Agenda item - Ernst & Young: Annual Certification Report

Report of Ernst & Young (copy attached).

1)            That the Audit & Standards Committee note the 2015/16 Certification Report

61.1      The Committee considered a report of Ernst & Young that set out their findings relating to the certification of grant claims completed in 2015/16.

61.2      Councillor Sykes noted that the value of the failures found represented 0.1% of the overall housing benefit subsidy. Councillor Sykes asked whether it was possible that there was a net effect of zero as the testing only reported overpayments and not underpayments.

61.3      Paul King, External Audit Director, clarified that may be the case adding that the Department for Work & Pensions (DWP) requested reporting of overpayments only.

61.4      Councillor Druitt asked that when overpayments were found, whether the overpayment was returned to central government or the local authority. In addition, Councillor Druitt observed that the report highlighted a change in arrangements whereby only the certification of the housing benefits subsidy claim was required and asked what had been previously required.

61.5      Tom Wilkins, External Audit Manager clarified that where overpayments were found, Ernst & Young reported these to the DWP. Following that, there would be a separate communication between the DWP and Brighton & Hove City Council on how to resolve the matter. It was his understanding that there was no financial detriment to the council. Paul King, External Audit Director, explained that non-domestic rates and capital receipts had previously been part of the grant certification regime.

61.6      Councillor Druitt asked if any underpayments found were reported to the council.

61.7      Tom Wilkins, External Audit Manager, confirmed that underpayments found were reported to the council and it was in the authority’s interest to pursue those.

61.8      Diane Bushell asked how the council compared and performed in relation to other authorities.

61.9      Paul King, External Audit Director, answered that the council were toward to the middle to low end in terms of errors made. Investment would reduce some errors but the key aspects in terms of auditing were the nature of the error and the amount of testing required.

61.10   The Assistant Director, Finance added that in terms of investment, there was a cost versus benefit assessment required. Increased investment could be made but that could equate to a higher cost than the errors found and needed to be considered in the context of a challenging financial environment. Extensive work was undertaken with Internal Audit about how performance in this area could be improved year on year.

61.11   RESOLVED- That the Audit & Standards Committee note the 2015/16 Certification Report.