To consider the Internal Audit work undertaken and the assurance given on the adequacy of internal controls operating in the systems audited for the period September to November 2016.

35.1           The report of the Head of Corporate Services, circulated at Pages No. 54-81, was the second monitoring report of the financial year and summarised the work undertaken by the Internal Audit team during the period September to November 2016.  Members were asked to consider the audit work completed and the assurance given on the adequacy of internal controls operating in the systems audited.

35.2           Members were advised that full details of the work undertaken in the period was attached at Appendix 1 to the report and a list of audits within the 2016/17 Audit Plan and their progress to date could be found at Appendix 2 to the report.  The majority of audit opinions had been positive with the exception of the audit relating to the Ubico monitoring arrangements which had a combination of ‘limited’ and ‘unsatisfactory’ opinions.  It was noted that there had been some slippage in the delivery of the Audit Plan due to sickness absence and an agreement was in place with the Finance team to use one of its Officers to undertake audits in order to help get the plan back on track for the New Year.  Confirmation was provided that there had been no incidents of fraud, corruption, theft or whistleblowing during the period. The partnership arrangement with Tewkesbury Town Council was on a one year rolling programme and the Internal Audit team was happy to continue this arrangement unless the Town Council wished to terminate the agreement.

35.3           Attention was drawn to the audit on the Health and Safety Self-Assessment 2016/17, set out at Page No. 57 of the report.  The Health and Safety Executive self-assessment checklist had been adopted by the Environmental Safety Officer and two of the statements within the checklist had been reassessed as ‘partially met’ so it would be necessary to establish additional procedures for reporting within the staff safety register and for lone working.  Reviews in relation to both lone working and health and safety reporting arrangements were included within the action plan which was monitored by the ‘Keep Safe, Stay Healthy’ Group.  It was noted that an annual health and safety report was brought to the Audit Committee for consideration.

35.4           Pages No. 58-61 set out the findings of the audit of Ubico client monitoring 2016/17.  The Head of Corporate Services clarified that this was an audit of the way the Council was set-up to monitor the Ubico contract and to demonstrate that it was being delivered in line with the requirements.  Whilst the overall conclusion was adverse, he emphasised that Ubico carried out in excess of three million bin collections per year on behalf of Tewkesbury Borough.  In terms of the financial information received, Internal Audit did not consider this to be detailed enough for robust scrutiny and challenge.  This view was shared by the Finance team which had flagged this to Ubico on numerous occasions.  There was a fragmented approach to the monitoring of the contract across the organisation, for example, waste and recycling was monitored by the Joint Waste team, responsibility for grounds maintenance lay with the Licensing team and trade waste was split across the Environmental Health and Joint Waste teams with the administration carried out by Ubico.  It was noted that there was no responsible officer for vehicle and fleet maintenance.  In addition, there were elements of the contract with limited performance measures in place, for instance, the Overview and Scrutiny Committee had picked up that there was no performance management information for grounds maintenance and this was currently in the process of being developed, similarly, there was no evidence that maintenance of the vehicle fleet was being monitored or reported and the information currently received in respect of street cleansing was insufficient for measuring service delivery.  Whilst there were stronger governance arrangements in respect of waste and recycling, only three of the six performance indicators were currently being reported leaving gaps in respect of stock control, bring sites and emergency planning.  It was therefore recommended that a review of the performance indicators within the contract be carried out and, where it was not appropriate to introduce a performance indicator, formal agenda items be included for discussion by the Client Monitoring Group to ensure those elements of the contract were being monitored.

35.5           A review of the housing benefit payment system had provided assurance that information was correctly recorded and payments accurately made.  It was noted that this was an inherently risky system given the number of transactions taking place but the audit opinion had supported the findings of Grant Thornton’s housing benefit subsidy claim.  In terms of the lone working audit, Members were advised that the Environmental Safety Officer had done a lot of work around the arrangements and an action plan had been drawn up to address the gaps which had been identified in terms of out of hours monitoring; assurance was provided that high risk service areas were covered and delivery of the action plan was monitored by the ‘Keep Safe, Stay Healthy’ Group.  In terms of the National Non-Domestic Rates (NNDR) audit, it was established that the return had been completed and submitted within the given timeframe; the overall new rates payable figure, and other supporting values, had been adequately reported on the return; and testing of individual relief awards confirmed they had been accurately calculated and supported with documentary evidence.  It was acknowledged that the Discretionary Relief Policy required mini-reviews to be completed annually to consider whether the relief remained appropriate; however, there was no evidence that this had been completed since the introduction of the policy in 2014.  The Head of Revenues and Benefits had indicated that the current process was too time consuming and it was therefore recommended that the Discretionary Relief Policy be reviewed.

35.6           Page No. 66 set out the outcomes of the complaints audit which had been given a ‘limited’ opinion in September 2015.  A project team had subsequently been assembled and a new complaints framework agreed in April 2016.  The audit had given assurance that the new framework was working well.  With regard to the corporate improvement work which had been carried out, Members were advised that a template of current and expected performance indicators had been produced as part of the Ubico contract monitoring audit.  In addition, consultancy advice had been provided in relation to the update of the Council’s Safeguarding Policy being carried out by Environmental and Housing Services to enable to completion of the safeguarding self-assessment. 

35.7           A Member indicated that his main concern was Ubico and he questioned when it was next due to be reviewed.  The Head of Corporate Services advised that senior management were notified of any ‘limited’ or ‘satisfactory’ audit opinion so the Chief Executive was aware of the concerns.  Whilst it would certainly be necessary to look at the client monitoring arrangements, Members were reminded that Ubico was a relatively new company and lessons were being learnt from how the contract was currently being monitored.  The Interim Head of Community Services explained that a lot of issues were inherited in terms of how the contract had been set-up and the agreement put in place at the time.  Many of the matters highlighted by the audit were already known to Officers and being identified in the course of performance management meetings and those held with the Joint Waste team.  Financial information and performance management had been covered at the last Environmental Services Partnership Board meeting and a dialogue opened up with Ubico at a contract monitoring meeting.  Unfortunately this was not something which could be fixed quickly but assurance was provided that Officers were working to address the concerns.

35.8           A Member drew attention to Page No. 58 of the report which suggested that performance monitoring was taking place but not in accordance with the contract which she did not feel was good enough for customers.  When Tewkesbury Borough Council had agreed to join the company, it was one of only three partners compared to seven currently and she understood that this number was likely to increase further.  She questioned whether expansion was happening too rapidly and whether Ubico could be expected to fulfil the original contracts within its current structure.  There had been a high customer satisfaction rate for waste and recycling and street cleansing when these services had been provided by the Borough Council and it was disappointing that these were now the areas which Councillors received the most complaints about.  She also indicated that she found it difficult to keep track of the various board and group meetings and where information was being reported. 

35.9           The Head of Corporate Services reiterated that the number of complaints regarding the services carried out by Ubico was actually quite low considering the number of transactions.  It was to be borne in mind that there was a difference between formal complaints and service failures, such as missed bin collections, grass needing to be cut, dog fouling etc. which were reported via the ‘Report It’ system - the most effective way to get this information to the contractor; formal complaints were monitored by the Overview and Scrutiny Committee on a six monthly basis.   A Member indicated that his own experience of Ubico within his Ward was generally positive and it was the responsibility of Borough and Parish Councillors to report any concerns they had within particular Parishes.  Another Member expressed the view that missed bin collections may seem to be a minor issue to Officers but it was not to the people involved, particularly if it was a persistent problem. 

35.10         In response to concerns regarding the cost of the Ubico contract, the Head of Finance and Asset Management advised that, in February 2016, the Council had decided to continue delivering the waste and recycling service in its current form following a complete Waste Service Review and options appraisal i.e. a fortnightly co-mingled recycling service, alternating with a fortnightly residual waste collection with separate weekly food waste collections.  It had also been agreed that the Council would invest £3.25M from capital resources into a vehicle replacement programme which would be delivered for operation in April 2017.  In terms of the report before Members today, he could only comment on the financial information provided by Ubico which was minimal and not particularly timely.  He had raised this with the other Chief Finance Officers of local authorities with Ubico contracts who were experiencing similar problems.  At this point he was unable to give Members, and the public, assurance of the adequacy of the budget and whether value for money was being achieved.  The Borough Solicitor went on to explain that the Overview and Scrutiny Committee was looking at the service provided by Ubico and the complaints received to come up with a way forward.  This audit related to governance and had highlighted that the Council did not currently have the necessary resources in place in order to adequately monitor the contract.  She stressed that the service specification was set by the Council and the contract in place was that which had been agreed when it had joined Ubico.  Whilst there were issues, they were not all the fault of Ubico and the new Deputy Chief Executive and Head of Service would be tasked with addressing this as a matter of urgency.  A Member questioned when the contract could be amended and the Borough Solicitor indicated that she did not have this information to hand, however, it was normal practice for a contract to include a review after three to five years - it was noted that the Council was currently in the second year of the Ubico contract.  

35.11         A Member noted from Appendix 3 that a number of audit recommendations were outstanding and most of the expected implementation dates had passed.  The Head of Corporate Services advised that, unfortunately, these recommendations had not been followed up due to sickness absence within the Internal Audit team but they would be targeted in the New Year and updates would be provided at the next meeting.  In response to a query, the Head of Corporate Services advised that the dates included within the Appendix were those which Managers had agreed the recommendations would be implemented by; he clarified that the report was saying that the recommendations had not been followed up by the Audit team, not that they had not been implemented.

35.12         Having considered the information provided, and views expressed, it was

RESOLVED          That the Internal Audit Plan Monitoring Report be NOTED.