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audit 2001/2002Annual Audit LetterRushmoor BoroughCouncilINSIDE THIS LETTERPAGE 2 • Key messages PAGE 3• Introduction- The purpose of this Letter- Audit objectives PAGES 4-7• Overview of the audit- Performance management- Financial aspects of corporategovernance- Accounts• Future audit work• Status of our Annual Audit Letter to theCouncil• Closing remarks• Reports to date arising from the auditPAGES 8-10 Appendix 1• Auditor’s report to Rushmoor BoroughCouncil on its Best Value Performance Planfor the year ended 31 March 2002Reference: CWRU003AAL02W – Draft 1 Authors: Martin Robinson – District AuditorChris Williams – Audit Manager Date: November 2002audit 2001/2002 Rushmoor Borough Councilwith the inclusion of more local PIs relating to KEY MESSAGEScorporate objectives.The past year has been a particularly challengingE-governmentone for many district councils, includingRushmoor. This reflects the continuing need to In the first half of the year we reviewed yourrespond to national initiatives alongside localplans for implementing e-government in line withpriorities and pressures which, in addition to a Government targets. Many of the issues raisednumber of local issues such as CCTV, have have since been addressed in your draft secondincluded: IEG statement produced in October.• regeneration of Farnborough and Aldershot• implementation of your integrated planning Corporate ...
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audit2001/2002
Annual Audit Letter
Rushmoor Borough Council
I N S I D E T H I S L E T T E R
P A G E 2
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Key messages
3P A G E
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Introduction
The purpose of this Letter
Audit objectives
P A G E S 4 7
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Overview of the audit
Performance management
Financial aspects of corporate governance
Accounts
Future audit work
Status of our Annual Audit Letter to the Council
Closing remarks
Reports to date arising from the audit
P A G E S 8 1 0
Appendix 1
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Auditor’s report to Rushmoor Borough Council on its Best Value Performance Plan for the year ended 31 March 2002
Reference:
Authors:
Date:
CWRU003AAL02W – Draft 1
Martin Robinson – District Auditor Chris Williams – Audit Manager
November 2002
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K E Y M E S S A G E S
Rushmoor Borough Counci
The past year has been a particularly challenging one for many district councils, including Rushmoor. This reflects the continuing need to respond to national initiatives alongside local priorities and pressures which, in addition to a number of local issues such as CCTV, have included:
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regeneration of Farnborough and Aldershot
implementation of your integrated planning and performance management system
development of the LSP and community strategy
implementing egovernment
preparation for CPA.
Our audit has identified a number of areas where action is recommended to ensure that performance can be sustained in the medium to longerterm.
The following key messages are highlighted for Members. We acknowledge that the Council is already taking action to address many of the issues arising from the audit.
Performance management framework
Good progress has been made with implementing our recommendations from last year, and an emphasis on the principles of Best Value as a means of achieving continuous service improvement is increasingly apparent.
Best Value action plans have been integrated with business plans and the overall approach to performance management, business planning and monitoring strengthened. However, the role of Members in performance management needs to be developed further and steps are being taken to achieve this.
Best Value Performance Plan
The Best Value Performance Plan (BVPP) is
compliant in all significant respects with
legislation. While we commented that last year’s
BVPP lacked focus and did not readily engage the
reader, a marked improvement is evident this
year. This would be further enhanced next year
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with the inclusion of more local PIs relating to corporate objectives.
Egovernment
In the first half of the year we reviewed your plans for implementing egovernment in line with Government targets. Many of the issues raised have since been addressed in your draft second IEG statement produced in October.
Corporate governance arrangements
The Council has continued to develop its corporate governance arrangements. A risk management framework to help ensure that risks are prioritised and actively managed is needed as a high priority.
There are currently no formal Internal Audit reporting arrangements to Members, which would help give the work of Internal Audit appropriate status within the organisation.
Financial standing
The Council was in a sound financial position as at 31 March 2002. However, recent projections suggest a revenue overspend in 2002/03, which would reduce balances to below the minimum level set in your mediumterm financial strategy.
Tight budgetary control needs to be maintained to minimise the predicted overspend, and the mediumterm financial strategy reviewed in the light of current projections. We understand Members are aware of the situation and are already considering necessary action.
Accounts
We [expect to issue] our audit opinion in December.
Comprehensive Performance Assessment (CPA)
A key issue for the Council over the coming year
will be the CPA, for which the methodology is in
the final stages of development. The Council has
clearly recognised the importance of CPA and has
already established a working group with
member involvement to oversee developments.
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I N T R O D U C T I O N
Rushmoor Borough Counci
The purpose of this Letter
This Annual Audit Letter summarises for Members the more important matters arising from our audit for 2001/02 and comments on other current issues. We have produced separate reports during the year on completion of specific aspects of our work, which are being discussed in detail with officers. The reports are listed at the end of this Letter for Members’ information.
The Audit Commission has circulated to all audited bodies a statement, which summarises the key responsibilities of auditors. Our audit has been conducted in accordance with the principles set out in that statement. What we say about the results of our audit should be viewed in the context of that more formal background.
Audit objectives
Our Code of Practice requires us to design a programme of work to address the significant operational and financial risks you face which impact on our responsibilities. Our work focuses on whether you have adequate arrangements for the following:
Performance
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Securing economy, efficiency and effectiveness in the use of your resources.
BVPP.
Producing performance information.
Financial aspects of corporate governance
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Ensuring your financial standing is soundly based.
Satisfying yourselves that your systems of internal financial control are both adequate and effective.
Ensuring proper standards of financial conduct and to prevent and detect fraud and corruption.
Securing the legality of transactions.
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Accounts
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Our opinion as to whether your accounts present fairly the Council’s financial position.
The relationship of the elements of the audit to each other is shown in Exhibit 1 below.
EXHIBIT 1 THE AUDIT COMMISSION’S CODE OF PRACTICE
Our audit has addressed the requirements of the Code of Audit Practice and we have worked with the Council to maximise the benefits of the integrated audit approach. Our work programme was designed to address the significant operational and financial risks you face which impact on our responsibilities.
We also liaise with Best Value and other Government inspectors to maximise the combined effectiveness of our respective roles and responsibilities.
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A U D I TT H E O F O V E R V I E W
The outcomes of our work are reported below, using the three Code areas defined above of:
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performance management
financial aspects of corporate governance
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accounts.
Performance management
Performance management framework and Best Value
Good progress has been made with implementing our recommendations from last year, and an emphasis on the principles of Best Value as a means of achieving continuous service improvement is increasingly apparent.
Best Value action plans have been integrated with business plans and the overall approach to performance management, business planning and monitoring strengthened. However, the role of members in performance management needs to be developed further and steps are being taken to achieve this.
Progress has been made with implementing our recommendations from last year, which emphasised the need:
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to develop and monitor action plans to deliver targets
for wider officer and Member ownership and awareness of Best Value
to drive forward the corporate management agenda
to set challenging but achievable targets with more focus on outcomes.
The performance management framework has been developed considerably and new arrangements introduced to improve business planning. Crosscutting business plans to support strategic objectives are being introduced.
While performance monitoring arrangements appear to be largely effective at operational and senior management levels, at Member level they need to be strengthened further. Action is already underway to achieve this. Business plans include arrangements for consulting with external stakeholders and performance measures based on feedback from service users.
This year, Best Value action plans have been integrated with business plans and the overall approach to performance management, business planning and monitoring
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strengthened. This now includes the monitoring of services delivered externally. The Best Value review (BVR) process has been simplified and greater consideration given to the resources needed to implement recommendations. Reviews themselves have a clearer focus on achieving service outcome improvements.
When reviewing your arrangements for implementing Best Value action plans and monitoring progress we took into account the ACIS Inspection of the Waste Management and Street Cleansing Services BVR and action plans. ACIS considered the action plans credible and likely to deliver improvements, and resources have been allocated to support their implementation where necessary.
However, Inspection identified target setting as an area of inconsistent practice. This already appears to have been addressed, and the business plans and contracts with external service providers that embody the Best Value recommendations now include specific targets and objectives. Responsibility for ensuring that targets are achieved has been included in staff Forward Job Plans. The Council needs to ensure that this is the case with all Best Value action plans.
Best Value Performance Plan
The BVPP is compliant in all significant respects with legislation. While we commented that last year’s BVPP lacked focus and did not readily engage the reader, a marked improvement is evident this year. This would be further enhanced next year with the inclusion of more local PIs relating to corporate objectives.
Our compliance review concluded that the BVPP is compliant in all significant respects with legislation. Most of the specified performance information has been included although there are a small number of inaccuracies and omissions. Our unqualified opinion on the Plan is included in the appendix to this report.
In previous years we have commented that your BVPP lacked focus and did not readily engage the reader. There has been a marked improvement this year, with a well laid out and easily readable document that reports your performance linked to key aims and objectives
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which should be useful both internally and to external stakeholders. Its value would be enhanced by the inclusion of more local performance information relating to local key targets.
Progress with egovernment
In the first half of the year we reviewed your plans for implementing egovernment in line with Government targets. Many of the issues we noted at that time have been addressed in your draft second IEG statement produced in October.
Implementation of egovernment is a key means of improving the accessibility and effectiveness of local authority services to their stakeholders, reflected in the national objectives and targets which have been set.
To meet these objectives, local authorities need a comprehensive strategy for e government and to be working to ensure all services that are capable of electronic delivery are available by 2005.
Earlier in the year we undertook a high level assessment of the Council’s preparations for egovernment. We are discussing our detailed findings with officers and recognise that many of the issues raised have been addressed in your second draft statement produced in October.
Overall, the Council has made a good start at implementing egovernment.
Financial aspects of corporate governance
Corporate governance arrangements
The Council has continued to develop its
corporate governance arrangements. The
development of a risk management framework to
help ensure that risks are prioritised and actively
managed needs to be a high priority.
There are currently no formal internal audit reporting arrangements to Members, which would help give the work of Internal Audit appropriate status within the organisation.
It is good practice for local authorities to develop their own corporate governance
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arrangements and to bring these together in a Code of Corporate Governance, with a comment in the financial statements on how it complies with the code and monitors its effectiveness.
Although it is not a statutory requirement to develop such a code, the Council will, as part of CPA, be expected to have made every effort to establish corporate arrangements that draw together all of their governance strands which underpin their performance management.
We have discussed with officers the arrangements you have in place and have highlighted areas for attention to help ensure good compliance with the CIPFA/SOLACE recommended governance framework.
A key aspect of governance arrangements is a risk management strategy which sets out the arrangements for identifying, prioritising and managing business risks and a corporate culture which puts this into effect. You are currently developing such a strategy.
There are currently no formal Internal Audit reporting arrangements to Members. This would help give the work of Internal Audit greater impact within the organisation. You are currently considering the most appropriate arrangements for dealing with this issue taking account of the arrangements for scrutiny and review within the Council.
Legality of financial transactions
We are satisfied with the Council’s arrangements for ensuring the legality of transactions with financial consequences. We have reviewed your arrangements for ensuring the legality of significant financial transactions, held discussions with officers and reviewed minutes and reports. Our work indicates that you have satisfactory arrangements to ensure the legality of significant financial transactions.
There are no current legal issues which need to be brought to Members’ attention.
Financial standing
The Council was in a sound financial position as at 31 March 2002. However, current projections
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suggest a revenue overspend in 2002/03, which would reduce revenue balances to below the minimum prudent level set in your mediumterm financial strategy.
Tight budgetary control needs to be maintained to minimise the predicted overspend, and the mediumterm financial strategy reviewed in the light of current projections. We understand members are aware of the situation and are already considering necessary action. Key elements of the Council’s mediumterm financial strategy are:
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maintaining a fouryear financial plan
retaining a minimum working balance of between £1 million and £1.5 million
identifying processes for budget restructuring in both the short and mediumterm
maintaining a Capital Resources Strategy to achieve a sustainable fiveyear capital programme.
General Fund
The Council was in a sound financial position as at 31 March 2002, with a General Fund (GF) balance of £2.56 million compared to the mediumterm financial forecast of £2.19 million.
However, forecast outturn figures for 2002/03 in October 2002 show a contribution being required from GF balances of £1.75 million compared to an original budgeted figure of £1.05 million. The main contributing factor to this is the underachievement of service cost reductions/additional income generation targets included in the original budget.
Although this position is subject to change as the year progresses, it should be seen as the best current indication of the likely position at the end of the year. It suggests that the GF balance will fall to around £0.8 million by the end of the year, below the minimum prudent level set out in the mediumterm financial strategy and recommended by your s151 Officer. Tight budgetary control will have to be maintained for the rest of the year to minimise the predicted overspend, and the financial strategy reviewed in the light of these projections. Members are aware of the position and are considering necessary appropriate action.
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Members will also need to consider carefully the implications for the forthcoming 2003/04 budget.
Arrears
There has been a marked improvement in the collection of taxes, with a significant reduction in arrears as shown in the table below:
Council Tax
NNDR
Total
31 March 2001
£1.932m
£2.261m
£4.193m
31 March 2002
£1.655m
£1.394m
£3.059m
Systems of internal financial control
Standing orders and financial procedure rules provide a sound base for internal financial control environment.
Although internal audit provision in 2001/02 was adequate, we are concerned that provision over the mediumterm remains uncertain. The Council should determine the type and extent of the Internal Audit function that will meet its requirements.
The Council has generally sound systems of internal financial control in place. A small number of recommendations in this area are under consideration by officers.
Our indepth review of Internal Audit for 2001/02 found the service overall to be effective. However the medium to longterm arrangements for the provision of the Internal Audit function have yet to be agreed. Before these arrangements can be finalised the Council need to identify the type and extent of the Internal Audit function that will meet its requirements.
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Prevention of fraud and corruption
Overall arrangements continue to reflect good practice.
The Council has produced and adopted an antifraud and corruption policy. An action plan should now be developed to ensure the plan is publicised and implemented across the Authority. Our review of the system for fixing, paying and controlling Members’ allowances and found it to be generally satisfactory; we are discussing minor recommendations with officers.
Accounts
Our audit opinion [is expected to be] issued in December. The Council considered and approved the accounts before the 30 September deadline. Our audit opinion [is expected to be] given in December. Future audit work
We shall, from next year, be moving our financial and operational year to start from 1 April rather than 1 November. In order to achieve this change, we will shortly be compiling a 17month Audit Plan to encompass two audit years.
We are currently considering the significant operational and financial issues and risks facing the Council that will need to be addressed in this audit programme. We will discuss our risk assessment with your officers before producing an Audit Plan.
A key area for the Audit Commission will be the CPA. The role of local auditors and inspectors in helping the Council prepare for, and to help inform, the process is as yet unclear but will be reflected in our forthcoming plan.
Status of our Annual Audit Letter to the Council
Our 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 or officers. They are prepared for the sole use of the audited body, and no
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responsibility is taken by auditors to any Member or officer in their individual capacity, or to any third party.
Closing remarks
The issues raised in the Annual Audit Letter were presented to and discussed with Cabinet on 17 December 2002.
Finally, I would like to take this opportunity to express my appreciation for the assistance received from officers during the course of our work. Our aim is to provide a high standard of audit service which makes a practical and positive contribution to the work of the Council. We recognise and value your co operation and support.
Martin Robinson District Auditor December 2002 Reports to date arising from the audit
Implementing egovernment
Interim Audit memorandum
Targets and performance indicator workshop
Best Value report 2002
Financial statements audit
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July 2002
June 2002
December 2002
November
December 2002
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A P P E N D I X 1
Auditor’s Report to Rushmoor Borough Council on its Best Value Performance Plan for the Year ended 31 March 2002
Certificate
I certify that I have audited Rushmoor Borough Council’s BVPP in accordance with section 7 of the Local Government Act 1999 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 Local Government Act 1999 (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 and, where appropriate, recommending how the Plan should be amended so as to accord with statutory requirements
to recommend:
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 Local Government Act 1999
whether the Secretary of State should give a direction under section 15 of the Local Government Act 1999. Audit Commission22LG AB 6/2002
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
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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.
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, Rushmoor Borough Council has prepared and published its BVPP in all significant respects in accordance with section 6 of the Local Government Act 1999 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 performance indicators selected by the Audit Commission for its comprehensive performance assessment of the Council.
Recommendations
On the basis of my audit work, I consider that there are no statutory recommendations that should be brought to your attention.
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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 Rushmoor Borough 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.
DA signature:
Date:
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Martin Robinson District Auditor
December 2002
