Stratford-on-Avon District Council: Core Strategy
Risk and Assurance Services
“Providing assurance on the management of risks”
Report status
Final
Report date
4th December 2015
Prepared by
Christopher Portmann,
Senior Auditor
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Core Strategy
RISK AND ASSURANCE SERVICES
SDDEV/2016
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Background
The development of the Core Strategy has been undertaken over a
number of years, but particularly the last four years. During that
period due in the main to changes in national legislation and
guidance the overall housing numbers requirement has changed
markedly. Consequently with the passage of time, it has been
necessary to revisit evidence that had been obtained to support the
emerging Core Strategy. All of the updated reports have been
considered by the Cabinet and included in the overall evidence
base, however, this has inevitably led to an overall increase to the
costs that the Council has incurred. This report also demonstrates
that on occasions where revised evidence has been required the
Council has requested the original tenderer to undertake additional
work so as not to further delay the production of the Core Strategy.
It should be noted in addition that a number of the costs that the
Council have incurred are not within the control of the Council, this
in the main relates to the costs of the Planning Inspectorate, and
the cost of running the Examination in Public exercise.
Total expenditure on the Core Strategy between the 2007/08
financial year and the end of September 2015 stands at
£1,244,909.
Key Findings
The review included a detailed examination of expenditure
transactions from funds allocated to the Core Strategy. This
confirmed that all funds allocated to the Core Strategy have been
spent on their intended purpose and the recent request to Members
for additional funding appears to be necessary.
Moreover, there are robust controls as regards budget monitoring
and control with the Accountancy section producing detailed
monthly budget monitoring reports for the Planning & Housing
Policy Manager. The Planning & Housing Policy Manager reports
directly to the Chief Executive and reports on any budget variances
as appropriate.
Introduction
Warwickshire County Council's Risk and Assurance Services
provides the Internal Audit Function on behalf of Stratford District
Council.
A request was received for Internal Audit to undertake a review of
the expenditure on the Core Strategy. This review was in addition
to the agreed 2015/16 audit plan.
The objective is to review the expenditure relating to the
development of the Core Strategy, including costs of consultants,
temporary staff and the planning inspectorate, as well as the
forecasting and reporting of such costs.
In addition, there is a bi-monthly revenue and capital budget report
to Cabinet, which includes expenditure and any variances relating
to the Core Strategy and there is an audit trail which shows that all
budgets allocated to the Core Strategy have been properly
approved.
The Core Strategy budget did not take into account the possibility
that the Independent Examination might result in the Core Strategy
not being approved and consequently no contingency was included
for any additional inspection costs and additional work that might
arise. It should be noted that the costs of the Planning Inspectorate
are outside of the Council's control.
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Core Strategy
RISK AND ASSURANCE SERVICES
SDDEV/2016
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An Interim Report was received from the Independent Examination
of the Council's submitted Core Strategy dated 18th March 2015
highlighting that more work on the Core Strategy was required.
However, whilst the actual costs were not known, the Interim Report
should have alerted officers that the costs of the Independent
Examination would be greater than anticipated (even though the
invoice from the Planning Inspectorate for the original Examination
in Public had not been received) and there would also be the need
for additional work on the Core Strategy formulation. Budget
monitoring reports indicated that the overall budget was on target
and a request for additional funding was not submitted to Members
until 19th October 2015.
Where the requirements of the Core Strategy have changed, the
Council has reacted quickly to these.
In addition to the budget management issues the review highlighted
one instance where no competitive procurement process had been
followed for the engagement of consultants, in accordance with the
requirements of the Council's Contract Standing Orders, making it
difficult to ascertain whether value for money had been obtained. In
addition there were three cases where the overall amounts paid to
consultants were greater than the total amounts tendered.
Instances were also noted where written contracts were not in place
for consultancy assignments.
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Core Strategy
SDDEV/2016
RISK AND ASSURANCE SERVICES
Appendix A – Findings & Action Plan
Explanation of Priority ratings:
Priority Explanation
Fundamental:
Action that is considered imperative to ensure that the organisation is not exposed to high risks. Major adverse impact on achievement of
organisation’s objectives if not adequately addressed.
Significant:
Action that is considered necessary to avoid exposing the organisation to significant risks.
Merits Attention:
Action that is considered desirable and should result in enhanced control or better value for money. Minimal adverse impact on achievement of
the organisation’s objectives if not adequately addressed.
These definitions are illustrative only and professional judgement is exercised when determining the priority rating of recommendations
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Core Strategy
SDDEV/2016
RISK AND ASSURANCE SERVICES
Appendix B – Findings & Action Plan
Risks and Implications
01
Risks:
The implications on the budget
may not have been fully
considered and reported
appropriately.
Finding
Recommended Action
An Interim Report on the Core
Strategy was received from the
Independent Examination dated 18th
March 2015 highlighting that more
work on the Core Strategy was
required. However, whilst the actual
costs were not known, the Interim
Report should have alerted officers
that the costs of the Independent
Examination would be greater than
anticipated and there would also be
the need for additional work on the
Core Strategy formulation. Budget
monitoring reports indicated that
the overall budget was on target
and a request for additional funding
was not submitted to Members until
19th October 2015.
Budget monitoring
arrangements for the Core
Strategy should be reviewed to
ensure that outturn forecasts
are robust and reported to
members in a timely manner.
Budgeting for the Core Strategy
should be reviewed and more
up to date budgets agreed,
including setting aside a
In the event that plans are not
contingency on the basis that
achieved, there is no
examination costs may be
contingency to support this
higher than currently anticipated
scenario.
and also to ensure that there is
a contingency covering any
additional work that may be
Implications:
required following the
The full financial liability of the
examination. This is particularly
Council may not be known.
It was also noted that the Core
important given the ongoing
Strategy budget did not take into
changes in requirements
Insufficient resources to support account the possibility that the
regarding the Core Strategy and
the Core Strategy.
Independent Examination might
consequent uncertainty as to
result in the Core Strategy not being what is required.
approved and consequently no
contingency was included for any
additional inspection costs and
additional work that might arise.
Budgets set may not be
realistic.
It was originally anticipated that the
costs of the examination would be
around £90,000 but the examination
is ongoing and the examination
costs are now estimated to be over
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Priority
Management Action
It is accepted that the Budget
Monitoring reports did not
highlight the resources for
the Core Strategy as a risk
during the early part of
2015/16. However, as
identified within the findings
the actual costs were not
known and the payment of
£113,945.32 was not made to
the Planning Inspector until
9th September 2015, ahead of
the special report on 19th
October 2015. It is accepted
however, that some
additional costs could have
been predicted.
In relation to contingencies,
it is not the practice of the
Council to provide such
budgets. Whilst there are
virement arrangements in
place it is appropriate that
requests be made to
Cabinet/Council for
additional resources is
required. Action has already
been put in place to ensure
better forecasting of year end
positions across the Council.
Core Strategy
SDDEV/2016
RISK AND ASSURANCE SERVICES
Risks and Implications
Finding
Recommended Action
Priority
Management Action
£200,000 and the costs of
consultancy work and legal fees
have exceeded those budgeted for
due to the additional work now
required.
02
Risks:
It is difficult to demonstrate that
value for money has been
obtained.
Non-compliance with Contract
Standing Orders and European
Union Procurement Legislation.
The overall values of payments to
five individual consultants within the
expenditure sample reviewed were
analysed and tracked to
procurement processes conducted:
Consultant
ref:
A
Total net
value of
payments
(£)
172,255.18
B
49,666.01
C
117,970
D
85,523
E
99,172
A lack of protection afforded to
staff managing contracts.
Implications:
The Council could be placed in
a vulnerable position should the
award of contracts be
challenged.
Period
payments
made over
Sept
2011Sept
2015
May
2011Feb
2013
May
2011 –
Oct 2014
January
2012 –
August
2015
Dec
2013 –
Sep
All contracts should be procured
in accordance with the
requirements of Contract
Standing Orders. Wherever
possible related work should be
packaged and tendered
together to seek to maximise
economies of scale as well as
securing a commitment and
accountability from contractors
to deliver all that is required by
the Council rather than
elements of a larger piece of
work.
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Expenditure on Consultant E
was originally an urgent
report estimated value less
than £15,000 so did not
require a rtendering exercise
under Council’s Standing
Orders. In addition other
consultants were not
available at the time of the
work, which was to review
another consultancy’s
estimate of housing
requirements. The continued
use of this consultant (as
reported to members) was
because the Council had
greater confidence in this
consultant’s work than
others. However it is
accepted that if it had been
known that the adoption of
the Core Strategy would take
such an extended period of
time, it would have been
preferable to undertake a
tendering exercise in this
instance.
Core Strategy
SDDEV/2016
Risks and Implications
RISK AND ASSURANCE SERVICES
Finding
Recommended Action
Priority
Management Action
2015
The following points were noted:
 In the case of Consultant A,
there were two procurement
processes and one case where
an exemption was applied;
however these only account for
£140,195 of the overall
payments to this consultant;
 For Consultant B, there are
records of competitive tenders
being received for this.
 For Consultant C, a contract
was awarded on 01.04.11 to the
value of £28,695 following a
competitive tendering process.
A separate contract was
awarded on 09.03.12 to the
value of £61,280. These
contracts only account for
£89,975 of the overall amount
paid.
 For Consultant D, there are
records of two competitive
tendering processes, however
the total value of these
contracts is only £32,077.
 There is no record of a
competitive tendering process
ever being conducted for
Consultants or E.
Moreover, some of the sums
referred to in the table above were
broken down into a number of
pieces of work. It was noted that
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All tenders undertaken were
for discrete pieces of work
and it was unknown there
would be other packages of
work provided to the same
consultant. The law and
guidance has been
developing as the work has
been undertaken. It is
accepted for any future core
strategy adoption a large
scale tender may be
appropriate, as would shared
arrangements for providing
the consultancy support. It
is not accepted this could
have occurred for this core
strategy.
Core Strategy
SDDEV/2016
Risks and Implications
RISK AND ASSURANCE SERVICES
Finding
Recommended Action
Priority
Management Action
these were not packaged together
and tendered as a larger piece of
work. Under European Union
Contract Aggregation Rules, where
a series of contracts are awarded
without undertaking a competitive
procurement process, the
arrangement could be deemed as
being one significant contract rather
than a series of relatively small
ones.
03
Risks:
Non-compliance with Contract
Standing Orders.
The record of contacts may be
incomplete.
Implications:
Difficulty in identifying all
contracts awarded.
04
Risks:
A lack of division of duties.
Implications:
A lack of protection afforded to
the individual concerned.
Under Contract Standing Orders, a
Contract Registration form has to be
completed for all contracts
"exceeding £25,000.00 as soon as
the contract is entered into." It was
noted that this form was not
completed for any of the
consultancy contracts examined
during the review which exceeded
this financial value.
A Contract Registration form
should be completed for all
contracts exceeding £25,000.00
as soon as the contract is
entered into in accordance with
the requirements of Contract
Standing Orders.
This is only true for some of
the works but for those
projects it is accepted.
A sample of 12 paid supplier
invoices relating to the Core
Strategy was reviewed. It was noted
that in two cases, the same
individual approved the purchase
order, verified receipt of the
goods/services provided and also
approved the payment of the
supplier invoice.
The processes for approving
purchase orders, verifying
receipt of goods/services and
approving invoices for payment
should include an appropriate
division of duties.
This is not accepted as the
Council does not have the
staffing levels to
accommodate this.
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RISK AND ASSURANCE SERVICES
Risks and Implications
Finding
Recommended Action
Risks:
A lack of documented approval
for expenditure committed.
From the sample of 12 paid supplier
invoices it was found that in 7
cases, the supplier invoice had
been processed as a non-order
payment.
Wherever possible, an official
authorised order should be
raised for all purchases prior to
receipt of the goods/services
required to ensure that a
commitment is raised in the
budgetary records and to
document the approval of the
expenditure in advance.
This matter has been
resolved as a result of the
new financial system.
There was not a written contract in
place in some cases where
consultants had been engaged to
undertake work on behalf of the
Council.
Contracts should be in place for
all consultancy arrangements
detailing the roles and
responsibilities of the respective
parties. Wherever possible,
contracts should also include
quantifiable and measureable
outputs.
Ensuring consultants have
written contract requirements
with due dates for
completion is accepted.
Commitments are not shown in
the budgetary records.
Implications:
Budgetary control is reduced.
06
Risks:
A lack of clarity over what is
required and the respective
roles and responsibilities of
each party,
Implications:
Disputes over the arrangements
may prove difficult to resolve.
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Priority
Management Action