Internal Audit Update on Schools Forum - 15 October 2018

1. Internal Audit Update Schools Forum 15 October 2018 Natalie Jerams, Audit Manager

2. Content • Introduction • Audit approach • Definition of assurance levels • Thematic audit reviews - key findings 2017/18 and 2018/19 to date • Issues arising from other audit work • Update on current frauds/scams • Schools Financial Value Standard (SFVS) • Contact details • Questions

3. Introduction • Southern Internal Audit Partnership (SIAP) is the internal audit function for schools. • SIAP also provides the internal audit function for the rest of Hampshire County Council as well as other Local Authorities and organisations.

4. Audit approach • We no longer visit each school as part of a rolling plan, although some reactive reviews are still carried out each year • Themes/topics are identified in consultation with Children’s Services, EPS, EFS, HIAS each year • A sample of schools (across areas and types) are selected for each review • Each school receives verbal feedback at the end of the visit as well as a report summarising the findings across all of the schools visited • An annual school communication is issued to share findings across all schools • SIAP attend Admin Officer networks annually to feedback all • findings.

5. Definitions of assurance levels

6. Thematic audit reviews – key findings Offsite Activities Overall opinion – Adequate assurance (15 schools visited for this review): Findings: • All schools had an Offsite Activities Policy in place • All schools had a nominated EVC • Risk assessments, medical declarations and parental consent forms in place • Authorisation sought from Outdoor Education Unit where required. Issues: • Some policies out of date • EVC training had lapsed in some cases • Minibus drivers not always MIDAS trained (not a statutory requirement but best practice) • Trained first aiders not always present on trips (as above) • Evolve forms often submitted late for approval to OEU (should be at least four weeks prior to trip)

7. Thematic audit reviews – key findings Fraud awareness Overall opinion – Adequate assurance (19 schools selected for this review – questionnaire) Findings: • Model policies/manuals used (Code of Conduct, ICT Acceptable Use, Whistleblowing/MFP&P, MOPP) • There was a general awareness of fraud and who to contact if fraudulent activity suspected • Passwords in place and not shared. Issues: • Some schools do not get senior management and/or finance staff to complete an annual pecuniary interest declaration • Some staff do not lock their screens when leaving their desk for a period of time • Some schools do not change their building access codes on a regular basis.

8. Thematic audit reviews – key findings Recruitment Overall opinion – Adequate assurance (15 schools visited for this review) Findings: • Safer Recruitment training undertaken by key staff • Contracts of employment in place for staff • Personnel records held securely. Issues: • Staff/governors had not signed to confirm that they had received and read the KCSiE document • Interview notes not always held, candidates not scored, name of interviewer not recorded • Some gaps in pre-employment checks, particularly relating to right to work documentation, referrals database check and references • DBS certificates retained on file (should be kept maximum of 6 months) • SCR not fully complete or up to date.

9. Thematic audit reviews – key findings Security of cash and assets Overall opinion – Adequate assurance (10 schools visited for this review) Findings: • Buildings locked when not in use • Alarms and CCTV in place • Adequate separation of duties between income collection and banking. Issues: • CCTV data retained for longer than necessary in some cases • Cash holdings limits exceeded at times • Assets not security marked • Inventory not in place/all required details not recorded • No formal authorisation process in place for the disposal of assets.

10. Thematic audit reviews – key findings Petty cash Overall opinion – Limited assurance ( 15 schools visited for this review) Issues: • Imprest level not appropriate for the needs of the school in some cases • Security of cash – safe combination not changed regularly and safe keys held on site overnight • Some schools making large payment (>£250) which should be processed through SAP purchase order or p-card • Payments made to individuals for works/services carried out • Receipts not always held to support all purchases • Claiming VAT without a valid VAT receipt/invoice and also not claiming VAT despite having a valid VAT receipt/invoice • Frequency and accuracy of reconciliations not sufficient in many cases • Personal loyalty cards used when making purchases.

11. Thematic audit reviews – key findings Procurement cards Overall opinion – limited assurance (15 schools visited for this review) Issues: • P-cards loaned to other staff in some cases • Receipts not always held to support all purchases • Claiming VAT without a valid VAT receipt/invoice – particularly relating to Amazon where only an order confirmation is held – in many cases • Transactions not reviewed and approved in many cases.

12. Issues arising from other audit work • Governance – papers, including budget reports, not sent to governors in advance of meetings • Budget – SAP reports (budget and payroll) not reviewed and signed off by HT monthly • Payroll – claims forms not completed and signed by the claimant and not authorised appropriately • Performance management – insufficient information presented to governors for both support and teaching staff • Recruitment – lack of interview notes to support appointments. Candidates not scored to ensure openness/consistency. • Income – charging for residential trips not in line with DfE guidance. The only charge that can be made is in respect of the actual cost of board and lodgings for the pupil on the trip. In addition to the above charge the school can request a voluntary contribution for other costs associated with the trip (transport etc.) • VAT – not correctly charged on lettings • Purchasing – SAP purchase orders raised after the goods/invoice had been received. Lack of compliance with Contract Standing Orders.

13. Update on current frauds/scams • Schools are being targeted by fraudsters who purport to be the Headteacher. The fraudsters contact a member of staff with responsibility for authorising financial transfers and request a one off, often urgent, bank transfer to be made. The amount requested is generally in the region of between £8,000 and £10,000. (Please see school communication SC016021 for more details) • Procurement cards should be cancelled as soon as the cardholder has left the establishment to ensure that the risk of inappropriate/unauthorised purchases is mitigated. • There should always be a clear segregation of duties (or spot checks in place) for the income collection process. This should also be supported by clear budget monitoring to ensure that all income budgeted for has been received and any discrepancies investigated.

14. Schools Financial Value Standard (SFVS) • All of the 2017/18 returns were received by the 31 March 2018 deadline. • Reminder that all SFVS returns should be reviewed and discussed at Full Governing Body prior to submission. • Returns have been analysed and some follow-up questions asked to a number of schools, and their responses are being received or chased.

15. Contact details Neil Pitman, Chief Internal Auditor (01962 845139, neil.pitman@hants.gov.uk) General school queries: Natalie Jerams, Audit Manager (01962 847951, natalie.jerams@hants.gov.uk) Neil Ireland, Senior Auditor (01962 847943, neil.ireland@hants.gov.uk) Fraud and Irregularity queries (including thefts): Iona Bond, Audit Manager (01962 847417, iona.bond@hants.gov.uk) Andy Payne, Senior Auditor (01962 845125, andy.payne@hants.gov.uk)

16. Any questions? Thank you