Issue - meetings

(i)      To approve the updated strategy against Fraud and Corruption, for inclusion in the Constitution (Annex A).

(ii)      To approve the Risk Management Strategy, for inclusion in the Constitution (Annex B).

(iii)     To approve the updated Code of Corporate Governance (Annex C).

The Chairman of the Audit and Governance Committee introduced the report and commended the updated strategies against Fraud and Corruption and Risk Management, plus the updated Code of Corporate Governance to Members.

RESOLVED:

1.       That the updated Strategy against Fraud and Corruption, attached as Annex A to the submitted report, be approved, for inclusion in the Constitution.

2.       That the Risk Management Strategy, attached as Annex B to the submitted report, be approved, for inclusion in the Constitution.

3.       That the updated Code of Corporate Governance, attached as Annex C to the submitted report, be approved, for inclusion in the Constitution.

The purpose of this report is to inform members of the Audit and Governance Committee about irregularity investigations and proactive counter fraud work undertaken by Internal Audit between 1 April 2014 and 31 March 2015.  This report complements and builds upon the half-year irregularity report presented to Audit and Governance Committee on 1 December 2014.

Declarations of interest:

None

Witnesses:

Reem Burton, Lead Auditor

Sue Lewry-Jones, Chief Internal Auditor

Key points raised during the discussion:

1.    The Lead Auditor introduced the report and suggested that a second fraud seminar be scheduled for the committee given the new membership and the upcoming in-depth review of the Strategy against Fraud and Corruption.

2.    Members asked why only seven borough and district councils were involved in the counter fraud partnership.  The Lead Auditor explained that when Internal Audit applied for funding from the Counter Fraud Fund, they had approached all borough and district councils.  Seven had said that they wanted to participate in a partnership.  The service was sharing its work with the four remaining authorities and they could then choose to participate in the partnership.

3.    It was confirmed that the relevant authority that the procurement case was referred to was Trading Standards who would share with Surrey Police.

4.    The Lead Auditor explained that Internal Audit records how much time it spends on different activities and so could identify the amount spent on the investigation of fraud and irregularity.  The figure of £15,270 is the direct salary costs and the £42,103 figure includes on-costs.  However, the latter figure is slightly over-inflated as it assumes that staff are on the mid-point of their grades whereas most of the staff are closer to the bottom of their grades.  The cost of the 35 day case is included in these figures.

5.    In response to a query about the fuel cards issue raised in the previous report, the Lead Auditor informed the committee that there had been some reasonable explanations for discrepancies although a small number were being followed up.  A follow-up audit is being undertaken and early signs are that controls are improved.

6.    The Chairman asked if any efforts were underway to reduce the use of cash in transactions.  The Lead Officer stated that this was being worked on where possible.  However this needed to be balanced with the personalisation agenda.  Controls on how cash is handled have improved and there are fewer instances of stealing from petty cash.

7.    The Lead Officer informed the committee that in 2014 none of the cases of proven fraud have so far gone to court.  However the procurement case may go to court.  The Crown Prosecution Service is likely to judge that it would not be a good use of taxpayers’ money to take low value cases of fraud to court. In these cases, action is limited to disciplinary action or dismissal.  Cases that go to court tend to be higher value frauds.

Actions/Further information to note:

To schedule a seminar on counter fraud (Recommendation Tracker ref: A23/15).

RESOLVED:

      i.        That the committee NOTES the report; and

     ii.        That the committee APPROVES the updated Strategy against Fraud and Corruption and ENDORSES it to Council for inclusion in the Constitution (Recommendation Tracker ref: 24/15).

Committee next steps:

None.