External audit annual letter 2003/04

Report: 9
Date: 24 February 2005
By: Clerk and Treasurer

Summary

The external auditor has issued his annual letter to members of the Authority following the audit of the 2003/04 accounts. Officers have developed an action plan covering the responsibilities of both the MPA and the MPS. Members are asked to endorse the action plan and agree that a summary of progress should be reported to the Authority in September 2005.

A. Recommendation

Members are recommended:

to receive the external auditor’s annual letter; and
to endorse the action plan and agree that a summary of progress be reported to the Authority in September 2005.

B. Supporting information

Introduction

1. At the conclusion of the annual audit of the Authority’s accounts the external auditor issues a letter to the members of the Authority summarising the significant issues that have arisen as a result of his assessment of the Authority’s performance in discharging its stewardship of public money. The letter relating to the 2003/04 audit is attached at Appendix 1.

2. As well as covering the work carried out as part of the external audit the letter includes summarised information from the HMIC baseline assessment of the MPS and from the Audit Commission’s initial performance assessment of the MPA.

3. The letter was considered in draft by the Corporate Governance Committee and has previously been circulated to all Authority members. The District Auditor, Kash Pandya, will be present at the meeting to speak to his letter.

4. Officers of both the MPA and the MPS have reviewed the key recommendations included in the letter and have developed an action plan to respond to them, and this is attached at Appendix 2. Where appropriate detailed action plans have already been agreed with the Audit Commission in relation to the individual reports whose findings are summarised in the letter.

5. A number of the items in the action plan will be subject to reporting to specific committees, eg the Planning Performance and Review Committee in relation to improvements in performance information, and the Finance Committee where actions are incorporated in the financial management strategic programme. It is proposed that the Authority should receive a summary of progress against the action plan in September 2005 before the audit for 2004/05 is completed.

C. Equality and diversity implications

There are no specific diversity implications of the actions proposed in response to the audit letter

D. Financial implications

The proposed actions will be contained within existing budgets

E. Background papers

None

F. Contact details

Report author: Peter Martin

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 2: MPA Action plan response to the Audit Commission’s 2004 Annual Audit Letter

It should be noted individual action plans should have been agreed in respect of most of the pieces of work identified in the annual audit letter. Key role for the MPA will be to ensure sufficient scrutiny to reassure ourselves that appropriate action is being taken.

Recommendations	MPA action	MPS action	Timescales
Areas that will require ongoing attention:
R1 The embedding of the culture change needed to make the C3i command and control system an effective crime management tool (pg 5)	Active governance of the C3i programme is a key priority identified in the MPA corporate strategy. The MPA will through the oversight board, ensure that the MPS is progressing the recommendations outlined in the Audit Commission report.	The MPS has completed an action plan outlining how it will respond to the issues raised in the Audit Commission report. The action plan has been reported to those groups responsible for C3i governance – both MPS and MPA. There are defined processes in place so that when new features are introduced they are supported by business change and implementation staff. There is follow up to ensure compliance and provide both feedback and support as necessary.	Ongoing
R2 Improved and more robust performance information systems (pg 7-8)	PPRC already undertakes regular scrutiny to hold the MPS to account for addressing recommendations made in NCRS report.	Accuracy of crime recording will be reported to PPRC in the new financial year as a result of MPS audit and inspection programme. There is an action plan which has been agreed by PPRC.	Ongoing
R3 Stronger community consultation processes to guide and move forward policing plans (Note: it is not clear in the AAL where this came from, I can only think that it was the statutory audit of the BVPP/Policing Plan. The IPA suggests that we are quite sound in this areas e.g. we ensured that for the first time priorities that came directly from citizens influenced the 2004/05 policing and performance plan.)	We are committed through the corporate strategy to publish and implement and comprehensive community engagement strategy, which will contribute to ensuring better consultation. Other actions include: oversight of the public satisfaction and consultation activity of the MPS that is regularly reported to MPA Committees including PPRC and Community Engagement.	In the absence of the MPA Community Engagement Strategy the MPS Strategic Consultation Unit has produced a draft Consultation Strategy. The unit has been working towards implementing the improved consultation processes outlined in the strategy. As of January 2005 a draft MPA Community Engagement Strategy has been received and the MPS Strategic Consultation unit will be working to integrate the two strategies. Updates on consultation activity are regularly reported to the MPA Community Engagement Committee.	Ongoing
… performance reviews have identified … a need to:
R4 Strengthen performance information systems, etc (pg 7-8)	See R2 above	See R2 above
R5 Improve the progress made in implementing activity based costing arrangements. Further work is necessary to meet National Policing Plan requirements. (pg 5-6)	Action in financial management strategic programme (FMSP): Implement activity based costing and secure optimum utilisation of the resulting financial management information.	"Continue to implement ABC and secure use of the resulting information, as part of the FMSP. On completion of Audit Commission’s audit of ABC, agree an action plan to address any issues raised Our 2003/04 financial data has been further reviewed and a revised return submitted to Home Office at end of December 2004. A new member staff (with significant ABC experience) is joining from Kent Police on 1 February 2005 and will lead further development of costing process.	Ongoing (Timescale: February 2005)" Revised 2003/04 return to HO by end Dec 2004. Improved 2004/05 return submitted by end July 2005
R6 Improve the consistency with which agreed recommendations arising from the work of external review agencies, including audit and inspections, are implemented. (pg 6-7)	Head of Scrutiny and Review to review accountability mechanisms at MPA level and deliver improved framework as necessary.	DCC9 (Directorate of Organisational Learning) was established to provide effective audit and the means for implementation of the recommendations emanating from the Morris Inquiry and Commission of Racial Equality Investigation. The directorate has since expanded to encompass the Inspection Liaison & Analysis Unit and will: - provide a single point of contact for external review agencies; - establish clear accountability over implementation programmes; - monitor implementation of recommendations from both internal and external review - identify key areas of organisational learning and disseminate this as good practice.	MPA March 2005
Members should:
R7 Develop and implement an improvement plan to address the matters identified in its initial performance assessment (pg 3-4)	Deputy Clerk is establishing small group to draw up key actions required as a result of IPA assessment. Improvement plan once drafted and costed to be signed of by COP/full authority as appropriate and Chair of the Authority. Part of this process is likely to including engaging the IDEA to provide some organisational development support. Monitoring reports will be sent regularly to COP/Full Authority as appropriate.	N/A	Responsibility to undertake development of improvement plan: Chair SMT Timescale: draft in place by 28/02/05 Monitoring: ongoing
R8 Continue to take steps to ensure that the forecast budget gap for 2005/06 is bridged and future spending plans matched with available resources (pg 9)	Final 2005/06 budget approved by MPA (16/12/04) as agreed with the Mayor. Action in FMSP: Develop further integration of business and financial planning. Medium term financial forecasts will be reviewed as part of the MPS service review during 2005.	Financial Planning team within Strategic Finance will continue to work closely with MPA Treasurer and internal MPS staff to review both 2005/06 and future years spending plans against available/forecast resources Further work to link corporate/business planning and financial planning is taking place Draft Efficiency plan for next three years will also highlight need for (and quantify) budget savings in 2006/07 and 2007/08.	Draft Efficiency Plan to MPA Finance Committee in February 2005 Further integration of business and financial planning by April 2005 Medium term financial forecasts reviewed by July 2005
R9 Seek further improvements in budget monitoring and control arrangements in high risk areas (pg 9)	Key objective of FMSP: To support the implementation and maintenance of sound corporate governance arrangements to secure effective business controls and management of risk. Additional actions in FMSP: Develop and implement measures to improve the quality and reliability of expenditure and income forecasting. Support the extension and effective delivery of devolved management.	Management accountant team brought under the line management of the Director of Business Support in order to provide closer links with the Business accountants who quality check forecast received from the business. This move is already improving the flow, understanding and quality of information from local managers. In addition the upgrading of the financial system MetFIN to the latest version of SAP has provided full integration of the financial monitoring systems and given much improved access to management information to central Finance and local managers via business warehouse. \|This facility is being extended to a range of items such as police overtime to ensure managers have access to accurate and timely financial information for their unit. The Director of Business Development is responsible for the progression of internal audit recommendations and those highlighted as high risk are being progressed on an ongoing basis. The Director of Business Development is responsible for the support to the ongoing project to extend devolved management and this is linked into the day-to-day business of the Business Accountants.	Upgraded financial system in place. Roll out of police overtime information on Business Warehouse in March 2005. Response to internal audit recommendations ongoing. Support to devolution project ongoing.
R10 Prioritise action to ensure that timely, accurate and complete information is available to support the statutory Best Value Performance Indicators in the BVPP and meet police data quality requirements (pg 7-8) NB there is some disquiet about these comments and the quality of the BVPI audit, not least because some of the missing data referred to was the responsibility of the Home Office not the MPS	Regular meetings are held between the authority and the MPS staff with responsibility in this area to ensure accuracy and timeliness. This has in the last year included agreeing processes/practicalities with the external auditors. With regard to some of the specific issues raised in the report: OBTJ figures are monitored through PPRC at every meeting, and have been for some time. We are aware of action to address DV data collection and are monitoring progress. See also R2 above	We have reviewed the SPI suite for 2004-5 and expected availability of supporting information. Timeliness and completeness will be improved when these SPIs are audited. There is one remaining SPI (SPI8) where systems need to be amended to enable collection and these amendments are in hand. [also cross refer to NCRS response]