2008-2009 - Annual Audit Letter - National Probation Service - South Yor

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Description

Annual Audit Letter National Probation Service - South Yorkshire Audit 2008/09 October 2009 Contents Introduction 3 Key messages 4 Financial statements and annual governance statement 6 Value for money conclusion 8 Closing remarks 10 Appendix 1 – Value for money conclusion 11 Status of our reports The Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission explains the respective responsibilities of auditors and of the audited body. Reports prepared by appointed auditors are addressed to non-executive directors/ members or officers. They are prepared for the sole use of the audited body. Auditors accept no responsibility to: • any director/member or officer in their individual capacity; or • any third party. Introduction Introduction 1 Our audit has been conducted against a background of difficult economic conditions and at a time of major organisational change for the probation service. Economic downturn 2 The economic downturn and banking crisis is having a very significant impact on public finances and the bodies that manage them. The local effect of these changes is most pronounced in the reduction to future funding levels which has required a fundamental review of organisational arrangements. 3 Although the effect of these changes will impact on 2009/10 and later years the need to identify significant workforce reductions arose in 2008/09 and a material financial provision was necessary ...

Informations

• Publié par: Nasong
• Nombre de lectures: 73
• Langue: English

Extrait

Annual Audit Letter

National Probation Service - South Yorkshire

Audit 2008/09

October 2009

Contents     Introduction  Key messages Financial statements and annual governance statement Value for money conclusion Closing remarks Appendix 1 – Value for money conclusion  

Status of our reports The Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission explains the respective responsibilities of auditors and of the audited body. Reports prepared by appointed auditors are addressed to non-executive directors/ members or officers. They are prepared for the sole use of the audited body. Auditors accept no responsibility to: •   any director/member or officer in their individual capacity; or • any third party.    

 

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Introduction 

Introduction 1 Our audit has been conducted against a background of difficult economic conditions and at a time of major organisational change for the probation service.

Economic downturn 2 The economic downturn and banking crisis is having a very significant impact on public finances and the bodies that manage them. The local effect of these changes is most pronounced in the reduction to future funding levels which has required a fundamental review of organisational arrangements. 3 Although the effect of these changes will impact on 2009/10 and later years the need to identify significant workforce reductions arose in 2008/09 and a material financial provision was necessary to support implementation of the restructuring strategy.

Trust status 4 The Offender Management Act 2007 enabled the establishment of probation trusts. This organisational model is intended to provide probation services with more independence to focus their work on local communities and reduce re-offending. Six trusts were established in the fist wave from April 2008 with the intention that all suitable areas will have made the transition to trust status by April 2010. 5 South Yorkshire made application for trust status in June 2009 and although unsuccessful in its first application has been invited to reapply in October 2009. The result of that application is awaited.

This letter 6 The key messages arising from our audit are highlighted below for the Board’s attention. The remainder of the letter provides a summary of our work during 2008/09.

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Key messages

Key messages This report summarises the findings from our 2008/09 audit. It includes messages arising from the audit of your financial statements and the results of the work I have undertaken to assess your arrangements to secure value for money in your use of resources.

Audit opinion 7 An unqualified audit opinion was issued on 16 September 2009.

Financial statements 8 It was not possible to issue the audit opinion by the June deadline due to uncertainty over the value of pension figures to be included in the financial statements. Updated pension calculations have been provided and the accounts amended accordingly. 9 Generally your financial statements were prepared to a good standard, with only a few minor amendments identified by the audit.

Value for money conclusion 10 An unqualified value for money conclusion was issued reflecting that the Board had adequate arrangements in place to secure economy, efficiency and effectiveness in its use of resources.

Audit fees 11 A summary of the audit fees required to deliver the audit programme is reported below.     Financial statements and annual governance statement Value for money Total audit fees Non-audit work Total  

   

Actual £   28,495 6,950 35,445 0 35,445

Planned £ Variance £ 26,090 2,405 6,950 0 33,040 2,405 0 0 33,040 2,405

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Key messages

12 Additional time was incurred this year to conclude the opinion audit due to the difficulties encountered in finalising pension fund values. As a consequence it has been necessary to raise an additional fee invoice for £2,405 (plus VAT).

Independence  13 I can confirm that the audit has been carried out in accordance with the Audit Commission’s policies on integrity, objectivity and independence.          

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National Probation Service - South Yorkshire

Financial statements and annual governance statement

Financial statements and annual governance statement South Yorkshire Probation's financial statements and annual governance statement are an important means by which the service accounts for its stewardship of public funds.

Significant issues arising from the audit - pension fund values 14 It was not possible to issue my audit opinion by the nationally prescribed deadline of 26 June 2009 due to uncertainty over the value of pension figures to be included in the financial statements. Having resolved these matters an unqualified audit opinion was issued on 16 September 2009. 15 The uncertainty over the material accuracy of pension fund disclosures arose as: •   potential changes to fund values, arising from the Board's proposed severance programme for 2009/10, had not been considered by the actuary; and •   the data underpinning the financial information included in the draft accounts was based on an estimate by the actuary of the full year position. A comparison against actual data available after the actuary made these calculations indicated that a material change to those figures was likely. 16 Revised calculations were provided by the actuary and consequent amendments, (the largest of which was a £859,000 increase in operating costs), were incorporated within the final version of the financial statements. 17 The volatility in investment values evident this year may recur in future years. The Director of Finance and Commissioning has already raised this issue with the Ministry of Justice to see if there is any way that the delay and additional administrative time can be avoided in future years. Other matters 18 My audit identified a classification error of £31,000 in the financial statements which management have corrected. Other than this item the only changes made to the accounts were to correct a mis-statement of comparative balances and to improve the presentation of the statements.

   

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Financial statements and annual governance statement

Material weaknesses in internal control 19 I did not identify any weakness in the design or operation of internal controls that might result in a material error in your financial statements. 20 I did however identify a continuing weakness in the arrangements over the separation of financial duties. My concern related to the Payments Manager (former Finance Manager) having access to all parts of the purchase ledger system as well as continuing to be an authorised bank signatory. Remedial action was immediately taken to improve financial control through revision of the bank mandate.

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National Probation Service - South Yorkshire

Value for money conclusion

Value for money conclusion I assessed whether the Board put in place adequate corporate arrangements for securing economy, efficiency and effectiveness in its use of resources. This is known as the value for money (VFM) conclusion.

VFM conclusion 21 I assessed your arrangements to secure economy, efficiency and effectiveness in your use of resources against criteria specified by the Audit Commission. The national criteria used to make my local VFM assessment were revised with effect from 2008/09. The new methodology is based on the key lines of enquiry (KLOE) that are being applied in other parts of the public sector. For 2008/09 my judgement was based on KLOE criteria in the following two theme areas: •   managing finances - focusing on sound and strategic financial management; and •   governing the business - focusing on strategic commissioning and good governance. 22 My review was also informed by the report findings of Her Majesty’s Inspectorate of Probation (HMIP) following their inspection during the 2008/09 year. The Inspectorate report was positive reflecting that considerable progress had been made in the delivery of services in recent years. Whilst scope for further improvement was identified, South Yorkshire is regarded by HMIP as 'one of the top performing areas nationally'.

   

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Value for money conclusion

  23 Findings from my assessment are summarised in Table 1 below. Further details of my assessment in each KLOE area are given in Appendix 1. Table 1 Summary results of KLOE assessment  

KLOE area Audit finding Financial planning & financial Financial planning found to be in accordance with the health resources made available and service objectives set. A lon er term view of the financial osition has been established which has helped to focus on future actions to maintain sound financial health. Understanding costs and No standardised methodology exists at national level achieving efficiencies for analysing probation services costs. The Board has artici ated in the re ional and national initiatives to develop its understanding of costs. Financial and activit information has been used to evaluate the effectiveness of aspects of local delivery of service. Financial reporting Financial re ortin is timel , reliable and meets the needs of internal and external users. Use of information Relevant and reliable data and information is used to support decision making and manage performance. Risk mana ement and internal Risks are mana ed a ro riatel and a sound s stem control of internal control is maintained.    24 As a result of my review I issued an unqualified conclusion stating that the Board had adequate arrangements to secure economy, efficiency and effectiveness in its use of resources.    

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Closing remarks

Closing remarks 25 I have discussed and agreed this letter with the Chief Officer and the Director of Finance and Commissioning. A copy of the letter will be made available to all Board members for their meeting in November 2009. I will present this letter at the Audit Committee on 8 December 2009. 26 Outputs from our audit are listed in the following table. Table 2 Audit outputs   Report Date issued Audit plan April 2008 Annual Governance Report September 2009 (including opinion on the accounts and VFM conclusion) Annual audit letter October 2009   27 The Board has taken a positive and constructive approach to our audit. I wish to thank your staff and directors for their continuing support and co-operation during the audit.       David Phillips Engagement Lead October 2009      

   

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Appendix 1 – Value for money conclusion

Appendix 1 – Value for money conclusion The following tables summarises the key findings and conclusions for the two use of resources themes.

Managing finances  

KLOE 1.1 Does the or anisation lan its finances effectivel to deliver its strate ic riorities and secure sound financial health?   VFM criterion met  Yes Key findings and conclusions •   Annual budget plan formed in accordance with the expected funding allocation from NOMS and based on an integrated internal business planning review. •   NOMS performance framework reporting confirms that South Yorkshire is rated as ‘green’ in each of the performance report areas. •   Three-year financial planning forecast developed which has helped to highlight future resourcing difficulties. KLOE 1.2 Does the organisation have a sound understanding of its costs and achieve efficiencies in its activities?   t VFM criterion me  Yes Key findings and conclusions •   No standardised costin methodolo but the Board have en a ed with the national S ecification, Benchmarkin and Costin Pro ramme and demonstrate an appetite to improve understanding of costs, make comparisons and assess VFM. •   Costing information is being used to assess the VFM of in-house services where opportunities to consider alternative models of provision. •   Briefings made to the Management Team/Board to share understanding of developments in costing and local actions in assessing VFM.

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