Agenda item

Report of the Deputy Chief Executive (Place)

The Audit and Procurement Committee considered a report of the Deputy Chief Executive (Place) that provided an overview of the results of the Accounts Payable Recovery Audit 2016-17 and sought approval to participate in future annual audit exercises with the supplier.

The Council made payments of over £300 million a year to suppliers and individuals through the Accounts Payable system within Agresso. Whilst robust controls were in place to ensure that transactions were complete and accurate, there was a residual risk that on occasion payments were made in error, or credit amounts owing were not identified and recovered. As such, it was common practice across local authorities to undertake proactive audits to identify and recover such items. Previous exercises on this had been carried out and in 2016, the Council engaged a supplier (Caatalyst Ltd) to undertake the latest audit, in-conjunction with support from Accounts Payable / Internal Audit. 

The audit covered accounts payable transactions processed on the Agresso system up to 31^st December 2016. The total spend reviewed was approximately £2 billion which represented around 500,000 lines of transaction data. The scope of the audit covered: Vendor statements – to identify, verify and recover credit notes and similar credit balances on vendor accounts due to the Council; Duplicate payments – to identify, verify and recover any duplicate payments made by the Council; VAT audit – to identify, verify and recover any VAT not recovered by the Council.

In total, the audit identified and recovered a sum of £218k, which consisted of 167 recovery items, including three outstanding recoveries still being processed. A breakdown of the recoveries by type was set out in the report.  This represented 0.01% of the total spend reviewed and was below the suppliers benchmark of 0.02% across other clients. The supplier felt that this result was due to strong internal controls being implemented at a management and accounts payable level and was an excellent achievement in the context of overall spend. The Accounts Payable system was subject to an annual internal audit review and was consistent with the suppliers. 

The results of the audit were reviewed to identify where control improvements could be made and a number of actions relating to: duplicate payments; vendor statements; credit notes; vendor statements: other credit balances; and VAT, were identified to be taken forward.

It was proposed that the Council undertook further “one off” annual exercises in the future. This would enable the impact on officers’ time to be managed more effectively as the timing of the work could be agreed to allow resources to be targeted accordingly. This would also allow appropriate time to bed in the actions outlined in the report. Whilst we would expect the level of recoveries to reduce over time as a result of these actions, sufficient time was required for this to be realised. 

The Committee were informed that payment was made to the Council engaged debt recovery company on a no win no fee basis and were also assured a legal agreement was in place to ensure that all data collected in respect of debt recovery was kept secure.  

RESOLVED that the Audit and Procurement Committee:

1)  Notes the outcome of the Accounts Payable Recovery Audit 2016-17 and the improvement actions identified as a result of this work.

2) Approves the option to undertake future annual proactive audit exercises with the supplier on accounts payable transactions.