Introduction

1. The Governance Committee, at their meeting of 9 December 2004, received a progress report from the County Treasurer on internal audit. This report drew attention to three issues in the Social Services Department: contracting for children's services; the approval of Regulation 38 foster carers; and financial irregularities, with particular reference to one home for older people. The purpose of this report is to update the Committee on action that has been taken to remedy the problems identified.

Contracting for children's services

2. The audit concerns reported to the Committee were that a central approved list of suppliers had not then been compiled, though it was acknowledged that the work was in progress, and that there were instances where the County Council's tendering and contracting procedures had not always been adhered to. Specific mention was made to a supplier of agency staff and a domiciliary care supplier.

3. Progress continues to be made on contracting for children's services in five areas: residential care (both residential schools and children's homes); independent fostering agencies; domiciliary care; service contracts; and negotiations over fees.

· On residential care, a database of suppliers in the Eastern Region is now operational and is used by the County Council though its coverage is as yet incomplete. Other suppliers used by the 19 local authorities in the South-East are to be added progressively from this month. Procedures for ensuring the consistency of monitoring of newly approved suppliers across authorities are being designed. Work is progressing with the Education Department with signing-up residential special schools and children's homes to standard forms of contract which incorporate a monitoring element.

· On independent fostering agencies, a formal contract exists with one agency and contract agreement has been reached with a second. These two cover around 50% of the placements made, the remainder being spread over a further 16 suppliers. It is intended that contracts, using a regional contract currently under development, will be agreed with those suppliers who can provide local placements only, except in very special circumstances.

· For domiciliary care, services for children and families will be secured under contract documentation already used in the adults and older people sectors from those suppliers whose registration with the Commission for Social Care Inspection (CSCI) includes children and families. Work is progressing in establishing which suppliers currently have this registration, the CSCI being unable to provide this information.

· On service contracts, a considerable amount of work has taken place to ensure that the 46 service agreements currently active are covered by satisfactory contract arrangements. Only 8 remain to be dealt with.

· On fee negotiations, a great deal of progress has been made in co-ordinating these across all contracts, including those covering placements jointly made with the Education Department. Relevant departmental staff have been notified to confirm these arrangements.

4. The staffing agency issue has been investigated and arrangements for the use of this supplier regularized. The key requirements of having a proper registered office address, a fixed telephone (not just a mobile) and meeting the County Council's expectations on public liability insurance cover have been complied with. The steps taken were reported to Internal Audit on 27 January 2005. The company is now a panel vendor under the County Council's Manpower contract and continues to be used: they have a good track record and the County Council's needs for temporary staffing to cover unanticipated staff absences in children's homes (where regulatory requirements on staffing levels are stringent) remain at a high level. As a panel vendor under the corporate agency staff contract, the company's performance and adherence to standards is now monitored by Manpower. The value of the Social Services Department's business with the company in the July to December 2004 period, the latest information available, was £22,450.

5. The domiciliary care agency issue arose in early December 2004. At that time, around 12 packages of care were purchased from this supplier for children and families. Internal Audit highlighted their concerns about timesheet anomalies, and requested that no new packages of care were purchased from this agency whilst an investigation was undertaken. Following this investigation, Internal Audit confirmed (23 December 2004) that the agency could continue to be used and restrictions on new placements were lifted. However, Internal Audit also stated that they had some concerns over the agency's financial suitability and that they would be carrying out some additional work, looking at how companies were included on approved lists, and whether there were any supplementary checks that needed to be carried out in addition to CSCI registration. Since, as noted above, the existing domiciliary care contracting arrangements in place across adults and older people sectors are to be used for services for children and families, any recommendations made by Internal Audit will be applied across the whole Department.

Regulation 38 foster carers

6. Progress has also been made with improving approval times for this group of foster parents - those that are not approved by the Fostering Panel in the normal way for fostering any children but come forward to foster a particular child, normally a family member or friend. Criminal Records Bureau checks are routinely carried out for these foster parents but the complete assessment process, which includes, for example, medical checks, were taking longer than the expected six weeks. A plan to address the delays was drawn up and reported to Internal Audit on 31 January 2005. This includes redeploying staff from other teams in order to enhance the Fostering Recruitment Team by 3 posts and engaging an independent fostering agency to carry out any assessment which the Team is unable to pick up. The contract is intended to be for a 4 to 6 month period. This work is underway.

7. This approach to the problem will provide a speedier solution than the normal recruitment process for additional staff. It also gives an opportunity to consider better a longer term and most effective solution for the future.

Financial irregularities at a home for older people

8. In 2001 there was a full audit investigation into the financial accounting and management procedures at this home. It found that significant improvements had been made in the way that personal account information was recorded. However there continued to be significant risk, as the controls over items purchased through the shop and charged to personal accounts were inadequate. Concerns were also raised over ordering goods and services, budget monitoring and the treatment of VAT where cigarettes and alcohol were purchased for residents. This resulted in a process of management support and supervision for the unit manager which was undertaken by the County and sector Service Manager for residential care. Support was also provided by County Treasurer's Financial Services Unit. This process was completed in July 2004 and the unit was given a clean bill of health in terms of financial accounting and management procedures by the Social Services Department's Control and Compliance team and Internal Audit.

9. In November 2004, Internal Audit were invited by the Department to undertake a further review. This highlighted areas of non-compliance. These are set out below, together with the action taken.

· Use of keys including access and retention. It was agreed that all keys should be returned to the unit for reallocation. An inventory of all keys was undertaken, those that needed reallocation were identified and the process of recovery is underway.

· The control framework for the receipting and recording of residents' monies was inadequate. A new system for the recording and receipting of residents' personal monies was put in place.

· Poor record keeping in terms of residents' property and inventory records. A new system for recording residents' personal items and clothing was put in place.

10. The scale of the financial anomalies that had been identified totalled £140. Although this was a relatively small amount of money, the underlying issues associated with residents' money meant that the subject was taken very seriously indeed. The residents concerned have been reimbursed. A new temporary manager has been appointed and an interim management team, with additional care staff support, put in place. The new Acting Unit Manager has been working closely with the Financial Services Unit to ensure that robust systems for the security of residents' personal monies are in place and that documentary evidence of an audit trail for all residents' personal monies received at the unit is available.

11. Following the last meeting of the Governance Committee, a full briefing on these issues, as requested, was given to the Leader by Gill Duncan, Director of Nursing and Residential Care.

12. It is intended that the learning from this investigation is applied across the entire residential and nursing care sector to support the implementation of Clinical/Care Governance, a report on which was considered by the Social Care Policy Review Committee on 19 November 2004.

Director's comments

13. I, and my management team, take standards, both in respect of financial and non-financial matters, and compliance with them very seriously. We recognize that the risks involved in running such a diverse range of services, where day-to-day responsibilities have to be devolved to many units, for many thousands of service users, using hundreds of service suppliers, are major. We take comfort from the fact that most of the time and in most circumstances the control processes and procedures work well. However, we are not complacent. As evidence of this, I would want the Committee to know that I have asked for unannounced visits from the Internal Audit Team to be carried out where persistent compliance problems are experienced and for twice-yearly position reports to be made to my Management Team meetings. These visits are being carried out and their outcomes are being reported.

14. All of the above issues were considered in detail by my Management Team with the County Council's Audit Manager for Social Services on 20 January 2005. Where this had not already happened, action plans were drawn up to tackle the issues and reported to her. In addition, my Management Team did note that the overall conclusion drawn from audits carried out in the third quarter of the financial year was that the framework of controls that was in place was generally working in practice. I have scheduled a further review of progress on these plans, and on the findings of audits carried out since, for April 2005 and will be pleased to take account of any requirements the Governance Committee might have.

Recommendation

15. That this report be noted.

Section 100 D - Local Government Act 1972 - Background Documents

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

None