Agenda item

Resolved: That the Committee believes that the audit panel should make every effort to retain independent members.

To advise Mayor and Cabinet of the following:

•   The Committee has concerns about progress with centralisation of counter fraud activities from local government to the Department for Work and Pensions (DWP).

•   The Committee recommends that Mayor and Cabinet raises queries about the progress and success the DWP has had to date with the performance of the single fraud investigation service.

4.1      David Austin (Head of Corporate Resources) introduced the report. The following key points were noted:

·         The report provided a summary of work of the audit panel for the 2016/17 year.

·         It included an overview of the external audit work that had been reviewed by the Panel.

·         Lewisham was given an unqualified audit opinion by the external auditors and there were no restrictions on their statement about the value for money of Lewisham services. There were general comments given by the auditors about the level of austerity facing the sector and the risk and impact of this on financial controls.

·         Last year was the first year that a limited opinion (on a scale of: substantial, satisfactory, limited or no assurance) was given by Head of Internal  audit based on the work of the Council's internal audit function.

·         This was in part as a result of single person dependencies, loss of knowledge and sudden changes in processes, which had resulted in some issues being missed in transition between reorganisations. These were all classic risks associated with the major savings programme and staff reorganisations.

·         Counter fraud initiatives had focused mostly around housing, where there had been a number of successes in the past year.

·         The annual governance statement, which set out the Council's processes for decision making and the coherence of the Council’s control frameworks, was reviewed by the Audit Panel as part of the financial statements external audit.

4.2      David Austin and Selwyn Thompson responded to questions from the committee, the following key points were noted:

·         At the level below the Constitution, there were a number of control frameworks in operation, including those for governance and finance, there were others for HR, procurement and other services to ensure that appropriate mechanisms were in place to manage effective processes for decision making and accountability.

·         Counter fraud activity was principally reactive. The main area of focus was in housing and included work assessing the legitimacy of applications as well as reducing incidences of sub-letting.

·         Lewisham was also participating in the National Fraud Initiative data matching exercises.

·         Officers also carried out special investigations, which focused on areas of high risk - particularly those highlighted by the Audit Commission and the Chartered Institute of Public Finance and Accountancy counter fraud hub.

·         Special investigations related mostly to employment fraud, supplier bank account fraud, procurement fraud and invoice validation.

·         In addition to acting on referrals relating to fraud, the Council undertook some proactive work when resources permitted. One example was the data matching exercise carried out to check suppliers and procurement records.

·         There had been difficulties recruiting independent members to the audit panel but there was currently only one vacancy (out of four places for independent members). There were two new highly qualified independent members of the panel.

·         Counter fraud staff and funding had been centralised at the Department for Work and Pensions to deal with housing benefit fraud.

·         Comparisons between the previous service and the centralised service were difficult to make because the outputs of the service were measured in different ways.

Resolved:

That the Committee believes that the audit panel should make every effort to retain independent members.

To advise Mayor and Cabinet of the following:

•   The Committee has concerns about progress with centralisation of counter fraud activities from local government to the Department for Work and Pensions (DWP).

•   The Committee recommends that Mayor and Cabinet raises queries about the progress and success the DWP has had to date with the creation of the single fraud investigation service.