2006-2007 - Annual Audit and Inspection Letter - Devon CC v1.0

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Annual Audit and Inspection Letter

March 2008

 

Annual Audit and Inspection Letter

Devon County Council

 

External audit is an essential element in the process of accountability for public money and makes an important contribution to the stewardship of public resources and the corporate governance of public services. Audit in the public sector is underpinned by three fundamental principles. •  Auditors are appointed independently from the bodies being audited. • The scope of auditors' work is extended to cover not only the audit of financial statements but   also value for money and the conduct of public business. •  Auditors may report aspects of their work widely to the public and other key stakeholders. The duties and powers of auditors appointed by the Audit Commission are set out in the Audit Commission Act 1998, the Local Government Act 1999 and the Commission's statutory Code of Audit Practice. Under the Code of Audit Practice, appointed auditors are also required to comply with the current professional standards issued by the independent Auditing Practices Board. Appointed auditors act quite separately from the Commission and in meeting their statutory responsibilities are required to exercise their professional judgement independently of both the Commission and the audited body.     Status of our reports This report provides an overall summary of the Audit Commission’s assessment of the Council, drawing on audit, inspection and performance assessment work and is prepared by your Relationship Manager. In this report, the Commission summarises findings and conclusions from the statutory audit, which have previously been reported to you by your appointed auditor. Appointed auditors act separately from the Commission and, in meeting their statutory responsibilities, are required to exercise their professional judgement independently of the Commission (and the audited body). The findings and conclusions therefore remain those of the appointed auditor and should be considered within the context of the Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission. Reports prepared by appointed auditors are: •  prepared in the context of the Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission; and •  addressed to members or officers and prepared for the sole use of the audited body; no responsibility is taken by auditors to any member or officer in their individual capacity, or to any third party.   Copies of this report If you require further copies of this report, or a copy in large print, in Braille, on tape, or in a language other than English, please call 0844 798 7070.

© Audit Commission 2008 For further information on the work of the Commission please contact: Audit Commission, 1st Floor, Millbank Tower, Millbank, London SW1P 4HQ Tel: [phone] Fax: [phone] Textphone (minicom): 020 7630 0421 www.audit-commission.gov.uk

Annual Audit and Inspection Letter  │  Contents  3  

Contents Key messages 4   Action needed by the Council 4   Purpose, responsibilities and scope 5   How is Devon County Council performing? 6   The improvement since last year - our Direction of Travel report 7   What evidence is there of the Council improving outcomes? 8   How much progress is being made to implement improvement plans to sustain future development? 9   Service inspections 10   The audit of the accounts and value for money 11   Financial statements opinion and VFM conclusion 11   Use of Resources 11   Partnership survey 13   Data Quality 14   Best Value Performance Plan 15   Looking ahead 16   Closing remarks 17   Availability of this letter 17  

Devon County Council

4 Annual Audit and Inspection Letter  │ Key messages

Key messages 1 The Council is making good progress against its priorities and wider community objectives. Outcomes for children have improved, particularly for those at risk. 2 The Council with its partners is providing more and higher quality cultural opportunities for the residents of Devon and participation levels in sport and active recreation are rising. 3 The Council is providing strong leadership and is improving the way it addresses its ‘Making Devon Greener’ priority including the impact of its own services. There have been increases in recycling and composting and the Council’s performance is amongst the best nationally. 4 Improvements in health are addressing some of the most at risk and the Council's approach to equalities and diversity is developing but progress to address the needs of vulnerable adults is more mixed. 5 The Council achieved a score of 3 for use of resources but, in order to meet the new tougher criteria, some improvements will be necessary if this score is to be achieved again in 2007/08. The Council needs to further develop its internal control assurance framework through a greater level of member scrutiny of risk management and by strengthening the links between risk management and performance management. 6 The Council’s approach to target setting is mixed. There are a number of challenging and outcome focused targets contained in Council plans but this is not universal. 7 The Council is increasing the capacity of Councillors in a variety of ways. There are comprehensive and innovative training programmes in place for members but take up is mixed. 8 The Council's performance in preparing its financial statements and supporting working papers was below its usual standard.

Action needed by the Council 9 The Council should prepare an action plan for maintaining and improving its arrangements for the use of resources and Councillors should monitor achievement of this. 10 The Council needs to continue to develop its approach to performance management, particularly target setting. The Council also need to develop its approach to risk management. 11 The Council has a good track record on achieving value for money. Councillors should continue to satisfy themselves that a culture of value for money and performance extends across the Council and that any remaining areas of comparatively poor performance are identified and addressed through robust action planning and monitoring.

Devon County Council

Annual Audit and Inspection Letter  │  Purpose, responsibilities and scope  5  

Purpose, responsibilities and scope 12 This report provides an overall summary of the Audit Commission's assessment of the Council. It draws on the most recent Comprehensive Performance Assessment (CPA) and the findings and conclusions from the audit of the Council for 2006/07. 13 We have addressed this letter to Councillors as it is the responsibility of the Council to ensure that proper arrangements are in place for the conduct of its business and that it safeguards and properly accounts for public money. We have made recommendations to assist the Council in meeting its responsibilities. 14 This letter also communicates the significant issues to key external stakeholders, including members of the public. We will publish this letter on the Audit Commission website at www.audit-commission.gov.uk. In addition the Council is planning to publish it on its website. 15 As your appointed auditors we are responsible for planning and carrying out an audit that meets the requirements of the Audit Commission’s Code of Audit Practice (the Code). Under the Code, we review and report on: •  the Council’s accounts; •  whether the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources (value for money conclusion); and •  whether the Council's best value performance plan has been prepared and published in line with legislation and statutory guidance. 16 This letter includes the latest assessment on the Council’s performance under the CPA framework, including our Direction of Travel report. 17 We have listed the reports issued to the Council relating to 2006/07 audit and inspection work at the end of this letter.  

Devon County Council

6 Annual Audit and Inspection Letter  │ How is Devon County Council performing?

How is Devon County Council performing?  18 The Audit Commission’s overall judgement is that Devon County Council is improving well and we have classified the Council as three-star in its current level of performance under the Comprehensive Performance Assessment. These assessments have been completed in all single tier and county councils with the following results. Figure 1  

  Source: Audit Commission

Devon County Council

 

 

 

 

Annual Audit and Inspection Letter  │  How is Devon County Council performing?    7  

19 The detailed assessment for Devon County Council is as follows. Our overall assessment - the CPA scorecard   Table 1 CPA scorecard  

Element Assessment Direction of Travel judgement Improving well Overall 3 star Corporate assessment/capacity to improve 3 out of 4 Current performance Children and young people* 2 out of 4 Social care (adults)* 3 out of 4 Use of resources* 3 out of 4 Environment 3 out of 4 Culture 4 out of 4   (Note: * these aspects have a greater influence on the overall CPA score) (1 = lowest, 4 = highest)

The improvement since last year - our Direction of Travel report 20 Overall, the Council is improving in its priority areas, adding to the quality of life of some of the most vulnerable in the county and expanding the breadth and quality of its services. Working with partners it is progressing its economic and environmental priorities. There are better outcomes for children, particularly those at risk, but progress to address the needs of vulnerable adults is more mixed. 21 Health inequalities are being addressed and the equalities and diversity agenda is moving forward but lacks significant outcomes. Access to services is improving and the Council provides good value for money. Departmental and service remodelling is increasing capacity supported by development programmes for staff and area based working. However, there are still weaknesses in member training.

Devon County Council

8 Annual Audit and Inspection Letter  │ How is Devon County Council performing?

What evidence is there of the Council improving outcomes? 22 The Council is making good progress against its priorities and wider community objectives. Outcomes for children have improved, particularly for those at risk. The percentage of looked after children who are allocated a suitably qualified social worker has increased and for young people leaving care educational achievement has continued to improve. While improvement in mainstream education mirrors the national upward trend, school absence rates and exclusions are increasing. 23 The Council with its partners is providing more and higher quality cultural opportunities for the residents of Devon. Satisfaction with libraries has risen, there has been increased investment in arts and participation levels in sport and active recreation are rising - helping to improve people’s health and address environmental priorities. 24 The Council continues to manage its transport and economic assets well. The condition of footpaths and roads is very good and this performance has been maintain or improved - commendable given the county’s large rural network. However, there remain challenges in terms of road safety; while the number of children seriously injured or killed has fallen overall numbers have increased. Working with partners the Council has helped support the county’s economy developing the urban growth centres of Exeter and Barnstaple, through improvements to infrastructure, and sustaining the rural economy through initiatives such as Discover Devon Naturally. 25 The Council is providing strong leadership and is improving the way it addresses its ‘Making Devon Greener’ priority including the impact of its own services. There have been increases in recycling and composting and the Council’s performance is amongst the best nationally. However, challenges remain with above average and increasing levels of waste production. The Council is on target to reduce its carbon footprint by 2 per cent in the first year. 26 Progress is being made in meeting the needs of vulnerable adults. Improvements to average waiting times for adaptations in people’s homes, the proportion of people admitted and the number in residential homes is falling and there are better facilities for respite care all important in improving the quality of life and promoting independence. However, waiting times for assessment and the number of younger adults in residential care are increasing and multi agency safeguarding reporting arrangement for adults are underdeveloped. Action is being taken to address this. 27 Improvements in health are addressing some of the most at risk. Rates of smoking during pregnancy and the percentage of babies with low birth weights are falling and immunisation rates are good and improving. The number of schools gaining healthy schools status has increased and the proportion of looked after children that receive regular health checks has improved to a very good level.

Devon County Council

Annual Audit and Inspection Letter  │  How is Devon County Council performing?    9  

28 The Council's approach to equalities and diversity is developing. The Council is improving its engagement with minority groups. However, it has not improved its race equality standard level or the diversity of its workforce - against a pattern of national improvement. Access to services generally is improving. The establishment of a county contact centre has extended access and improved customer service. Improvements in accessing children’s services, and adult social care services in piloted areas, have been significant but there remain variances across the county. 29 The Council provides good value for money. There are clear and detailed information on costs and performance and a good understanding of their interaction. Spending is in line with priorities, supported by medium term financial planning, and there is a track record of investment resulting in improved services. The Council exceeded its efficiency targets largely through procurement improvements and internal review and reorganisation.

How much progress is being made to implement improvement plans to sustain future development?  30 Business planning is developing well. Supporting the delivery of the Council’s strategic plan are the corporate plan, the medium term financial strategy and directorate business plans. These provide a clear planning structure on which effort can be focused on meeting the Council’s ambitions. 31 The Council’s achievements and forward plans are communicated well. The Council’s annual report is clear with links to council’s priorities. The public can clearly see how the Council is performing and what it plans to do to improve services and the quality of life in the county. 32 The Council’s approach to target setting is mixed. There are a number of challenging and outcome focused targets within the strategic plan such as increasing the proportion of adults and older people helped to live at home. However some targets are not outcome focused or do not have specific measurable targets. Action is being taken to improve outcome measures. 33 The Council has increased its corporate capacity through the formation of an organisational development unit. The unit has brought in internal skills and is focused on changing the organisation to be more forward looking within its structure, processes and particularly with its performance management framework which has been significantly strengthened. This is aimed at developing an organisation which is fit for purpose to tackle future challenges.

Devon County Council

10 Annual Audit and Inspection Letter  │ How is Devon County Council performing?

34 Directorate workforce plans and learning and development plans are helping to increase staff capacity. There has been continued investment in staff development and recruitment including graduate, apprentice and the leadership and management programmes. The Council is effectively managing its sickness with average days lost reducing placing Devon well above average for councils. This is helping to provide a more effective workforce to improve services and deliver better value for money. 35 The Council is increasing the capacity of its members in a variety of ways. There are comprehensive and innovative training programmes in place for members but take up is mixed. Councillors are given local funding to increase their profile in their constituencies and improve their engagement with communities. The introduction of county committees has enabled closer working with communities and further strengthened councillors' leadership roles. Through an area and market based approach to tailoring services, the Council is ensuring better integration between county and district services. 36 The Council has effectively managed the tensions and capacity issues linked to the Exeter Unitary Authority proposal. The whole issue of reorganisation in the Devon area has now been referred to the Boundary Commission for consideration. 

Service inspections 37 An important aspect of the role of the Relationship Manager is to work with other inspectorates and regulators who also review and report on the Council’s performance. Relationship Managers share information and seek to provide ‘joined up’ regulation to the Council. During the last year the Council has received the following assessments from other inspectorates. •  The Commission for Social Care Inspection (CSCI) Annual Performance Assessment of Adult Services judged the Council's performance to be good with promising prospects for improvement. This equates to a score of three (out of four) in the CPA scoring framework. •  OFSTED's Annual Performance Assessment of Services for Children and Young People rated the Council's performance at grade two signifying that the Council consistently delivers services for children and young people at an adequate level. 38 We have used these as evidence to help arrive at the Council’s overall CPA rating and to reach the Direction of Travel judgement. The assessments have been separately reported to the Council, and they are referred to in the Direction of Travel report where significant.  

Devon County Council

Annual Audit and Inspection Letter  │  The audit of the accounts and value for money  11  

The audit of the accounts and value for money

Financial statements opinion and VFM conclusion 39 As your appointed auditor, I have reported separately to the Audit Committee on the issues arising from our 2006/07 audit and have issued:  my audit report, providing an unqualified opinion on your accounts and a • conclusion on your vfm arrangements to say that these arrangements are adequate on 28 September 2007 and •  my report on the Best Value Performance Plan confirming that the Plan has been audited. 40 Whilst specific details are contained in the report as described above, I would draw Councillors' attention to the following: •  we identified material errors in respect of debtors, creditors and cash which required adjustment; •  we found a number of journals at the year end, some for significant amounts, to have been prepared inaccurately; and •  we found significant weaknesses relating to fixed assets partly due to the increasing complexity of the Council's asset recording spreadsheet as it is expanded to address revisions to the SORP and partly due to weaknesses in supporting working papers in this area.

Use of Resources 41 The findings of the auditor are an important component of the CPA framework described above. In particular the Use of Resources score is derived from the assessments made by the auditor in the following areas. •  Financial reporting (including the preparation of the accounts of the Council and the way these are presented to the public). •  Financial management (including how the financial management is integrated with strategy to support council priorities). •  Financial standing (including the strength of the Council's financial position). •  Internal control (including how effectively the Council maintains proper stewardship and control of its finances). •  Value for money (including an assessment of how well the Council balances the costs and quality of its services). 42 For the purposes of the CPA we have assessed the Council’s arrangements for use of resources in these five areas as follows.

Devon County Council