Agenda item

The Head of Internal Audit presented a progress report on the delivery of the 2020/2021 Internal Audit and Counter Fraud Plan and the outcomes from work completed since the last report to Committee.

Appendix 1 to the submitted report summarised the progress made in delivering 2020/21 internal audit work.  The audits listed had been agreed with management as a priority for review during the year, and had either commenced been scheduled to take place.  No further audits would be added to the programme of work, although support would be provided when requested if additional assurance was required. 

A number of areas had been added to the work programme since the last report, including work relating to Covid-19 such as a review of arrangements relating to supplier relief, post-assurance work on business grants paid out and the returns provided for the government’s income compensation scheme.  A number of other audits had been deferred including commissioning (within Children’s Services), the housing delivery vehicle and public health. These audits would be considered along with other priorities for inclusion in the 2021/22 audit plan.

The Auditor clarified that the additional work related to Covid-19 work which was prioritised as a necessity.  The work that was deferred was planned for quarter four and had not yet started and in discussion with senior officers it was agreed they were not a priority.  

The Internal Auditors continued to prioritise financial system audits that were not completed in 2019/20 due to the Covid-19 pandemic.  An audit of debtors had been finalised and other financial systems audits were either underway or were scheduled to commence soon.

A summary of work completed since the last report to this Committee, including the number of actions agreed and key issues identified, was included in Appendix 2 to the submitted report and a summary of the number of new actions agreed and implemented during 2020/21 was included at Appendix 3.

The Council approved a new Counter Fraud Policy, Counter Fraud and Corruption Strategy (with associated action plan), as well as considering an updated Fraud Risk Assessment in September 2020. Revised Whistleblowing and Anti-Money laundering policies were agreed in December 2020.

Councils had been given responsibility for the administration of Covid-19 grants to businesses across a number of schemes, e.g. Small Business Grant Fund, Local Authority Discretionary Grant Fund and Retail, Hospitality and Leisure Grant Fund.

These schemes had been targeted by organised criminals operating nationally and

Internationally, as well as false applications for grants by local businesses.

The Department for Business, Energy, and Industrial Strategy (BEIS) had required all councils administering grants to undertake an independent review of payments made during the first phase of lockdown. The counter fraud and internal audit teams would undertake this work for Middlesbrough Council.  A 5% sample of payments would be taken, evidence scrutinised, and checks made with external data sources to identify potential fraud and error.  From work already undertaken by the Auditor with various other Councils, it appeared that they had administered the grants correctly in a diligent way and it was expected that Middlesbrough would be no different in this respect.

The 2020/21 National Fraud Initiative (NFI) was underway and it would also examine Covid-19 payments this year. Grant payment data would be used to detect where businesses had erroneously or fraudulently accessed multiple grants, payments that may have been made to accounts linked to organised crime, and whether state aid thresholds have been breached.

A key objective for the counter fraud team was raising awareness of fraud with staff.

The team had met with key service areas to arrange fraud awareness sessions and has already delivered training to members of staff in the Human Resources department. Further work was planned to help promote and raise awareness of the Council’s whistleblowing procedure.

AGREED that the information provided was received and noted.