The Head of Finance and Section 151 Officer reported on the outcome of further error testing work undertaken on Housing benefit claims following the work carried out by the Wales Audit Office, wherein it had tested a sample of 45 Housing Benefit cases.  The sample contained 11 cases with errors, and the findings extrapolated, according to normal auditing practice to calculate a hypothetical error of circa £1.9m.  He stated that as explained to the previous meeting of the Committee, the extrapolation is purely for the purposes of establishing whether a particular matter could materially affect the Council’s accounts.  He informed the Committee that the WAO had determined the matter was significant, but not material in respect of the Council’s 2016-17 financial statements.       

The Head of Finance and Section 151 Officer reported that further work had been carried out by officers to establish whether there is a larger underlying issue.  He stated that for each of the three types resulting in financial adjustments, a further 40 cases had been checked, totalling 120 cases.  He presented a summary of the results of further testing, where 3 errors had been found, of which 2 required financial adjustments.  One case resulted in an underpayment of £7.51 where a works / occupational pension had been incorrectly calculated.  The other case resulted in a one-off overpayment of £29.06 where earnings had wrongly been applied.  He informed the Committee that the WAO are required to perform further testing on the sample of 120 cases, which would involve checking a 10% sample of each of the case types, in addition to the three errors identified. 

The Head of Finance and Section 151 Officer reported that further testing had been carried out by the WAO on expenditure for non-Housing Revenue Account rent rebates.  He stated that this audit work was necessary as part of the routine testing by the WAO of the Council’s annual housing benefit claim.  He informed the Committee that a number of errors had initially been identified, every single bed and breakfast assessment totalling 68 cases, had been checked.  He stated that an identical error was detected in all cases and that ineligible fuel costs had been overstated by £1.93 per week, leading to an underpayment.  He informed the Committee that each case had been corrected and underpayments ranged from £0.28 to £25.09, with one overpayment of £61.20.  He also informed the Committee that the total error across the caseload was £347.28 out of total expenditure of circa £37,000.  He stated that all the cases had been corrected and the payments made good.  He informed the Committee that this error was attributable to a historic differential between bed & breakfast rates and statutory deductions which has changed over time and would now be addressed as part of the annual check, preventing this in future.  He also informed the Committee that one further error was identified by the WAO in this sample which affected the subsidy claim to DWP by £0.72.  The Head of Finance and Section 151 advised the Committee that it was important to note that this element of Housing Benefit is paid to the housing department of the Council, and therefore, the values reflected above had not impacted either upon individuals in temporary accommodation and the total impact on the council’s subsidy claim from the Department of Work & Pensions is £61.20.

The Head of Finance and Section 151 Officer also reported that further testing had been carried out on 20 cases not linked to bed & breakfast cases, with one error found which related to the calculation of a monthly average for occupational pension income; this resulted in an underpayment of £0.10.  He stated that the WAO had asked for further testing for cases of this type with occupational pension income and that most cases within this category were recipients in receipt of “pass-ported” benefits.  He informed the Committee that the Benefits Team Manager carried out a 100% check on all the cases in Cell 11 and found no further errors in any other cases of pension age or any in receipt of an occupational pension income.  This would also be subject to WAO review.  The WAO had also commenced the required testing on “Modified schemes” (typically war pensions) and that this work is ongoing.

The Head of Finance and Section 151 Officer informed the Committee that values of the errors found were significantly smaller than which were previously reported to the Committee and not to the scale reported in the media.

The Financial Audit Manager, Wales Audit Office confirmed that the work on testing cases is in progress and that the outcome of the testing will be reported to a future meeting of the Committee as part of theCertification of Grants and Returns report.  He also confirmed that 120 cases had been tested and that a sample of 10% of cases had been selected, whereby 3 errors had been identified, 2 of those cases required financial adjustments to be made.  He stated that further testing on the sample of 120 cases was conducted, which involved the checking of 12 cases.  Of the 12 cases, 7 cases were error free, 5 cases had ongoing queries which would be resolved by next week.  He also informed the Committee that three further non-HRA cases required testing.  He stated that the Wales Audit Office also audit non-grant claims and that in the last year a number of those claims had qualifications.  Thus far, no qualifications had been reported this year.  He stated there had been a noticeable improvement on non-Housing Benefit cases.

The Committee questioned when the further work by officers to establish whether there was a larger underlying issue would be completed.  The Head of Finance and Section 151 Officer informed the Committee that the WAO is applying an audit technique and he was confident there were no errors to the magnitude reported in the media.  He stated that officers had carried out further testing of cases for errors and more assurance could now be given as to their accuracy.  He also informed the Committee that the WAO need to review the work of officers on the cases found.  He stated that there were no fundamental control weaknesses and there was a need to strike a balance between the speed of processing housing benefit claims and accuracy, but stressed that no two cases were identical.  He also stated that there was a need to reinforce that whilst speed was important in processing claims it should not be to the detriment of accuracy.  He informed the Committee that the errors found were attributable to human error.  He also informed the Committee that management checks had been stepped up and that the aim is to strive towards zero errors.

RESOLVED:           That the report be noted.