Agenda item

(Chief Internal Auditor) To consider the attached report (AGC-019-2013/14).

The Chief Internal Auditor presented a report on the Due Diligence checks undertaken by the Council before it entered into a contract with a third party.

The Chief Internal Auditor stated that the report had been requested by the Committee, with particular emphasis on the Leisure Management contract and the former Bailiffs contract. The Council’s Contract Standing Orders provided for the checks which should be carried out before the Council entered into any contract with a third party, and varied depending upon the value of the proposed contract; i.e. the greater the value of the contract, the more due diligence should be performed. Two separate audits had been carried out on this area during 2013/14, one reviewing Contracts and Procurement Fraud, the other specifically on Housing Service Contracts.

The Chief Internal Auditor reported that a sample of contracts from across different Directorates were reviewed and no evidence of any fraudulent activity was found, although some issues were identified to reduce the risk to the Council. This audit was given a ‘Substantial Assurance’ rating. A random sample of five Housing Contracts were also examined The tender processes were found to be accurate and complete, and Due Diligence had been demonstrated for each contract. This audit was given a ‘Full Assurance’ rating.

In relation to the contract for Leisure Services, the Chief Internal Auditor affirmed that a considerable amount of time and effort had been expended to ensure that the successful bidder was both suitable and met the Council’s requirements as close as possible. A review of the process had indicated that Contract Standing Orders were fully complied with and additional work was also carried out. Since the letting of the contract, two Equifax full company reports had demonstrated that the company was financially sound and its financial position was improving.

In respect of the former Bailiffs contract, the Chief Internal Auditor stated that a company had provided bailiff services to the Council since the early 1990’s but had undergone at least two name changes with the same Directors in charge. While regular payments were being received nothing appeared to be wrong, however it was discovered that payments made by customers had not been passed over to the Council. No records were found regarding the appointment of this company so it was not possible to ascertain the level of due diligence applied, but all outstanding monies were recovered and the Council had used other Bailiff companies throughout this period. The three companies currently contracted to provide the Council with Bailiff services had all been appointed following a full tender process in accordance with Contract Standing Orders.

The Chief Internal Auditor considered that the Council had a robust set of Contract Standing Orders in place which ensured appropriate due diligence was undertaken in the selection of contractors. Controls were in place to identify errors or omissions, and this provided reasonable assurance concerning the efficient and effective processing of contracts. Training was also provided to ensure that staff were aware of their responsibilities when spending public money.

The Committee enquired about the cost involved in applying due diligence and whether a balance was maintained. The Chief Internal Auditor assured the Committee that the Contract Standing Orders were written such that the higher the value of the contract then the more due diligence was applied during the tender process. The Committee welcomed the report.

Resolved:

(1)        That the findings of the report by the Chief Internal Auditor regarding the arrangements for due diligence within the Council be noted.