. In these circumstances, it is likely that the relevant grant paying body will require further information from the Council to satisfy itself that the full amounts of grant claimed are appropriate. There is a risk that grant paying bodies clawback grant from the Council.

Exhibit 1: Number of claims qualified and/or amended

Exhibit 2: Grant claim errors and qualifications across services

Summary of claims qualified and amended

Ref

CI ref

Grants and returns

Value of

Claim due

Claim

Late

Department

     

claim

 

received

   

1

BEN01

Housing and Council

50,058,702

30/04/14

30/04/13

No

Resources

   

Tax Benefits – claim

         
   

value 64 million.

         

2

EDU15

Schools Effectiveness

3,402,392

30/09/14

30/09/14

No

Education and

   

Grant

       

Children’s

             

Services

3

EDU18

School Building

4,400,000

30/09/14

16/09/14

No

Education and

   

Improvements Grant –

       

Children’s

   

Dinefwr 1

       

Services

4

EDU18

School Building

3,700,000

30/09/14

16/09/14

No

Education and

   

Improvements Grant –

       

Children’s

   

Dinefwr 2

       

Services

5

EDU18

School Building

4,400,000

30/09/14

16/09/14

No

Education and

   

Improvements Grant –

       

Children’s

   

Ffwrnes

       

Services

6

EDU18

School Building

2,299,500

30/09/14

16/09/14

No

Education and

   

Improvements Grant –

       

Children’s

   

Strade

       

Services

7

EDU43

Learning Pathways

772,927

30/09/14

30/09/14

No

Education and

   

(Local Claim)

       

Children’s

             

Services

   

Page 13 of 26 -Certification of Grants and Returns 2013-14 -Carmarthenshire County Council

Ref

CI ref

Grants and returns

Value of

Claim due

Claim

Late

Department

     

claim

 

received

   

8

EDU43

Learning Pathways

4,298,754

16/01/15

27/10/14

No

Education and

   

(Regional Claim)

       

Children’s

             

Services

9

EDU44

Welsh in Education

631,619

30/09/14

30/09/14

No

Education and

             

Children’s

             

Services

10

EUR01

Business Finance/LIF

4,059,167

14/07/14

14/07/14

No

Regeneration and

             

Leisure

11

EUR01

Bwcabus

604,707

14/07/14

17/07/14

Yes

Technical

             

Services

12

EUR01

Collaborative

1,709,660

08/05/14

19/05/14

Yes

Regeneration and

   

Communities

       

Leisure

13

EUR01

Property Development

2,797,659

14/07/14

14/07/14

No

Regeneration and

   

Fund (PDF)

       

Leisure

14

EUR01

Carmarthenshire

3,188,263

14/02/14

17/02/14

Yes

Regeneration and

   

Physical Regeneration

       

Leisure

15

EUR01

Regional Learning

734,295

11/02/14

13/02/14

Yes

Regeneration and

   

Partnership

       

Leisure

16

EUR01

Crosshands East

2,705,264

05/12/14

27/11/14

No

Regeneration and

             

Leisure

   

Page 14 of 26 -Certification of Grants and Returns 2013-14 -Carmarthenshire County Council

Ref

CI ref

Grants and returns

Value of

Claim due

Claim

Late

Department

     

claim

 

received

   

17

EYC01

Flying Start -Revenue

2,702,511

30/09/14

30/09/14

No

Education and

             

Children’s

             

Services

18

EYC02

Flying Start -Capital

868,069

14/10/14

14/10/14

No

Education and

       

(following

   

Children’s

       

extension

   

Services

       

by WG)

     

19

EYC14

Families First

2,243,716

30/09/14

30/09/14

No

Education and

             

Children’s

             

Services

20

HLG01

Section 33 NHS

701,788

10/05/14

09/05/14

No

Social Care,

   

(Wales) Act 2006

       

Health and

   

Pooled Budgets

       

Housing

21

HLG03

Section 34/194 NHS

800,000

30/09/14

28/08/14

No

Social Care,

   

(Wales) Act 2006

       

Health and

   

Money Transfers

       

Housing

22

HOU03

HRA Subsidy

6,278,600

30/08/14

11/09/14

Yes

Social Care,

             

Health and

             

Housing

23

LA01

NNDR Final

43,333,691

31/05/14

30/05/14

No

Resources

   

Contribution

         
   

Page 15 of 26 -Certification of Grants and Returns 2013-14 -Carmarthenshire County Council

Key

Recommendations

Recommendations in bold were also reported in 2012-13.

Appendix 1

Audit fees

Our overall fee for certification of grants and returns for 2013-14 has increased from 2012-13 but with less grants audited.

Note – The Works has been slipped from the 2012-13 programme of work to 2014-15 and so any issues arising from the audit of this claim will be reported in 2014-15 (see page 7).