Agenda item

Report of the Corporate Director for Finance and Resources

Councillor Audra Wynter, Portfolio Holder for Finance and HR, Ross Brown, Corporate Director for Finance and Simon Parsons, Audit Manager, presented the report which outlines two areas, Appointeeships and HR/Payroll, which had received no assurance when internally audited. The following information was highlighted:

 

Simon Parsons provided an overview of the report on Appointeeships. The following information was highlighted:

 

(a)  the level of assurance provided by this report was No Assurance which is the lowest level of assurance;

 

(b)  the Appointeeships team used to sit within the Nottingham Revenues and Benefits (NRB) Ltd and transferred to Customer division in April 2023; 

 

(c)  the Appointeeships team look after DWP benefits on behalf of individuals who cannot manage their financial affairs themselves under arrangements agreed with DWP;

 

(d)  Internal Audit reviewed the service following a data matching methodology after the Director of Adult Health and Social Care raised concerns around the monies recorded in the system, and how they were accounted for, including a particular concern regarding the balances of individuals who had passed away;

 

(e)  the review determined that the computer system in use was not fit for purpose as it could not provide a full record of income, charges, money paid out and balances;

 

(f)  as a consequence monitoring was not effective and DWP benefits may have been overpaid because balances above DWP thresholds may not have been notified to DWP;

 

(g)  the Appointeeships team have limited powers to identify balances controlled by families or other parties relevant to DWP benefits and as a result are not always able to establish when DWP thresholds are reached;

 

(h)  the citizens funds were swept from the Council’s income account straight into the Council’s General Fund bank account rather than into separately identified sub-accounts. The money has not been misused, but there is a risk as it is more difficult to account for it;

 

(i)  Internal Audit will follow up the report later in 2023/24;

 

Lucy Lee, the Director of Customer Services, provided the following comments:

 

(j)  a number of actions have been developed to provide assurance on Appointeeship; 

 

(k)  both Appointeeship and Deputyship services have come under the remit of Customer Services and they are being combined to provide better value;

 

(l)  the monies for individuals were kept in a ringfenced way. They should have been kept in individual accounts, but the digital system used by Customer Services did not allow for this. The Caspa system used for Deputyships does allow for individual accounts and will be used for Appointeeships;

 

(m)a manual record is kept for Appointeeship accounts;

 

(n)  a search agency has been commissioned to find next of kin relating to deceased persons accounts. 15 have been found, whilst 16 have been unable to identify next of kin and money will be transferred to Crown Estate. The remaining 201 accounts are being searched for;

 

(o)  12 cases above the DWP threshold have been identified. There are genuine reasons in each case and continuous monitoring is ongoing;

 

During the discussion and in response to questions from the Committee, the following points were raised:

 

(p)  the implementation of the Caspa system will be delivered before the next audit update due at the Audit Committee meeting on 23 February 2024;

 

(q)  the original source of concerns about Appointeeships was the Deputyship team following a review of Deputyship accounts. The Appointeeship service was formerly managed by NRB. Whilst it was effectively managed, there was a lack of scrutiny within the company;

 

(r)  a full review of the Appointeeships service is being carried out as part of the team being brought within the Customer Services division;

 

(s)  the wider lessons from this should be that where the Council operates similar services, processes and systems should be aligned and teams grouped together to provide better value for residents, efficiency and transparency;

 

Simon Parsons provided an overview of the report on HR and Payroll. The following information was highlighted:

 

(t)  the level of assurance provided by this report was No Assurance which is the lowest level of assurance. The report comments on central ownership and accountability together with the overview and monitoring of policy, activity and controls within payroll;

 

(u)  Internal Audit have the same expectation of robust internal control and monitoring within central HR as within Finance, but the audit found weaknesses;

 

(v)  whilst there are systems in place to enable the Council to meet the Transfer of Undertakings Protection of Employment rights (TUPE) requirements for when external services are transferred into Council control, for example, the transfer of Nottingham City Homes staff into the Council. The necessary checks regarding inward TUPE transfers were not being undertaken;

 

(w)  there is evidence that pay progression due for some staff was not correctly automated leading to underpayment;

 

(x)  specific payments and employment checks require retained evidence the document management system appears no longer used and storage of such documentation is inadequate;

 

(y)  there are a number of data quality/integrity issues affecting the Oracle Fusion system reports;

 

Titu Hayre-Bennett, Head of HR and Organisational Development, and Ceri Morgan, Programme Manager for EMSS and Oracle, provided the following comments:

 

(z)  the HR Team understand the areas of concerns and a clear HR Improvement Plan has been developed;

 

(aa)  the Pay and Governance Board has been reinstated this week;

 

(bb)  issues around establishment control are being worked on by PwC;

 

(cc)  financial controls with regard to the housing service are being finalised;

 

(dd)  payroll controls are in place;

 

(ee)  challenges with HR payroll include the use of overtime contracts and people on two separate contracts;

 

(ff)  work with EMSS continues to new implement new systems of financial control;

 

(gg)  every current assignment has been reviewed as part of September update to pay tables;

 

(hh)  there is a secondary check on pay variances which the new system can pickup. This was previously a manual process;

 

(ii)  errors increased with self-service implementation during the pandemic;

 

During the discussion and in response to questions from the Committee, the following points were raised:

 

(jj)  the Council has around 7000 employees, so the HR Improvement Plan is vital for maintaining standards;

 

(kk)  the Portfolio Holder confirmed that she was assured that the deadlines outlined within the HR Improvement Plan were realistic and achievable, subject to any issues which may arise.

 

Resolved to:

 

(1)  note the findings of the two Internal Audit Reports;

 

(2)  request a further follow up report in February on Appointeeship;

 

(3)   request a further update report in February on HR & Payroll.