Agenda and minutes

Members are asked to declare any interests in the items under consideration and in

doing so state:

(1) the type of interest concerned; and

(2) the nature of the interest concerned

If any member requires advice on declarations of interests, they are advised to contact the Head of Democratic Governance in advance of the meeting.

There were no declarations of interest on this occasion.

To agree the minutes of the last meeting of the Audit Committee held on 22 September 2016 as a true and correct record.

The Committee agreed that the minutes of the last meeting held on 22 September 2016 be signed by the Chairman as a true and correct record.

To update the Audit Committee on actions taken to address the recommendations of the Internal Audit review on the Selective Licensing Scheme.

The Committee considered a report which detailed the actions taken to address the recommendations of the Internal Audit review on the Selective Licensing Scheme. It was noted that the report had been requested by Members at the last meeting of the Committee, where it had been noted that the audit review had identified that the expenditure incurred by the scheme was reasonable and in line with its delivery objectives. However, it had also been considered that there should have been more robust management by the service to ensure that budgets for schemes reflected actual expenditure and that the focus of the service had been on outcomes, rather than monitoring resources.

Mr Blackledge, Director of Community and Environmental Services, introduced the report and began by stressing what a positive experience the Audit process had been. He explained that the Selective Licensing Scheme was a huge undertaking and that approximately 2000 properties were covered by the scheme to date. In explaining the process to the Committee, he acknowledged that the scheme had raised a number of questions, particularly around costs. Mr Blackledge explained that any costs that related to enforcement issues came out of the Council’s Revenue Budget and not from the scheme itself. He now received regular updates on that subject and was confident that a far more robust process was now in place, helped by a greater focus now being placed on bad debtors through the Cedar system. He added that recent figures obtained from the police showed reductions in both crime and anti-social behaviour, which helped to illustrate the success of the scheme.

Responding to questions from the Committee, Mr Blackledge reiterated that the costs from the scheme paid for its management, but not for any enforcement action. He explained that whilst Legal Services documented all of their time on casework in relation to enforcement issues, the Public Protection department remained outcome focussed.

Asked about the acceptance and popularity of the scheme, the Committee was informed that the majority of landlords both accepted and appreciated the scheme. Mr Blackledge mentioned however that the media tended to concentrate on prosecution cases, so there was a requirement to change the emphasis of the media to focus more on positivity and the work of good landlords.

Mr Blackledge was asked about the approach that was taken with absent landlords and those that employed management companies. Particular concern was raised about what action Councillors should take when complaints were received in relation to absent landlords. Members were informed that an extremely robust approach was taken in such cases and that any complaints received should be referred directly to the scheme.

The Committee raised questions in relation to specific recommendations within the Audit Action Plan. In relation to Recommendation 7 ‘the budget holder should develop recovery plans for the forecast overspends on both schemes’ and the agreed action ‘a plan will be developed to reduce overspend and rationalise staffing levels as appropriate’, Mr Blackledge was asked to provide a further explanation. He outlined that  ...  view the full minutes text for item 3.

To consider a progress report on individual risks identified in the Council’s Strategic Risk Register.

The Committee considered a progress report in relation to the individual risks identified on the Strategic Risk Register, specifically in relation to risks regarding ‘Service Failure’. The Committee discussed plans to control and mitigate the risks with the strategic risk owner, Mr Thompson, Director of Resources.

Mr Thompson began by explaining that the risk of service failure was split between external and internal provision of services. In the case of the former, the sub-risk was identified as ‘Failure of a service provider in high risk contracted areas such as Social Care and Waste Management’. He pointed out that in the current climate, it was not unusual for providers to go into administration. In such cases, where a service was terminated, the Council had a statutory duty to provide continuity. An example quoted was the provision of services to residents in care homes. To mitigate against risks, the Committee was informed that contractors were required to provide adequate business continuity arrangements, although difficulties arose where services were sub-contracted.

In relation to internal services and the sub-risk ‘Loss of key infrastructure which results in Council services not being delivered, such as ICT and property’, Mr Thompson advised that ICT (as an example) was a common thread that most services relied upon and that the property portfolio, together with the services within, needed to be prioritised. The Corporate Risk Management Group was involved in testing priorities and an example quoted was the arrangements that were in place to ensure continuity of services in the case of a flu epidemic. On the requirement to ensure that all services had up to date business continuity plans in place, it was pointed out that the current proportional figure within the Council was 95% against a target of 90%. Mr Thompson mentioned however that the current aim was to achieve 100% in the near future.

Mr Thompson also advised that it was important not to lose sight of the full spectrum of risks that may impact on service failure in the future. A feature of the current financial climate was that some local authorities were forecasting considerable risks in relation to forthcoming budget issues going forward.

Mr Thompson was questioned about risks that were considered to be uncontrollable and the types that were considered to be so. He explained that a flu epidemic would be a good example and a flu pandemic would be considered critical. External inspections that affected the operation of care comes was also quoted. He explained that whilst processes were in place to mitigate against such failures, it was not possible to provide continuous monitoring. It was further explained that risks around infrastructure were easier to manage.

The Committee raised questions around corporate ICT business continuity and resilience against a possible cyber attack. Specifically, the question around the adequacy of the Council’s server back up arrangements at Municipal Buildings and Bickerstaffe House. Mr Thompson acknowledged that the risk of cyber attack was a prevalent threat and would feature within the Quarter 3  ...  view the full minutes text for item 4.

To consider the Chartered Institute of Public Finance and Accountancy (CIPFA) Fraud and Corruption Tracker report for 2016 and the plans to implement the recommendations.

The Committee considered the Chartered Institute of Public Finance and Accountancy (CIPFA) Fraud and Corruption Tracker report for 2016, together with the Council’s plans and response to the recommendations.

The report was presented by Mrs Greenhalgh, Chief Internal Auditor. The Committee was informed that the report gave a national picture of fraud, bribery and corruption in the UK’s public sector and the actions being taken to prevent it. The report summarised the results of a survey carried out among authorities across the country (of which Blackpool was a contributor) and was supported by a number of other agencies. It was the second survey of this type and gave the opportunity to look for achievements, trends and emerging threats in the sector.

Mrs Greenhalgh talked the Committee through the CIPFA recommendations and the action being taken by the Council to address them. She then responded to questions in relation to the report and action plan.

The report made reference to a case study where Oldham Council had worked with the Department of Work and Pensions (DWP) to create the Single Fraud Investigation Service (SFIS) as part of a pilot national programme. Mrs Greenhalgh confirmed that a Single Fraud Investigation Service was established in Blackpool in April 2015.

On the subject of shared data, Mrs Greenhalgh acknowledged that there continued to be problems as the Department for Work and Pensions were unable to access the Council’s data. Asked about prevention measures in relation to business rates fraud, Mrs Greenhalgh confirmed that work was already being carried on by the Business Rates team and further links with the Corporate Fraud team were being considered.

The Committee discussed purchasing and procurement arrangements and the different arrangements that existed between various departments. Mrs Greenhalgh stressed that the Council had a strong procurement framework in place and that all departments should follow contract procedure rules. The procedures were also covered by regular audit procedures.

Members went on to question Mrs Greenhalgh in relation to the action plan recommendation that stated ‘it is important to prevent fraud that has no direct financial interest, such as data manipulation and recruitment, as it is high value fraud’. The response to that was that currently, the Corporate Fraud team responded to referrals, but had not undertaken any proactive work. However, it would be built into the revised proactive anti-fraud work programme going forward to assess the risk to the Council. Mrs Greenhalgh provided current examples of proactive work that included the Council Tax (single person discount and reduction scheme), the Blue Badge scheme and the checking on whether expenditure made via purchase cards was appropriate.

On the subject of anti-fraud measures within the Council’s own insurance claims, Mrs Greenhalgh confirmed that work would be led by the Corporate Fraud Team, in partnership with other departments, including Highways and Legal Services.

Asked what she considered to be the three highest risk areas faced in relation to fraud issues, Mrs Greenhalgh outlined the following:

1.         Having the capacity to identify fraud risk  ...  view the full minutes text for item 5.

To consider the findings of the Local Government Counter Fraud and Corruption Strategy 2016-2019.

Mrs T. Greenhalgh, presented the Committee with the newly released Local Government Counter Fraud and Corruption Strategy 2016-2019. The purpose of the document was to outline the direction that the service was going and to identify a number of challenges, which included:

·         The significant fraud losses which occur in local authorities.

·         The reputational damage fraud had on local authorities.

·         The fact that fraudsters were constantly revising and sharpening their techniques and the need for local authorities to adapt to meet these challenges.

·         The need to tackle cross-boundary and organised fraud and corruption attempts as well as addressing new risks.

·         The changing public sector landscape including budget reductions, service remodelling and integration and government policy changes.

·         Barriers to tackling fraud effectively including incentives, information sharing and powers.

In order to meet the challenges, there was a requirement for local authorities to continue to develop the following principles:

·         Acknowledge fraud risks exist.

·         Prevent and detect more fraud.

·         Pursue by punishing fraudsters and recovering losses.

Mrs Greenhalgh responded to a number of questions from the Committee on the contents of the document. Asked about how the profile of fraud risk was being raised amongst staff and what rewards or praise existed for staff discovering fraud, Mrs Greenhalgh explained about the Council’s Whistle blowing Policy and the Fraud Referral Policy. She explained that the majority of staff who exposed any sort of fraud would not want any sort of publicity from it and would prefer to remain anonymous.

Asked about what checks were in place against malicious reporting, Mrs Greenhalgh explained that fact finding checks were always undertaken and appropriate action taken against anyone who made malicious reports.

The Committee discussed the possibility of error being mistaken for fraud. Mrs Greenhalgh confirmed that the possibility of error was always considered and investigated appropriately.

On the subject of staff training, the Committee was informed about the fraud awareness ipool course and the face to face training that took place in high risk areas. In relation to elected member training and specific training for Audit Committee Members, Mrs Greenhalgh explained she would consider further and would be happy to offer training if there was a willingness amongst Members.

The Committee made reference to the financial incentives that had been made available to local authorities for anti-fraud measures as detailed in the Strategy. Mrs Greenhalgh confirmed that Blackpool had placed a bid for funding but unfortunately was not successful and further feedback was not available.

Mrs Greenhalgh was asked whether any of the recommendations for local authorities, contained with the Delivery Plan section of the report, stood out in particular. She confirmed that the Council was already working on a number of the recommendations but needed to improve on anti-fraud measurement. She stressed however the importance of this taking place in partnership with other authorities. She added that a consistent baseline measurement methodology would be very helpful.

The Committee thanked Mrs Greenhalgh for her attendance and agreed the following:

1.         To note the report.

2.         To request  ...  view the full minutes text for item 6.

To note the date and time of the next meeting of the Committee as 24 November 2016, commencing at 6pm.

The Committee noted the time and date of the next meeting as 6pm on Thursday 24 November 2016 at Town Hall, Blackpool.