PERTH A D KI ROSS COU CIL

Transcription

1 June September 2009 Draft Issued: Final Issued: External Audit Report o: 2009/ /2008 Housing Benefit and Council Tax Benefit Subsidy Management Letter PERTH A D KI ROSS COU CIL

2 Contents Page Restriction on Use Main Report 1-2 Appendix I - Action Plan 3-6 This report has been prepared in accordance with our responsibilities under International Statements of Auditing and Audit Scotland s Code of Audit Practice for the audit of the financial statements of Perth & Kinross Council. Our audit does not necessarily disclose every weakness and for this reason the matters referred to in this report may not be the only shortcomings which exist. Appendix II /07 HB/CTB Management Letter Action Plan Follow-Up 7-13 We take this opportunity to remind you that: Appendix III /08 HB/CTB Audit Certificate 14 This report has been prepared for the sole use of Perth & Kinross Council and the Audit Sub-Committee and will be shared with the Accounts Commission and Audit Scotland; Appendix IV /08 HB/CTB Audit Qualification Letter No responsibility is assumed by us to any other person who may choose to rely on it for his or her own purposes. 186

3 Main Report Introduction During the audit of the Housing Benefit (HB) and Council Tax Benefit (CTB) subsidy claim 2007/08 (the 2007/08 subsidy claim) a number of errors and areas for improvement were noted. The main purpose of this management letter is to formally raise these points which were discussed with officers in January 2009 following completion of the audit. It is also intended to improve the preparation and audit processes for everyone involved in future reviews. Follow-up of the action plan agreed after the 2006/07 audit is also included at appendix II. This letter has been delayed as a result of issues relating to the certification of the claim, arising from the use of a new audit methodology. We issued our original certificate and audit qualification letter on 5 December We reissued both documents in April 2009 (Appendices III and IV) following discussion with Audit Scotland and the Department for Work and Pensions (DWP) to clarify certification guidance that had been issued to us. We understand that this has not had any impact on payment of subsidy to the Council. Audit Methodology In 2007/08 the new HB COUNT audit methodology was rolled out by Audit Scotland. Under the new methodology 20 cases from each of the three claim headline cells are tested. If any errors are found the likelihood of these recurring in other cases must be considered and if these errors are considered to be isolated then no extra testing is required. However if these are considered to be recurring errors then extra testing is required and there is extrapolation of the errors to arrive at the estimated overpaid subsidy for each headline cell. This contrasts to the previous system where auditors were able to use their judgement on whether an error was material, and when errors were considered to be material these would generally be reported on, rather than performing extended testing. A number of changes have been made to the HB COUNT methodology for 2008/09 as a result of the experience in 2007/08. These include not testing performance indicators and simplifying sample selection. Overall Conclusion 2007/08 subsidy claim Our testing of 60 cases (20 Rent Rebate cases, 20 Rent Allowance cases and 20 Council Tax Benefit cases) identified 17 systemic errors, mainly relating to input errors and classification errors. The Authority undertook testing of a further 280 cases and identified a further 13 errors within those cases. A number of small addition errors were also found. Under the new methodology information is provided to the DWP, including extrapolations of errors. These extrapolations ranged from 2k to 80k and are outlined in our qualification letter which is attached at Appendix IV. We concluded that, subject to the observations in our qualification letter, the entries in the 2007/08 subsidy claim are fairly stated and in accordance with the related terms and conditions set by the DWP. The wording of our certification letter is provided at Appendix III and the qualification letter is at Appendix IV

4 Main Report Overall Conclusion (Cont d) Good Practice Points The DWP responded to the matters raised in our qualification letter on 21 July 2009, requesting further information and assurances from both ourselves and the Council. Letters addressing these matters were sent to the DWP in mid August Further correspondence was received from the DWP on 12 August 2009 accepting the Council s treatment of the one-week rule, which had been raised in Appendix IV of our qualification letter. The Council is still awaiting a final decision by the DWP as to whether they will claw back any HB/CTB subsidy. A number of good practice points have been identified during the course of the audit. These include the following points: Audit team members have been provided with specific Council contacts for dealing with queries; Increased in-year checking of claims for errors in entitlement; 2006/07 action plan follow-up Review of manual adjustments for correct treatment. Our 2006/07 HB/CTB subsidy management letter action plan is attached at Appendix II. This includes a management update on progress made against these points and highlights that all recommendations have been implemented or are being completed on a regular basis now. Main Recommendations Our main findings and recommendations identified during the 2007/08 HB/CTB subsidy claim audit are included in the Action Plan in Appendix I. Acknowledgements We would like to take this opportunity to thank all of the staff involved with the subsidy audit for their co-operation and assistance

5 Appendix I - Action Plan Observation and Risk Recommendation Management Response 1 The Council does not undertake analytical review of the claim by comparing current year cell values with prior year cell values. This should give reasons for movements including: - Details of movements in caseloads; - Actual or expected rent charge increases; - the impact of any changes in benefit regulations; - expected trends in cells or expected relationships between cells. Analytical review is a useful tool to identify errors and without analytical review errors in the claim may not be identified. R1 Undertake analytical review on the claim and provide reasons for year on year movements. Note: Each year Audit Scotland provides a spreadsheet to assist with doing analytical review. A copy of this spreadsheet may be requested from us. SUB030 Northgate report is now run four weekly after the PTEN 4 weekly payment run. This enables the benefits staff to liaise with their accountancy sections to discuss movements in the report generally from the cell values extrapolated. To be actioned by: System Support Accountancy Management Team o later than: monthly ongoing Grade B 2 When reviewing manual adjustments to the claim we found a number of addition errors. Although such errors should be picked up in the audit the Council should check workings and/or use spreadsheets to record manual adjustments to identify these before the claim is submitted. R2 Ensure there is appropriate review of the addition calculations when including manual adjustments in the claim. Spreadsheets are now used by the Principal Officer to identify movements in the cells, resulting from manual adjustments. This spreadsheet should be checked by accountancy. To be actioned by: Principal Officer Accountancy o later than: Year end processing Grade C 3 189

6 Appendix I - Action Plan Observation and Risk Recommendation Management Response 3 During testing some instances were noted where staff were incorrectly inputting data. This included: - input errors in income details, dates and categories; - overpayment classification errors. One error noted relates to the notification of changes of circumstances. We noted that where there was more than one notification relating to the same change (e.g. separate notifications from the council tax section and the claimant) the date of the later notification might be used. In these cases the date of the first notification should be used. As a result of these input errors the claim was qualified and significant extra testing undertaken by Council staff. There is also the risk that the DWP may claw back subsidy as a result of these errors. R3 Reiterate to staff the need for accuracy in inputting data. For changes in circumstances staff should be reminded to review the file for any earlier notifications of the same change in circumstance and apply this from the date of first notification. Quality checking procedures were reviewed in January 2009, with 10% of claims checked at pre-notification stage. The findings are notified to individuals on their particular errors and the management team are notified separately with graphical information and amount of under/over payments resulting from the checks. These findings are used to formulate training programmes for the team and individuals. To be actioned by: Training Team Leader Audit Officer o later than: Monthly - ongoing Grade B 4 190

7 Appendix I - Action Plan Observation and Risk Recommendation Management Response 4 The HB/CTB system classes entitlement as a backdate based on dates input onto the system. If the date of claim is before the date of receipt then a backdate is automatically calculated and this creates a tick in the backdate box. There are four date fields on the HB/CTB system and it appears that staff are inputting dates in the wrong fields as other Councils using the system have no problems with their backdates cells. When a case is considered for a backdate a backdate justification form is filled in and, if approved, a copy is put on the backdate file. At year end the claims included in the backdate cells are checked against the backdate justification forms on the backdate file and cases without a form are excluded from the claim. R4 Review a sample of claims containing those found to be both correctly and incorrectly classified as backdates in 2007/08. Looking at the dates that were put onto the system identify the reason for the incorrect cases. Once this has been identified ensure that staff are aware of the reason for the problem and correctly input dates. Our Appeals Officer undertakes weekly a review of all items in cells 38(RR), 126(RA), 161(CTB) relating to backdates on Subsidy Enquiry Form Level Report. This allows him to reconcile data against Northgate and where backdate sheets have been submitted that they too are reflected in the Northgate software. Any mismatches identified are rectified on a weekly basis. The staff member who created the mismatch corrects the Northgate database and this is again checked by the Appeals Officer. To be actioned by: Appeals Officer This system is not foolproof and we found one case where a backdate justification form had not been put on the backdate file and had therefore been incorrectly excluded from the claim. o later than: Weekly - ongoing Although the backdate cell does not affect the amount of subsidy claimed if the system is correctly being used there is a reduced risk of error. Grade B 5 191

8 Appendix I - Action Plan Observation and Risk Recommendation Management Response 5 HB/CTB system reconciliations were prepared in accordance with the software provider s guidance as required. However reconciliations between the HB system physical payments figure, the HB system BACS payments report, and the general ledger payments balance were not reconciled. Differences in these balances may be reported to the DWP and could result in reductions in subsidy if these are not properly reconciled. R5 Reconcile the general ledger payments to the HB system BACS report payments and to the overall HB/CTB reconciliation (Northgate spreadsheet) Our accountants now produce a spreadsheet detailing the reconciliation between BACS payments to the general ledger payments at year end processing. This commenced post 07/08 claim. However we have now reconciled not only the subsequent claims for 08/09 but also that of 07/08. To be actioned by: Overpayments Team Leader - Accountancy o later than: Year end processing of subsidy claim Grade B Ranking Definition Fundamental issues which require the urgent consideration of senior management. B Significant matters which require the attention of line management. C Less significant matters, which do not require urgent attention but which should be followed up within a reasonable timescale

9 Appendix II /07 HB/CTB Management Letter Action Plan Follow-Up Recommendation Management Comments Responsible Officer For Action Agreed Completion Date Management Update as at September 2009 Claim Provide a full reconciliation from the Northgate SUB030 subsidy report to the claim form, including supporting documentation for all reconciling items. Northgate software suppliers are attending 9/01/08 to identify further reconciliation reports that will identify the true benefit postings to the housing general ledger. Pat Lakie Completed HRA044 Northgate report in conjunction with spreadsheets containing the general ledger amounts and BACS payments are all used to reconcile the amounts / postings between Northgate Rents & Northgate Benefits. Reconciliations were completed for both the & claims. Review any negative balances in the SUB030 report. Rent Officer Determinations (cell 101) often show negative balances due to rent decision overlaps. SUB007 ran monthly to correct positive and negative values and other cells as arise to be investigated. (Likely cells 105, 179g and 231b). Ongoing As per Management Comments. Consider the treatment of any BACS payments created on Northgate and not physically paid until the next subsidy year. DWP confirm that if a payment is raised in the current subsidy year, then it should be included in the subsidy claim albeit not actually paid. Completed Adherence to DWP guidance. Payments are in line with the annual subsidy claim year (eg.13 x 4 weekly payments)

10 Appendix II /07 HB/CTB Management Letter Action Plan Follow-Up Recommendation Management Comments Responsible Officer For Action Agreed Completion Date Management Update as at September 2009 System Upgrades A process should be implemented to ensure that all patches are advised to the Benefits Manager and that these are reviewed on a timely basis. All patches will be advised to the ICT Help Desk (Service Desk) - help@pkc.gov.uk internal tel: ext tel: Once they are implemented a log will be created to state when completed and by whom. Fiona Wilson Completed Team Leader assessment maintains in liaison with system support, (Benefits) a log of release and patch installations. System Parameters Ensure that thresholds are updated for 2007/08 and review whether this problem is also relevant for other parameters. All thresholds will be updated annually as part of year end processing log to be included in above. Clare Brandon Completed Thresholds are updated and system maintains these alterations. This includes any prescriptive changes such as for example most recently child maintenance disregards

11 Appendix II /07 HB/CTB Management Letter Action Plan Follow-Up Recommendation Management Comments Responsible Officer For Action Agreed Completion Date Management Update as at September 2009 System Reconciliations Written guidance should be sought from Northgate as to how to reconcile the main cells to the amounts posted to other systems and determine what treatment in the subsidy claim is required for Northgate discrepancy column figures. See main claim details above. 9/1/08. See action point one above. Reconciliations. Benefits staff should understand and be able to explain to auditors how the reconciliation works and why reconciling items are valid without requiring assistance from Northgate. Monthly reconciliation log to be kept, with supporting reports from Northgate software systems to both council tax and housing, general ledger. System Support Completed Staff are aware of the necessity for reconciling valid items and monthly reconciliation logs are kept. When postings occur between modules within software packages we ensure that reconciliation is validated. Reconciliations between Northgate and housing, general ledger and council tax systems should be undertaken regularly and provided to the auditors in a single file at the start of the subsidy claim audit. See note above As per Management Comments Differences between Northgate and the housing system rent roll report should be investigated and if this is not the appropriate report to rely on then other reports or reconciliations should be provided. See note above Report HRA044 is available and can identify differences in the postings between Northgate Rents & Northgate Benefits. This is complimented by BACS & general ledger reconciliations

12 Appendix II /07 HB/CTB Management Letter Action Plan Follow-Up Recommendation Management Comments Responsible Officer For Action Agreed Completion Date Management Update as at September 2009 Manual adjustments Manual adjustments should be reviewed for subsidy impact throughout the year and an appropriate means of recording this, such as a spreadsheet, organized. RBE263 to be run as a weekly scheduled report. Financial year 2007/2008 will be fully reconciled by 31 March Fiona Wilson Clare Brandon Completed Running this report on a weekly basis was not feasible. This was completed as a year end exercise

13 Appendix II /07 HB/CTB Management Letter Action Plan Follow-Up Recommendation Management Comments Responsible Officer For Action Agreed Completion Date Management Update as at September 2009 Homeless legislation subsidy threshold cells The Council should write to the DWP asking whether previous years subsidy claims can be reassessed for errors noted in licensed and short term leased cells. DWP to be approached in regards to previous years subsidy claims. Pat Lakie Completed The Council has written to the DWP requesting the re-opening of the 2004/5 & 2005/6 subsidy claims. Notification was received on the 25 th June 2008, and the Secretary of State agreed to settle the two previous claims. The Council received additional subsidy of 44,067. The charges for Council owned hostels for homeless people should be reviewed to ensure these are being correctly calculated in line with Appendix E of the DWP HB and CTB Subsidy Guidance Manual. If local authority hostel accommodation is being reported within the Housing Revenue Account, then the DRI (Disproportionate Rent Increases) rules apply. PKC complies with this ruling. Pat Lakie Completed PKC complies fully with the legislation pertaining to the DRI rule. Prepare detailed schedules of dwellings leased by the Council for use by homeless people which provide the required disclosure analysis (below threshold, between threshold and cap, above cap). Provide a listing of these dwellings to the auditor along with confirmation from the homeless unit or the relevant landlord. Cells to be randomly checked for correctness of classification of dwellings. In short term leased accommodation cells should only include properties leased by the Council from private landlords. Letter to be obtained from Homeless Manager to state that we have no licensed accommodation and lease named properties accommodation from the private sector. Homeless Service Manager, Claire Mailer & Clare Brandon Completed Homeless guidance spreadsheet has been devised and is updated as advised by Homeless Manager. Letter obtained annually in regards to the fact we have no licensed and private sector leasing accommodation

14 Appendix II /07 HB/CTB Management Letter Action Plan Follow-Up Recommendation Management Comments Responsible Officer For Action Agreed Completion Date Management Update as at September 2009 Overpayment errors Determine the reason for errors noted in overpayment testing and provide staff training as required. In particular, it should be stressed to staff that the date that LA errors start is the date when the Council has all the information it needs to process a change but is unable to process the information prior to the payment of additional benefit (or in the case of CTB within the benefit week the information is received). Overpayments Officer to check all LA error overpayment records created each week from report BPY309 for accuracy. Gillian Walker Completed LA error overpayments have been managed and checked on a weekly basis. However, from October 2008 the Northgate software releases caused overpayment reports to be inaccurate and unavailable. We are currently devising business objects reports to supplement the required accuracy data for checking. Consideration should be given to sorting the eligible overpayments by value and then reviewing the largest of these for correct treatment, as is done in some other authorities. All Recoverable overpayments to be reviewed weekly by value. Report BPY311 to be run weekly. Gillian Walker Completed Recoverability is considered as per DWP guidance. Overpayment recovery is considered on all case records. In addition, if there are concerns over correct classification of overpayments it would be possible for us to choose an overpayments sample before the audit commenced so that you could review this and to preempt undertaking extended testing during the audit. Submit to auditor overpayments sample prior to audit with checklists and accuracy checks. Gillian Walker Completed Overpayment classification checked throughout all claim records. Auditor did not required to consider pre-sample for 2008/09 but has provided samples after their initial audit testing which are being undertaken

15 Appendix II /07 HB/CTB Management Letter Action Plan Follow-Up Recommendation Management Comments Responsible Officer For Action Agreed Completion Date Management Update as at September 2009 Entitlement testing It is good practice for the Council to sort the entitlement cells by value and to review the highest value cases (for example the highest ten in each main entitlement cell) to ensure that these are correctly calculated and valid. RBE584 is already run twice weekly, following the payment runs, this looks at all entitlements over 500 per claim. This is checked by the Team Leader Assessments and log retained. Fiona Wilson Ongoing & Completed Records maintained on high value cases checked from payment runs. Review landlords classed as RSLs against the register of social landlords maintained by Communities Scotland (which can be found at v.uk/register/reg_pub_dsp.home). Directive to all staff to verify registration when new registered social landlords identified. Existing RSL s to be verified by Principal Officer. Clare Brandon Completed Existing RSLs identified and checked for registration. Staff made aware of verification of new landlords and procedures in place to report new landlords for creation within software system. Backdates The Council has suitable manual systems in place to assess and record backdates, however it could be using the Northgate system to record these, however, Northgate system reports do not provide the correct figures. The Council should investigate the reason for this and contact Northgate for guidance if necessary. Benefits Manager to investigate with other Local Authorities how they have overcome the bug in the system on recording of backdates, or perhaps other LA s are reporting incorrectly. Liaison with Northgate required. Perth & Kinross Council is accurately reflecting the backdated awards within the subsidy claim and is doing so manually. Andrew Salmond Andrew Salmond Completed Completed Backdates are now recorded within Northgate. Items are reconciled and checked by maintaining manual records too. Manual records were still maintained which enabled the Auditor to reflect accurately backdates within our subsidy claim. We will continue to maintain manual records

16 Appendix III- 2007/08 HB/CTB Audit Certificate CERTIFICATE OF AUDITOR APPOITED BY AUDIT SCOTLAD We certify in accordance with the guidance contained in the Audit Scotland Grant Note GN/HBS/08, we have examined the entries within this form and the related accounts and records of the Authority and have: carried out such tests; and obtained such explanations as we consider necessary. Subject to the observations in the attached report dated 17 April 2009 we are of the opinion that the entries are fairly stated: and in accordance with the related terms and conditions set by the Department for Work and Pensions. Henderson Loggie 17 April /08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

17 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Date: 17 April 2009 Department for Work and Pensions Shared Services: Accounting Services Housing Benefits Unit Room 512 Norcross BLACKPOOL FY5 3TA Ref CW/MR/Pert210/HB/CTB Dear Sir / Madam Perth and Kinross Council Housing Benefit & Council Tax Benefit claim for the year ended 31 March 2008 (Form MPF720B) Qualification Letter referred to in the Auditor s Certificate dated 17 April 2009 Details of the matters giving rise to our qualification of the above claim are set out in the Appendices to this letter. Our qualification refers you to the Authority s letter which will be forwarded to you in due course. The factual content of our qualification has been agreed with officers of the Authority. No amendments have been made to the claim for the issues raised in the appendices to this qualification letter. However the claim has been amended for the following errors; Cell 018 was reduced by 54 and cell 012 increased by 54 for a misclassified manually calculated adjustment made to the claim. Cell 020 was reduced by 2,426 due to an addition error in a manually calculated adjustment to the claim cell. A corresponding increase in cell 023 has also been made. Cell 094 was increased by 1,888 due to an addition error when adding the system manual adjustments to the system generated subsidy claim form (SUB030 report). Cell 098 was also increased by the same amount. Cell 109 and cell 094 were both reduced by 6 for an isolated error. Cell 161 was reduced by 14 due to an addition error in the calculation of the claim cell which is based on the system backdated amounts amended by any incorrect amounts identified in manual review. Yours faithfully Henderson Loggie 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

18 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Cross cutting qualification issues Reconciliations Appendix I The Authority has compiled the standard Northgate reconciliations on the spreadsheet entitled Subsidy recon as required by Northgate. Differences were noted in these reconciliations but we are unsure of the reasons for these differences. The differences found on the SUB057 reconciliation were: Cell Posted balances (per Reconciling items Subsidy (before Difference HB/CTB system) manual adj.) Rents 9,220, ,278 9,355,347 (28,830) Creditors 11,043,642 57,680 11,097,658 (3,664) Council Tax 6,367,627 1,407,997 7,775,465 (161) As can be seen above, in all cases the amounts posted plus reconciling items were greater than subsidy claimed. The Northgate system paid balances were also checked against reports from the Rents system (Northgate) and the main accounting system (for payments) and the findings are documented in the table below. There are no cumulative reconciliations between the Northgate Council Tax and CTB systems but it was confirmed that all interface files were successfully interfaced during the year. Cell Paid per HB system Amount in Rent/Accounting System Difference Cell 011 Rent System 9,221,115 9,230,329 9,214 Cell 094 Accounting System 11,047,678 11,028,312 19,366* * = The majority of this difference is considered to be due to timing differences however we have not been able to confirm this as the Authority has not reconciled these balances. Missing Files When undertaking 40+ testing of RR and CTB overpayments the Authority could not locate three of the case files selected for testing. As a result we substituted three different cases for completing this testing. The Authority maintains documents in hard copy files. 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

19 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Findings from Detailed Testing Appendix II Cell 011: Rent Rebates - Total expenditure (Benefit Granted) Cell 011: cell total: 9,979,118 Cell 011: cell population: 5,242 Headline cell 011: 9,979,118 Testing of the initial sample of 20 rent rebate cases identified one input error on income. Given the nature of the population and the error found, an additional random sample of 40 cases was taken from the audit trail supporting cell 011. This additional testing identified no further errors. The results of our testing are set out in the tables below: Results of testing: Testing and sample size Cell Total Sample Error Initial sample 1 error case (overpayment) from 20 cases Additional random sample - 40 cases from cell Combined sample results 60 cases Sample Value Percentage error rate Cell Revised Cell Total if Cell applied [CT less CA] [CT] [SE] [SV] [SE/SV] [CA = CT times SE/SV] 9,979, , % 425,652 9,553,466 9,979, ,391 0% 0 9,979,118 9,979, , % 79,841 9,899,277 Only the initial sample identified that the Authority has had an input error for income. As a result benefit has been overpaid in one case with cell 011 being overstated as a result. The value of the overpaid benefit error was 772 for a period of 46 days. Given the nature of the population and the fact that other input errors were noted in RA and CTB cases this type of error appears not to be an isolated error. Due to the amounts of errors noted in RR, RA and CTB cases and the error founds it is unlikely that even significant additional work will result in us being able to quantify any adjustment that might be required to correct the claim. 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

20 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Appendix III Cell 028: Rent Rebates - Eligible overpayments (current year) Cell 028: cell total: 220,218 Cell 028: cell population: 1,377 Headline cell 011: 9,979,118 The testing of the initial sample identified two eligible overpayment cases where the Authority should have classified these as LA error overpayments. Given the nature of the population and the errors found, an additional random sample of 40 cases was taken from the audit trail supporting cell 028. This additional testing identified one further test failure. The results of our testing are set out in the tables below: Results of testing: Testing and sample size Cell Total Sample Error Initial sample - 20 cases from main cell 2 fails Additional random sample - 40 eligible overpayment cases 1 fail Combined sample results - 60 cases Sample Value Percentage error rate Cell Revised Cell Total if Cell applied [CT less CA] [CT] [SE] [SV] [SE/SV] [CA = CT times SE/SV] 220, , % 7, , , , % 1, , , , % 1, ,508 Both the initial sample and additional random sample identified that the Authority has been misclassifying LA error overpayments as eligible overpayments. As a result eligible overpayments in cell 028 are overstated and LA error overpayments in cell 026 are correspondingly understated. There is no impact on the: headline cell as the error relates to the classification of total expenditure (Benefit Granted) for subsidy; and local authority error subsidy, as the impact of all extrapolated overpayment amendments in this letter would not take the authority over the lower threshold. The value of the errors found range from to and the benefit period ranges from 14 days to 21 days. Similar findings have been included in our qualification letter last year. None of the cell adjustments noted above exceed our materiality level for the claim. Given the nature of the population and the variation in the errors found it is unlikely that even significant additional work will result in us being able to quantify any adjustment that might be required to correct the claim. 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

21 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Appendix IV Cell 094: Rent Allowance - Total expenditure (Benefit Granted) Cell 094: cell total: 10,436,824 Cell 094: cell population: 4,284 Headline cell 094: 10,436,824 The testing of the initial sample of 20 cases identified three rent allowance cases where the Authority had started entitlement from the date the claimants moved in (applying the one week rule), but the claim had actually been received early in the following week so the one week rule was not applicable. Given the nature of the population and the errors found, an additional sample of 40 cases, randomly selected from the sub-population of all new RA claims in 2007/08, were tested. This additional testing identified one case where benefit was overpaid and one case where benefit had been underpaid. The results of our testing are set out in the tables below: Results of testing: Testing and sample size Initial sample 20 cases 3 errors Additional random sample - 40 cases 1 case overpaid Combined sample result - 60 cases Sub Population Total Sample Error Sample Value Percentage error rate Cell Revised Cell Total if Cell applied (Cell 011) [CT less CA] [SP] [SE] [SV] [SE/SV] [CA = SP times SE/SV] 2,201, , % 11,924 10,424,900 2,201, , % 1,908 10,434,916 2,201, , % 3,371 10,433,453 In both our initial and additional testing we identified cases where the Authority had made input errors in processing claim information. As a result we cannot establish that the correct amount of Housing Benefit has been paid and therefore the correct amount of Subsidy claimed. Should the combined sample error rate be applied to the claim it would result in a reduction of: Headline Cell: Cell value: Reduction: Revised value: Cell Total Expenditure (Benefit 10,436,824 3,371 10,433,453 Granted) Detail cells: Cell 102 De-regulated RSLs 4,858,582 3,371 4,855,211 The value of the errors found range from to and the benefit period ranges from 1 day to 4 days. None of the cell adjustments noted above exceed our materiality level for the claim. Given the nature of the population and the variation in the errors found it is unlikely that even significant additional work will result in us being able to quantify any adjustment that might be required to correct the claim. 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

22 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Appendix V Cell 094: Rent Allowance - Total expenditure (Benefit Granted) Cell 094: cell total: 10,436,824 Cell 094: cell population: 4,284 Headline cell 094: 10,436,824 The testing of the initial sample identified three rent allowance cases where the Authority had made input errors on income details, including incorrect tax credit input. Given the nature of the population and the errors found, an additional sample of 40 cases, randomly selected from cell 094, were tested. This additional testing identified 6 further test failures (3 overpayments, 3 underpayments). The results of our testing are set out in the tables below: Results of testing: Testing and sample size Cell Total Sample Error Initial sample 20 cases 3 input errors Additional sample on main cell - 40 cases 3 errors Combined sample result - 60 cases Sample Value Percentage error rate Cell Revised Cell Total if Cell applied [CT less CA] [SP] [SE] [SV] [SE/SV] [CA = SP times SE/SV] 10,436, , % 19,242 10,417,582 10,436, , % 36,948 10,399,876 10,436, , % 34,096 10,402,728 In both our initial and additional testing we identified cases where the Authority had made input errors in processing claim information. As a result we cannot establish that the correct amount of Housing Benefit has been paid and therefore the correct amount of Subsidy claimed. The value of the errors found range from 2.26 to and the benefit period ranges from 7 days to 364 days. None of the cell adjustments noted above exceed our materiality level for the claim. Given the nature of the population and the variation in the errors found it is unlikely that even significant additional work will result in us being able to quantify any adjustment that might be required to correct the claim. 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

23 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Appendix VI Cell 109: Rent Allowances - Eligible overpayments (current year) Cell 109: cell total: 250,209 Cell 109: cell population: 1,419 Headline cell 094: 10,436,824 The testing of the initial sample identified three eligible overpayment cases where the Authority should have classified these as LA error overpayments. Given the nature of the population and the errors found, an additional random sample of 40 cases was taken from the audit trail supporting cell 109. This additional testing identified two further test failures. The results of our testing are set out in the tables below: Results of testing: Testing and sample size Cell Total Sample Error Initial sample - 20 cases from main cell 3 fails Additional random sample - 40 eligible overpayment cases 2 fails Combined sample results - 60 cases Sample Value Percentage error rate Cell Revised Cell Total if Cell applied [CT less CA] [CT] [SE] [SV] [SE/SV] [CA = CT times SE/SV] 250, % 51, , , , % 1, , , , % 2, ,957 In both the initial sample and additional random sample we identified that the Authority has been misclassifying LA error overpayments as eligible overpayments. As a result eligible overpayments in cell 109 are overstated and LA error overpayments in cell 108 are correspondingly understated. There is no impact on the: headline cell as the error relates to the classification of total expenditure (Benefit Granted) for subsidy; and local authority error subsidy, as the impact of all extrapolated overpayment amendments in this letter would not take the authority over the lower threshold. The value of the errors found range from to and the benefit period ranges from 5 days to 189 days. Similar findings have been included in our qualification letter last year. None of the cell adjustments noted above exceed our materiality level for the claim. Given the nature of the population and the variation in the errors found it is unlikely that even significant additional work will result in us being able to quantify any adjustment that might be required to correct the claim. 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

24 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Appendix VII Cell 142: Council Tax - Total expenditure (Benefit Granted) Cell 142: cell total: 7,759,738 Cell 142: cell population 11,416 Headline cell 142: 7,759,738 The testing of the initial sample identified 2 council tax benefit cases where the Authority had made processing errors on income details, all giving rise to underpayments. As input errors can also give rise to overpayments an additional sample of 40 CTB cases were selected for testing, given the nature of the population and the errors found. These cases were selected from all CTB cases which included an assessment on earned income in 2007/08. This additional testing identified one overpayment and one underpayment, as well a one case where wage slips could not be found to verify the information. The results of our testing are set out in the tables below: Results of testing: Testing and sample size Initial sample of 20 cases no overpmnts Drill down sample - 40 earned income cases 1 fail Combined sample result 60 cases Cell Sub Population Total Sample Error Sample Value Percentage error rate Cell Revised Cell Total if Cell applied [CT less CA] [SP] [SE] [SV] [SE/SV] [CA = SP times SE/SV] 7,759, , ,759,738 7,759, , % 3,316 7,756,422 7,759, , % 1,854 7,757,884 In both our initial and additional testing we identified cases where the Authority had made errors in processing income details. As a result we cannot establish that the correct amount of Council Tax Benefit has been paid and therefore the correct amount of Subsidy claimed. Should the combined sample error rate be applied to the claim it would result in a reduction of 1,854 to cell 142 and cell 144. The value of the error found was 5 and was for 84 days. None of the cell adjustments noted above exceed our materiality level for the claim. Given the nature of the population and the fact that similar errors have been noted in RR and RA testing it is likely that input errors are not isolated. Given these findings it is unlikely that even significant additional work will result in us being able to quantify any adjustment that might be required to correct the claim. 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

25 Appendix IV- 2007/08 HB/CTB Audit Qualification Letter Appendix VIII Cell 148: Council Tax - Eligible excess benefit (current year) Cell 148: cell total: 129,289 Cell 148: cell population: 2,834 Headline cell 142: 7,759,738 The testing of the initial sample identified three eligible overpayment cases where the Authority should have classified these as LA error overpayments. Given the nature of the population and the errors found, an additional random sample of 40 cases was taken from the audit trail supporting cell 148. This additional testing identified a further test failure. The results of our testing are set out in the tables below: Results of testing: Testing and sample size Cell Total Sample Error Initial sample - 20 cases from main cell 3 fails Additional random sample - 40 eligible excess benefit cases 1 fail Combined sample results - 60 cases Sample Value Percentage error rate Cell Revised Cell Total if Cell applied [CT less CA] [CT] [SE] [SV] [SE/SV] [CA = CT times SE/SV] 129, % 36,436 92, , , % 2, , , , % 3, ,540 In both the initial sample and additional random sample we identified that the Authority has been misclassifying LA error overpayments as eligible overpayments. As a result eligible overpayments in cell 148 are overstated and LA error overpayments in cell 147 are correspondingly understated. There is no impact on the: headline cell as the error relates to the classification of total expenditure (Benefit Granted) for subsidy; and local authority error subsidy, as the impact of all extrapolated overpayment amendments in this letter would not take the authority over the lower threshold. The value of the errors found range from 4.29 to and the benefit period ranges from 14 days to 77 days. Similar findings have been included in our qualification letter last year. None of the cell adjustments noted above exceed our materiality level for the claim. Given the nature of the population and the variation in the errors found it is unlikely that even significant additional work will result in us being able to quantify any adjustment that might be required to correct the claim. 2007/08 Housing Benefit and Council Tax Benefit Subsidy Management Letter for Perth & Kinross Council

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