INTERNAL AUDIT REPORT

Pc2876

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F I N A L INTERNAL AUDIT REPORT Review of Asset ManagementLANDLORDS MAINTENANCE BUDGET 2004/ 2005 ___________________________________________________ Management Summary Table of Recommendations ……………………………………….. AUDIT MANAGER F I N A L MANAGEMENT SUMMARY This review was undertaken using control framework objectives, which ...

Sujets

• management
• risk management
• managers

Informations

• Publié par: Saun
• Nombre de lectures: 18
• Langue: English

Extrait

INTERNAL AUDIT REPORT

Review of Asset Management LANDLORDS MAINTENANCE BUDGET

2004/ 2005 ___________________________________________________

Management Summary

Table of Recommendations

……………………………………….. AUDIT MANAGER

F I N A L

MANAGEMENT SUMMARY

This review was undertaken using control framework objectives, which incorporates the following:

Strategic Management, Compliance with Laws, Policies & Procedures, Operational Effectiveness, and; Data Integrity & Accurate Financial Reporting.

This review was initially intending to look at five (5) specific areas of Asset Management Service, but after the commencement of the audit and after meetings with key managers, and taking on board their concerns; it was decided to scale the scope down to two (2) areas only. 1. The Landlords Maintenance Budget 2. Lease Renewals

Internal Audit’s main concerns are that:

Strategic Management

1) The Landlords Maintenance Budget is not sufficient enough in value to maintain all of the PCC owned buildings and fixed assets within. This means that there is the risk that buildings will need to close and more seriously, there is a risk to life.

2) Risk Management is still being developed and the lack of a proper link from risks to budget planning has meant that the full impact of under-funding has not been properly examined by Members until the Scrutiny Panel review.

Compliance with Laws, Policies & Procedures

3) The Authority is in breach of the Health and Safety at Work act (1974) as well as being in breach of its own Financial Regulations. PCC are running the risk of prosecution.

Operational Effectiveness and Efficiency

4) The Procurement trial that was set up to ensure the correct use of PCC assigned contractors has not been followed. The results of the trial have not been analysed and communication between AMS and Procurement departments has not been effective.

Data Integrity & Accuracy of Financial Reporting

F I N A L

5) No Asset Register exists of electrical and/ or mechanical assets within PCC buildings. Financial reporting and maintenance obligations are not being conducted sufficiently as a result.

The Scope of testing undertaken during this review has been restricted, mainly to Internal Audit focussing on key, specific areas only, but also because obtaining various requested reports from AMS has not been possible.

Information not received included:

• • •

Contractor spend by cost centre YTD. Contractor spend YTD greater than £5,000. Budget v actual (and any variance commentary) for the previous 5 years.

At the request of Karl Golder and the AMS Management Team, the main focus of this review was concentrated in the area of the Landlords Maintenance Budget.

Our brief initial overview of this area proved that AMS concerns were well founded.

It is our intention to conduct a follow-up review due to the seriousness of a number of the issues raised.

Priority

Essential

Important

Useful

Basis

F I N A L

There is non-compliance with legislation, policies or procedures. There are significant control weaknesses – either lack of controls or controls that cannot be relied upon. There are system weaknesses or poor practice

Reason action is required

To facilitate administration of the authorities financial affairs

The level of risk is reduced as a result.

To enhance system efficiency/effectiveness and promote best practice

Recommendations

F I N A L

Possible Consequences

Strategic Management Unrealistic and 1 . All PCC owned property needs to be re- insufficient budgets will inspected in order to establish an up-to-date continue to be set and value of the R&M works requiring attention. PCC buildings deteriorate. Breach of H&S law.

Priority

Management Response

Officer(s) Responsible / Target Date

Agreed. •AMS will identify all assets Robert Brind requiring a condition survey, June 2005 prepare and inspection plan within a 5 year rolling programme. Roger Ching •Additional Resources will be November 2005 applied for under MTRS to enable allocation of revenue to this activity. •The approach adopted by AMS has been to balance inspection against repairs carried out. If more resources are directed to inspection less repairs will be completed with the consequence of increasing Health and Safety risks and building closure risks. Funding for schools not held by AMS.

Recommendations

2.Once the inspection has taken place, a full and comprehensive database should be established (and maintained), showing in detail, all PCC owned property and its condition.

3.Once complete, this database should be used as a tool to set and manage a more realistic rolling budget for AMS.

F I N A L

Possible Consequences

Incorrect and/ or out-of- date information is held.

Less than reliable management information

Priority

Management Response

Agreed. •AMS will develop the Help desk and More Database and decommission IPF/Access Condition Database. •Referencing methodology to be consistent with Corporate Property Asset Register

Officer(s) Responsible / Target Date

Robert Brind September 2005 To be commenced subject to available funding and completion of recommendations (1)

Karl Golder May 2005

Mainly Agreed. •Database will require Robert Brind continuous updates. To be commenced •AMS will Investigate the subject to available capabilities of Help Desk and funding and More to take into account cost completion of inflation, planned and reactive recommendations (1) works undertaken and & (2) Additions/deletions of buildings •Interface with Oracle NGFS to be investigated to improve efficiency.

Recommendations

.A policy for replying to, and acting upon ormal, written notes needs to be adopted and applied with a consistent approach.

F I N A L

Possible Consequences

Management concerns are not acted upon.

Compliance with Laws, policies and procedures. 5.A comprehensive AR of all plant and Breach of Financial machinery located within PCC owned Reporting Standard operational property should be established FRS 15. with immediate effect.

Priority

Management Response

Agreed •AMS policy to be prepared consistent with corporate standard •Directorate Standards to be prepared consistent with corporate standards •Reports on major asset management issues to be considered by the Asset Management Board and forwarded to the appropriate stakeholders

Agreed. •Help Desk and More system to be amended and linked to Asset Register. •Project Plan to be prepared and implemented for data capture. •This will also be assisted with the implementation of the Medium Term Contract

Officer(s) Responsible / Target Date

Karl Golder March 2005

Roger Ching March 2005

AMS Management Board Commence April 2005

Robert Brind Commence from April 2005 then ongoing

Recommendations

6.A procedural document detailing AMS policy for amending the AR should be written and circulated to all relevant personnel.

7.Once established, Asset Management Service (AMS) should ensure the accurate maintenance of the AR, restricting its access to key members of staff.

F I N A L

Possible Consequences

AR not correctly maintained. Occurrence of errors and omissions.

AR not correctly maintained. Occurrence of errors and omissions.

Priority

Management Response

Partly Agreed •Existing Procedures require revision to reflect changes in responsibilities for data management within AR. •Individual staff have been briefed verbally in terms of their responsibilities by the Business Manager •The process will be included in the AMS QA manual. •This will also be assisted with the implementation of the Medium Term Contract Partly Agreed •The Asset Register is continuously being updated and quality of data is improved when record is amended. This is undertaken within existing resources •To undertake a more comprehensive audit of data will require resources which are not available.

Officer(s) Responsible / Target Date

Karl Golder/David Ball December 2005

No action proposed

Recommendations

8.The exact location(s) off all maintainable assets, together with their maintenance obligation(s), should be documented with immediate effect.

9.Once documented, the data and any drawings of asset locations should be maintained with changes as they occur.

10.Once all PCC plant and machinery has been located and documented (as per recommendation 10), a 10 year, rolling, R&M plan should be adopted.

F I N A L

Possible Consequences

Breach of Health & Safety at Work Act 1974.

Breach of Health & Safety at Work Act 1974.

Maintenance work is not completed. Breach of the Health & Safety at work Act 1974.

Priority

Management Response Officer(s) Responsible / Target Date Agreed Ian Morrison/Robert • Brind/David Ball The asset register and Help desk and more will be Commence March amended to ensure that a 2005 and reviewed maintained comprehensive list within 5 year rolling of assets which require programme maintenance is recorded. Karl Golder •Specification for a new November 2005 database to be written and costed. MTRS submission to be considered to implement Agreed Karl Golder • Commence February AMS currently undertaking a reorganisation of electronic 2005 complete by document storage to enable July 2005 storage of property related documents in a logical structure and improve efficiency and accuracy of records. Agreed • Robert Brind Recommend a 5 year rolling programme, subject to the Commence May availability of resources 2005 Roger Ching •MTRS submission for Consider Bids additional resources November 2005

Recommendations

11.Software solutions should be sought or adapted, where applicable, to aid the implementation and management of a 10 year rolling plan.

Effectiveness and efficiency of operations. 12.In order for the trial to fulfil its initial objectives, AMS should use the Policy held on POLO web when obtaining quotes and issuing work to contractors.

13.Once the trial has been completed and reported upon, the Preferred contractor list should be used without exception. Any deviations from this list should be documented with specific reasons and have suitable authorisation from management graded staff.

14.The policy initiated by the Procurement department to capture and benchmark contractor data (as documented on POLO web) should be implemented with instant effect.

F I N A L

Possible Consequences

Inaccurate data capture.

Trial objectives are not met. Trial findings become meaningless.

Fraud, and allegations of staff corruption.

Contractor work is not monitored and/ or benchmarked

Priority Management Response Officer(s) Responsible / Target Date Agreed. •Prepare IT specification and Karl Golder obtain quotations for November 2005 replacement software solution for AMS. This is part of the current AMS business plan as an outstanding action.

Agreed •Revised QA process to be issued and communicated to staff. •Random audit to be undertaken to ensure compliance Partly Agreed •Medium term Contract for works up to £10k replaces previous system •Quotations sought for schemes between £k and £50k. Procurement/AMS to refine select list Agreed. •Feedback assessments to be introduced and feedback passed to procurement to review

Lawrence Tristram Review March 2005

Karl Golder Review in June 2005 and February 2006

No action required

Robert Brind/David Pointon December 2005

Robert Brind/David Pointon July 2005

Recommendations

15.The policy initiated by the Procurement department, detailing the need to use preferred contractors on a rota basis (as documented on POLO web) should be implemented with instant effect.

16.As per issue number 5.3.8 (Commercial Rents Review B157 2003/ 2004) and subsequent recommendation number 17, all Lease Files should include a standardised check sheet.

F I N A L

Possible Consequences

Loss of fair contractor competition and/ or price fixing.

Unable to easily identify progress of work undertaken. Potential Loss of Legal documentation.

Data integrity and accuracy of financial reporting 17.Estateman informationThe Estateman System Administrator should compile a formal written document is not accurate. hat ensures the key data entry steps are captured. 18.Estateman data entry should be Data is not captured performed by selected staff members to consistently. allow for a specialist, consistent approach. 19.Lease renewals passAn investigation into the reason(s) for keeping old/ out-of-date information on unnoticed. Estateman should be conducted and the indings documented.

Priority Management Response Officer(s) Responsible / Target Date Partly Agreed • No action Medium term contract addresses this issue Robert Brind/David •Preferred list of contractors to Pointon be reviewed with Procurement December 2005 Partly Agreed •Forms have been created. All Peter Mountford staff to be briefed on their use March 2005 in future cases. Mary Cox •Loss of legal documents are not AMS responsibility

Agreed •Procedures to be revised and communicated to relevant staff Agreed •Already in place and implemented Not agreed Records are kept in accordance with the corporate retention and destruction policy and data protection act. Reason codes are recorded against each record where archived.

Bob Hughes/Karl Golder

No action

No action