Audit Committee Report, 1 December 2003

R-Mackie

Description

2002/2003 Relationship Management Report and Annual Letter Lewes District Council INSIDE THIS LETTER PAGE 2 • Key messages • The purpose of this Letter PAGES 3-7 • Objectives of audit and inspection • Comprehensive Performance Assessment • Performance management • Financial aspects of corporate governance • Accounts • Grant claims • Audit and inspection fees • Future audit and inspection work • Status of our Relationship Management Report and Annual Audit Letter to the Council • Closing remarks PAGES 8-9 Appendix 1 • Audit report on the Best Value Performance Plan Reference: GLLE013AAL03W – Draft 3 Authors: Darren Wells – District Auditor and Relationship Manager Graham Liddell – Audit Manager Date: November 2003 2002/2003 ANNUAL AUDIT LETTER Key messages The purpose of this Letter The Council is currently being inspected under This is our first joint audit and inspection ‘Annual the Commission’s comprehensive performance Letter’ to Members summarising the conclusions assessment programme. This is about helping from our 2002/03 work. councils deliver better services to local people. Earlier this year, the Audit Commission The Council has completed a detailed self- appointed a Relationship Manager to each assessment of its strengths and weaknesses Council. The Relationship Manager is the supported by an independent peer review and Commission’s primary point of contact with you ...

Informations

• Publié par: Fyac
• Nombre de lectures: 19
• Langue: English

Extrait

2002/2003 Relationship Management Report and Annual Letter

Lewes District Council

I N S I D E T H I S L E T T E R

P A G E 2 €Key messages €The purpose of this Letter

P A G E S 3 - 7 €Objectives of audit and inspection €Comprehensive Performance Assessment €Performance management €Financial aspects of corporate governance €Accounts €Grant claims €Audit and inspection fees €Future audit and inspection work €Status of our Relationship Management Report and Annual Audit Letter to the Council €Closing remarks

P A G E S 8 - 9

Appendix 1 €Audit report on the Best Value Performance Plan Reference: GLLE013AAL03W – Draft 3

Authors:

Date:

Darren Wells – District Auditor and Relationship Manager

Graham Liddell – Audit Manager

November 2003

 2002/2003

Key messages

The Council is currently being inspected under the Commission’s comprehensive performance assessment programme. This is about helping councils deliver better services to local people. The Council has completed a detailed self- assessment of its strengths and weaknesses supported by an independent peer review and produced an initial agenda for improvement. This will be further refined following the outcome of the inspection which is due to be published in February 2004.

Our planned audit and inspection coverage this year was tailored in light of the scope of the comprehensive performance inspection. The key messages from our work are as follows:

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The Council’s Best Value Performance Plan is well written and published to a high standard. We are satisfied that the Performance Plan complies with statutory requirements.

The Council has made appropriate arrangements to:

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secure the economy, efficiency and effectiveness in the use of its resources

ensure that its financial standing is soundly based

satisfy itself that its systems of internal financial control are both adequate and effective

maintain proper standards of financial conduct and to prevent and detect fraud and corruption

secure the legality of transactions.

The accounts have been produced to a high standard and in accordance with the Council’s timetable.

RM report and Annual Audit Letter 2002/03

ANNUAL AUDIT LETTER

The purpose of this Letter

This is our first joint audit and inspection ‘Annual Letter’ to Members summarising the conclusions from our 2002/03 work.

Earlier this year, the Audit Commission appointed a Relationship Manager to each Council. The Relationship Manager is the Commission’s primary point of contact with you and is also the interface between the Commission and other inspectorates, Government Office and other key stakeholders. In view of this change this Letter is presented as a Relationship Management Report and Annual Letter.

This Letter also incorporates the report we are required to issue under section 7 of the Local Government Act 1999 on the Council’s Best Value Performance Plan.

The Audit Commission has circulated to all audited bodies a statement that summarises the key responsibilities of auditors. Our audit has been conducted in accordance with the principles set out in that statement. The responsibilities of Audit Commission inspectors are detailed in section 10 of the Local Government Act 1999. What we say in this Letter should be viewed in the context of that more formal background.

Lewes District Council (Draft 3) – Page2

progress in meeting the decent homes standard or contribution to the management of housing market

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appointed auditor assessments of performance on each of the main elements of the Code of Audit Practice

Benefit Fraud Inspectorate’s assessment of benefit services

€Giving an audit opinion. Financial aspects of corporate governance

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Lewes District Council (Draft 3) – Page3

diagnostic assessments of the Council’s:

the Council to assess how well it is doing

ANNUAL AUDIT LETTER

Financial standing.

Background

EXHIBIT 1

Central to our audit are your corporate governance arrangements. Our audit is then structured around the three elements of our responsibilities as set out in the Code and shown in Exhibit 1.

Our main objective as your appointed auditor is to plan and carry out an audit that meets the requirements of the Code of Audit Practice (the Code). We adopt a risk-based approach to planning our audit, and our work has focused on your significant financial and operational risks that are relevant to our audit responsibilities.

RM report and Annual Audit Letter 2002/03

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The three main elements of our audit objectives

€Legality of transactions. Performance management

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Performance information.

Systems of internal financial control.

Audit

the public to judge whether best value is being delivered

the Government to assess how well its policies are being implemented on the ground

Standards of financial conduct and the prevention and detection of fraud and corruption.

council self-assessment

management of public space

the Council to identify failing services where remedial action is necessary.

 2002/2003

Use of resources.

Objectives of audit and inspection

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Comprehensive Performance Assessment (CPA) is about helping councils deliver better services to local people as part of the wider improvement agenda set out in the Local Government White PaperStrong Local Leadership – Quality Public Services.

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a corporate assessment

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Audit Commission inspectors operate within the statutory requirements of the Local Government Act 1999. Inspectors seek to enable:

The main elements of the approach are:

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Audited performance indicators, inspection reports and plan assessments.

Inspection

accredited peer challenge to inform the self- assessment

The process encompasses the role of councils in developing and contributing to sustainable social and economic environments for their communities and local area.

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Comprehensive Performance Assessment

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Best Value Performance Plan.

Accounts

 2002/2003

CPA at Lewes

CPA at Lewes is already underway.

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Following a peer review by IDeA, the Council submitted its self-assessment of its strength and weaknesses on 24 September. This included an initial agenda for improvement.

We have scored the Council’s arrangements for financial aspects of corporate governance using the Audit Commission’s methodology set out in:Comprehensive Performance Assessment Indicators: Auditors' Judgements .

€The CPA team from the Audit Commission visited Lewes during November. The results for all the East Sussex districts and boroughs are due to be published in February 2004.

Performance management

The Best Value Performance Plan is well written and published to a high standard. We are satisfied that the Performance Plan complies with statutory requirements. We are satisfied that the Council has made appropriate arrangements for securing the economy, efficiency and effectiveness in the use of its resources.

Best value and performance information

The Best Value Performance Plan is well written and published to a high standard. We are satisfied that the Performance Plan complies with statutory requirements.

The Council has strong arrangements for collating and publishing performance information.

Our formal audit report on the Best Value Performance Plan is set out in Appendix 1. We have not made any recommendations and, as a result, the Council is not required to give a formal response.

Use of resources

Because the Council has been focused on preparing for CPA, we have not carried out any RM report and Annual Audit Letter 2002/03

ANNUAL AUDIT LETTER

specific studies on the way the Council uses it resources. However, based on previous year’s work, our assessment of risk areas and our review of Best Value and performance information, we are satisfied that the Council has made appropriate arrangements for securing the economy, efficiency and effectiveness in the use of its resources.

Financial aspects of corporate governance

Financial standing

The Council’s level of balances are in line with its medium-term financial strategy. The Council is currently consulting on its updated medium- term financial strategy. This seeks to provide a clearer link between financial resources available to the Council and its spending priorities. We are satisfied that the Council has appropriate arrangements to ensure that its financial standing is soundly based.

Level of balances

As anticipated by the Council’s medium-term financial strategy, the general fund balance remains at £0.8 million and the Council has drawn on its earmarked reserves. A £0.5 million surplus on the housing revenue account has increased the housing revenue account balance to £0.9 million. This is supported by £0.6 million in the major repairs reserve. 31 March 31 March 2002 2003 £m £m General fund 0.8 0.8

Ear-marked reserves

Total general fund reserves

Housing revenue account

Major repairs reserve

Total housing reserves

Usable capital receipts

3.8

4.6

0.4

0.5

0.9

2.0

2.6

3.1

0.9

0.6

1.5

2.4

Lewes District Council (Draft 3) – Page4

 2002/2003

Medium-term financial strategy

Last year we commented that the Council had developed a three-year medium-term financial strategy. This included:

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a structured approach for determining the level of balances appropriate to its needs

determining that the balance on the general fund reserve should be £830k

setting up the ‘asset management and revenue equalisation reserve’ to fund planned expenditure that varies from one year to another.

The Council is currently consulting on its draft three-year financial strategy to 2006/07. The intention of this document is to provide a clear link between all the financial resources available to the Council and its spending priorities. Following consultation with the local community this will be used, in early 2004, as a basis for setting taxation and spending levels for 2004/05.

The Council has reviewed opportunities to use its investments to repay some of its debt and has taken action to do so. The Council’s financial projections suggest that this could realise an annual benefit of £0.6 million per annum to the general fund.

The medium-term financial strategy is supported by:

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a strong annual budget and monitoring process

regular financial updates to the Cabinet.

Members have online access to the Council’s financial monitoring system. Plans are in place to develop this facility and to provide training for members on how to use it.

Systems of internal financial control

The Council has appropriate arrangements to satisfy itself that its systems of internal financial control are both adequate and effective. The Council needs to review its arrangements for governance against best practice as defined by the CIPFA/SOLACE framework. The Council also needs to ensure that consideration of risk becomes an integral part of the Council’s management and decision-making.

RM report and Annual Audit Letter 2002/03

ANNUAL AUDIT LETTER

The Council’s arrangements in respect of internal financial control include: €a strong internal audit function that reports to a well established audit committee €monitoring of key financial controls by both management and internal audit €a risk management strategy. As part of the 2002/03 statement of accounts, the Council was required to provide a statement on internal financial controls. For 2003/04, this statement will be widened to consider other internal controls. We would expect this to include a consideration of the Council’s arrangements compared to best practice as set out in the CIPFA/SOLACE framework.

As a result, the Council needs to consider whether its arrangements: €are appropriate to its needs and comply with the CIPFA/SOLACE framework €are operating as intended and effective in practice. Risk management forms as important part of the CIPFA/SOLACE framework and, as noted above, the Council has in place a risk management strategy. We are continuing to work with officers to help the Council to develop its approach to risk management. The challenge for the Council is to ensure that consideration of risk becomes an integral part of the Council’s management and decision-making.

Standards of financial conduct & prevention and detection of fraud and corruption

The Council has appropriate arrangements to maintain proper standards of financial conduct and to prevent and detect fraud and corruption.

General

The Council’s arrangements include: €an anti-fraud and corruption policy supported by training for new staff €investigations in respect of Housing Benefit fraud €specific reviews by Internal Audit

National Fraud Initiative

The National Fraud Initiative (NFI) is the Audit Commission’s data-matching exercise. Its main aim is to help identify and reduce housing

Lewes District Council (Draft 3) – Page5

 2002/2003

benefit fraud, occupational pension fraud, tenancy fraud and payroll fraud. The NFI is carried out every two years and two sets of data matches were provided to you during 2003.

The Council has completed its review of the first set of data provided by the Audit Commission and is currently reviewing the second. We will continue to monitor the progress the Council is making.

Legality of transactions

The Council has appropriate arrangements to secure the legality of transactions.

The Council’s arrangements for securing the legality of its transactions include: €arrangements to enable statutory officers to discharge their functions €processes to identify and address new and emerging issues €dissemination and training to officers and Members where considered appropriate.

Accounts

The accounts have been produced to a high standard and, in accordance with the Council’s timetable.

SAS 610

Statement of Auditing Standards (SAS) 610 ‘Reporting to those charged with governance’ applies to the audit of your accounts for the first time in 2002/03. The SAS requires auditors to report to those charged with governance (as distinct from management) certain matters before they give an opinion on the financial statements:

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Auditors should communicate to those charged with governance: −expected modifications to the auditors’ report −unadjusted mis-statements −material weaknesses in the accounting and internal control systems identified during the audit −their views about the qualitative aspects of the entity’s accounting practices and financial reporting

RM report and Annual Audit Letter 2002/03

ANNUAL AUDIT LETTER

−matters specifically required by other auditing standards to be communicated to those charged with governance −any other relevant matters relating to the audit. Based on the work we have carried out to date, we have not identified any issues that we are required to report to those charged to governance under SAS 610.

Grant claims

Our work on grant claims at the Council is dominated by our audit of the Housing Benefit Subsidy claim. We expect to be able to issue our audit certificate for this claim by the Department of Work and Pensions deadline of 31 December 2003.

Audit and inspection fees

The proposed fee for 2002-04 was set out in our audit and inspection plan agreed at the start of the audit.

The table below sets out our latest estimate of the actual fee for 2002-04 on the basis that work remains in progress, together with explanations where there are variances. Members should note that in order to bring the Audit Commission financial year in line with the NHS and local authorities, the current plan covers the period from November 2002 to March 2004. In this time we will deliver two statutory audits and two annual letters.

Lewes District Council (Draft 3) – Page6

 2002/2003

EXHIBIT 2

Fee update Area of work

Accounts Financial aspects of corporate governance Performance TOTAL CODE OF AUDIT PRACTICE AUDIT FEE Additional work requested by the Council (1) Inspection (2) Certification of grant claims (3) TOTAL FEE

Plan 2002/04

£46,400 £19,800

£62,500 £128,700

£10,000

£15,800 £21,000

£165,500

Antici ated actual 2002/04 £46,400 £19,800

£62,500 £128,700

£10,000

£15,800 £21,000

£165,500

(1) This is for support to help the Council to develop its approach to risk management. This work is not part of our Code of Audit Practice responsibilities and is carried out under section 35 of the Audit Commission Act 1998.

(2) Inspection fees are net of ODPM grant received.

(3) The grant claim audit continues until the end of 2003 and the actual fee reported is our current estimate of the likely fee for the 2002/03 certification work.

Future audit and inspection work

Following the results of CPA we will work with the Council to develop a programme of audit and inspection activity appropriate to the needs of the Council.

RM report and Annual Audit Letter 2002/03

ANNUAL AUDIT LETTER

Status of our Relationship Management Report and Annual Audit Letter to the Council

Our Relationship Management Report and Annual Audit Letter is prepared in the context of the Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission. Annual Audit Letters are prepared by appointed auditors and addressed to Members and officers. They are prepared for the sole use of the audited body, and no responsibility is taken by auditors to any Member or officer in their individual capacity, or to any third party.

Closing remarks

I would like to take this opportunity to express my appreciation for the assistance and co- operation provided during the course of the work. Our aim is to deliver a high standard of audit which makes a positive and practical contribution which supports the Council’s own agenda. We recognise the value of your co- operation and support. Darren Wells District Auditor and Relationship Manager November 2003

Lewes District Council (Draft 3) – Page7

 2002/2003

ANNUAL AUDIT LETTER

A P P E N D I X 1

Draft audit report on the Best Value Performance Plan

Certificate

I certify that I have audited Lewes District Council’s BVPP in accordance with section 7 of the Act and the Audit Commission’s Code of Audit Practice. I also had regard to supplementary guidance issued by the Audit Commission.

Respective responsibilities of the Council and the auditor

Under the Act, the Council is required to prepare and publish a BVPP summarising the Council’s assessments of its performance and position in relation to its statutory duty to make arrangements to secure continuous improvement to the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

The Council is responsible for the preparation of the plan and for the information and assessments set out within it. The Council is also responsible for establishing appropriate performance management and internal control systems from which the information and assessments in its plan are derived. The form and content of the BVPP are prescribed in section 6 of the Act and statutory guidance issued by the Government.

As the Council’s auditor, I am required under section 7 of the Act to carry out an audit of the BVPP, to certify that I have done so, and:

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to report whether I believe that the plan has been prepared and published in accordance with statutory requirements set out in section 6 of the Act and statutory guidance

where appropriate, recommending how the plan should be amended so as to accord with statutory requirements

to recommend:

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where appropriate, procedures to be followed in relation to the plan

whether the Audit Commission should carry out a best value inspection of the Council under section 10 of the Act

whether the Secretary of State should give a direction under section 15 of the Act.

Opinion

Basis of this opinion

For the purpose of forming my opinion whether the plan was prepared and published in accordance with the legislation and with regard to statutory guidance, I conducted my audit in accordance with the Audit Commission’s Code of Audit Practice. In carrying out my audit work I also had regard to supplementary guidance issued by the Audit Commission.

I planned and performed my work so as to obtain all the information and explanations which I considered necessary in order to provide an opinion on whether the plan has been prepared and published in accordance with statutory requirements.

In giving my opinion, I am not required to form a view on the completeness or accuracy of the information or the realism and achievability of the assessments published by the Council. My work therefore comprised a review and assessment of the plan and, where appropriate, examination on a test basis of relevant evidence, sufficient to satisfy me that the plan includes those matters prescribed in legislation and statutory guidance and that the arrangements for publishing the plan complied with the requirements of the legislation and statutory guidance. RM report and Annual Audit Letter 2002/03 Lewes District Council (Draft 3) – Page8

 2002/2003

ANNUAL AUDIT LETTER

Where I have qualified my audit opinion on the plan, I am required to recommend how the plan should be amended so as to comply in all significant respects with the legislation and statutory guidance.

Opinion

In my opinion, Lewes District Council has prepared and published its BVPP in all significant respects in accordance with section 6 of the Act and statutory guidance issued by the Government.

Recommendations on procedures followed in relation to the plan

Where appropriate, I am required to recommend the procedures to be followed by the Council in relation to the plan.

Basis of recommendations

For the purpose of making my recommendations, I conducted my audit in accordance with the Audit Commission’s Code of Audit Practice. In carrying out my audit work I also had regard to supplementary guidance issued by the Audit Commission.

I planned and performed my work so as to obtain all the information and explanations that I considered necessary in order to enable me to determine whether or not to make recommendations in this report on the matters that came to my attention during the audit.

However, my work cannot be relied upon to identify every weakness or opportunity for improvement. In particular, it has not necessarily covered the same areas as a best value inspection.

For this purpose, my audit included a review and assessment, and where appropriate, examination on a test basis of evidence relevant to the adequacy of the systems set in place by the Council for collecting and recording specified performance information; and the testing of specific PIs selected by the Audit Commission for its CPA of the Council.

Recommendations

On the basis of my audit work, I consider that there are no matters that should be brought to your attention.

Recommendations on referral to the Audit Commission/Secretary of State

I am required each year to recommend whether, on the basis of my audit work, the Audit Commission should carry out a best value inspection of the Council or whether the Secretary of State should give a direction.

On the basis of my work:

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I do not recommend that the Audit Commission should carry out a best value inspection of Lewes District Council under section 10 of the Act

I do not recommend that the Secretary of State should give a direction under section 15 of the Act. Signature:

Date:

Darren Wells District Auditor and Relationship Manager

RM report and Annual Audit Letter 2002/03

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