CHWARAEON CYMRU SPORT WALES

Transcription

1 CHWARAEON CYMRU SPORT WALES INTERNAL AUDIT REPORT Review of National Governing Body Grants /Local Authority Partnership Agreements REPORT STATUS: FINAL DISTRIBUTED TO: Director of Corporate Services: Chris James Central South Manager: Sport Wales Manager: Tom Overton Debbie Austin Sport1/2012/2013/Review of LAPAS & NGB/July 12/Review of LAPAS & NGB July 12

2 Review of National Governing Body Grants and Local Authority Partnership Agreements CONTENTS Page(s) Executive Summary Introduction 3 2. Objectives 4 3. Scope 5 4. Summary of findings 6-18 Appendices 1 Extended Management Comments in Response to Observation Point Risk Assessment Criteria

3 Review of National Governing Body Grants and Local Authority Partnership Agreements EXECUTIVE SUMMARY Following consultation with the Senior Management and in line with our consideration of risk, we have undertaken an audit review of National Governing Body (NGB) grants and Local Authority Partnership Agreements (LAPAs) which has focussed upon the following key areas: Effectiveness of controls and procedures relating to the awarding of grants Adherence to policies and procedures in relation to the authorisation, awarding and payment of grant funding The extent of revised processes now in place and ascertaining how these processes have adapted (or are planned) to incorporate the change in focus towards the measurement of outcomes of Investments Our audit work established that the existing documented procedures relating to LAPAs and NGB s were not up to date within the context of the development in this area and also that there are some procedural improvements to be made. We have made several detailed observations and recommendations as set out in section 4 of this report and have prioritised them in order of risk for the Audit Committee s attention. Based on the sample selected of three LAPAs and four NGB s for review, we identified the following themes:- 1. The processes as currently documented are not entirely consistent with the emerging practice. In particular this impacts:- - The consistency of information collated/presented at varying stages of the process - The requirement for certain procedures that appear to be supplemental to the revised decision making procedures (ie certain procedures are now superceded). This would indicate that there is a need for clarity and alignment in the documentation of the process. We are aware that this area is still evolving therefore there is necessity to continue to identify and implement the preferred and appropriate procedures which are commensurate with ensuring that all relevant and appropriate internal controls and procedures are consistently applied and adequately documented. 1

4 Review of National Governing Body Grants and Local Authority Partnership Agreements 2. The presentation of target information by partners is not entirely consistent and the adequacy of evidence as to the reliability of target data for LAPAs in particular is reliant upon the relationship between Officers and Partners with varying degrees of challenge applied. We also noted that it was possible for inaccuracies to manifest themselves in the target data held in AIMS and the Partner Investment Sheet (PIS form). Whilst many aspects of the LAPA and NGB processes at present remain unchanged from previous years, the points noted above also have relevance in those areas in which the approach has now been modified by the organisation. We are aware that there are additional adjustments and modifications to be made. This transitional phase may well generate inconsistencies and errors until the processes have been finalised, documented and fully implemented. As such, management will continue to need to be cogniscent of the impact of any delays in the transition and the increased risk associated in this transitional phase. Of our ten recommendations, we consider one to be high risk, eight to be medium risk and one low risk. 2

5 Review of National Governing Body Grants and Local Authority Partnership Agreements 1 INTRODUCTION 1.1 An internal audit of the review of NGB s and LAPAs was undertaken in 1.2 Following a thorough Internal Audit planning exercise involving discussion with The Financial Controller and Director of Corporate Services, a detailed audit programme was prepared. A sample of three LAPAs and four NGBs (covering nineteen separate grant streams) formed the basis of selection for audit review. 1.3 The 2012/13 grants selected for audit were as follows:- LAPAs Cardiff (total 1,410,588) Gwynedd (total 1,025,353) Neath/Port Talbot (total 1,090,372) NGB s Welsh Hockey Union (total 659,000) Welsh Cycling Union (total 749,200) Golf Union of Wales (total 426,500) Welsh Athletics (total 787,000) 1.4 We would like to thank all Sport Wales staff involved for their assistance and co-operation during the course of our audit. 3

6 Review of National Governing Body Grants and Local Authority Partnership Agreements 2. OBJECTIVES 2.1 The objectives of our audit were to document, review and test the procedures and controls relating to the awarding and payment of NGB and LAPA grants. In particular, we sought to confirm: There are clearly documented procedures in place with regard to awarding and processing of grants. That all grants are correctly awarded and authorised. That payment of grants are correct agree to the authorised amounts. That contracts by way of signed offer and acceptance letters are correct. That adequate systems exist to ensure that targets agreed at the offer stage of grants are realistic and will be correctly monitored, compared to actual outcomes in due course and that there are clear procedures in place on how the process will operate. 4

7 Review of National Governing Body Grants and Local Authority Partnership Agreements 3. SCOPE 3.1 We evaluated the system for the awarding, processing and payment of grants in place, and the controls established by management and carried out appropriate testing with regard to the following: a) The internal control system per se; b) Compliance with policies and procedures and best practice regarding processing of grants. c) Compliance with required authorisation. 3.2 To establish the systems, controls and procedures in place we held interviews and discussions with: Tom Overton Sport Wales Central Manager Debbie Austin Sport Wales Manager Katherine O Brien Sport Wales Administrator 5

8 Review of National Governing Body Grants and Local Authority Partnership Agreements SUMMARY OF FINDINGS Adopting the Sport Wales s risk matrix shown at Appendix 1 we have risk scored our observations using the following colour coding notation: An extreme risk (red) should be addressed immediately. A high risk (orange) should be addressed as a matter of urgency. A medium risk (yellow) should be resolved within a reasonable timescale. A low risk (green) should be resolved when practicable. 6

9 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.1 LAPAs The audit points included in the LAPAs follow up audit in 2011 were revisited and each point was discussed with Sport Wales Central South Manager. Weaknesses as identified by the previous audit may still exist and have not as yet, been fully addressed Sport Wales to consider the recommendations made in the follow up audit as part of their planned strategy towards an outcomes approach. Priority Rating L I S Responsibility of Agreed Corporate Directors Implementation date Review to be completed by 30 th September To date no action has been taken relating to these points but a board meeting was planned for 9 th July 2012 to consider a way forward into the next stage of the new outcomes approach with a view to improving systems, quality of information and action points to be addressed

10 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.2 NGB/LAPAs At present, Sport Wales Inaccurate data may Consideration be given relies on the close be presented to and to the introduction of relationship between its accepted by Sport sample checking of data officers and grant recipient Wales which could provided by partners in partners to obtain influence investment order to verify the confidence in the accuracy decisions. Inaccurate accuracy and reliability of of information presented data may also result in data presented by regarding targets at both trends and partners. the application stage and benchmarks being more importantly, in the difficult to interpret presentation of data in over time. respect of outcomes during the review processes. In addition close relationships may impact the ability or desire of Officers to challenge fully the data presented by Partners. LAPAs Sport Wales Senior Officers work with LA partners to ensure targets, outputs and outcome measures are both challenging and accurate. Measures have been put in place to better evidence outcomes: a) School Sport Survey launched in 2011 will provide benchmark data every other year at a national and area level. b) Output measures have been reduced to 7 key indicators on the PIS Sheet. NGBS See Extended Response in Appendix 1. Priority Rating L I S Responsibility of Sports Development Managers Implementation date April

11 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.3 NGB/LAPAs Sport Wales has been Lack of clarity in Procedures to be moving towards an relation to systems updated to reflect the outcomes basis for at operational level. new system. both NGB/LAPA s. This approach is still in its infancy and some system changes have already been introduced, e.g. all grants are now recorded on a Partner Investment Sheet (PIS). This is presented to Board Members for approval at a board meeting and this is the main procedural difference at this stage from the previous system. Procedure notes have not been updated to reflect adjustments to the system as they have occurred. Procedural changes are introduced piecemeal and ineffectively. Procedures are not undertaken on a consistent basis. LAPAs Corporate support to update procedures following the Sport Wales Board discussion regarding Partner Investment Principles (July 2012). NGB Procedures are already in place to consider long term funding for NGB s. Desk notes will be revised to reflect new timelines. Priority Rating L I S Responsibility of Sarah Powell/ Graham Williams NGBS/Institute/ Mark Frost Implementation date December 2012 December

12 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.4 NGB It has been noted that As additional It is good practice to if an additional introduce a procedure amount of grant is for an offer and awarded there is acceptance letter currently no procedure in place for the governing body to acknowledge this formally by virtue of signing any additional paperwork. awards are subject to the same terms and conditions as the original offer, if there is no signed acceptance there is potential for dispute in the future. (contract) to be signed similar to that of the original offer. Agreed. Revised offer letters are sent out stipulating original offer letter terms and conditions apply. Sport Wales will ensure there is a signed acceptance of the revised offer. Priority Rating L I S Responsibility of Implementation date Chris James Now addressed

13 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.5 NGB If the total of a grant As the total extra If the existing Agreed. The findings awarded over the investment over the procedures to be relate to the old period of an investment period of the adhered to, the chair of process that was, in (e.g. 4 years) exceeds investment is the original Members practise, too the total agreed at the approved after the Panel (or CEO) should original Members Panel offer letter has been approve the total by more than 20 per sent, and payment amount of the grant in cent or 100,000, made, there is no the final year if the approval by the chair of opportunity to total exceed the the original panel is specified amounts required. before the offer is made to the NGB. This level of excess applies to all NGB s reviewed as part of this exercise, i.e. Welsh Athletics, Welsh Hockey Union, Welsh Cycling Union and Golf Union of Wales. At the time of the audit the four year funding sheets had not been signed or put onto AIMS. They have been subsequently signed by the CEO and have been decrease the level of the grant for the final year if it is not considered to be acceptable by the Chair of the original panel for whatever reason. Alternatively if this authorisation is now deemed to be supplemental to the existing approval/authorisation process, revised guidelines may be required to supercede those now in place to more appropriately reflect the activities consistent with these processes complex. The Board have since agreed approval for NGB funding is agreed at the start of the year when the budgets are approved. Any increased awards to NGBs are reported to the Board via the Finance Report. The first such report will be presented at the September 2012 Board meeting. Priority Rating L I S Responsibility of NGBS/Institute/ Mark Frost Implementation date Now addressed

14 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments entered onto AIMS (the chair of the original panel has left Sport Wales). Priority Rating L I S Responsibility of Implementation date

15 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.6 NGB It has been noted Appropriate delegated that the Grant authorities not being Administrator adhered to resulting in sometimes signs grant offer letters on behalf of the Senior Officer, e.g. an offer of an additional 42,000 to Welsh Cycling Union was signed on behalf of the Senior Officer by the Administrator. risk of inappropriate/incorrect offers being made. Furthermore this dilutes the personal accountability of the Senior Officer in this part of the process. All offer letters to be signed by Senior Officers with appropriate delegated authority. Priority Rating L I S Responsibility of Agreed NGBS/Institute/ Mark Frost Implementation date Immediate The offer of funding (and by implication the signing of offer letters) is outside the remit of the Administrator

16 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.7 LAPAs The delivery plans for This may cause Sport Wales should Neath Port Talbot difficulty in ensuring instruct Local Authorities and Cardiff did not that information is to summarise the targets state the total figures correctly collated for under the same headings for the targets that the PIS and offer required by Sport Wales are included in the letters, and for an for the PIS and offer offer letters on PIS appropriate letters when submitting (Partner Investment summary to be their delivery plans. Sheet), (although it is available in regards noted that various individual targets were included). those targets when considering the overall investment and success against these targets. Additional clarity over consistency of approach would be desirable in this regard. Cardiff submitted a 2 year plan in January 2011 with 2 year targets. In year targets were agreed locally and these populated the PIS (Partner Investment Sheet) sheet and a copy is on AIMS. Neath Port Talbot targets and outcomes were agreed at a local level and these were subsequently populated the PIS sheet. Priority Rating L I S Responsibility of N/A N/A Implementation date

17 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.8 NGB Comparisons were The potential Sport Wales staff to There is a difference in made in respect of exists for the ensure that all target terminology used by target data held or Board to be information is completed sports and that of reported between presented with in the application form. If applications made by application forms, inaccurate target there are specific NGB s. panel meetings, offer information when reasons for changes in letters and PIS making decisions targets between the A new NGB (Partner Investment relating to various stages leading up application form is Sheet). These investments. to the decision making being developed which comparisons and approval by the can be tailored by the identified that board (i.e. recorded on sports to ensure there were some the PIS), these should be consistency of differences between clearly documented. terminology. the targets stated on Sport Wales staff to the various ensure that up to date Comments on AIMS documents in the information is promptly noted. following instances: filed on AIMS. Priority Rating L I S Responsibility of NGBS/Institute/ Mark Frost Implementation date April 2013 Golf Union of Wales The target number of clubs was omitted from the application form and the target for Elite/World was different on the PIS form as it was taken from a Data supplied on PIS forms and stored on AIMs should be cross checked to ensure all data is drawn from up to date sources

18 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments previous application form which was not up to date. Priority Rating L I S Responsibility of Implementation date Welsh Athletics The target figure for Active Coach Officials differed between documents. An out of date application form was used and the up to date application form cannot be found in hard copy or on AIMS

19 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.9 LAPAs For Neath Port Talbot Information could be Human and Gwynedd LAPAs submitted to Sport there were no Wales by a person signatures or endorsements relating to the delivery plans on documents filed on AIMS. without adequate authority to do so. Ensure that all delivery plans are either signed or Endorsement Forms are signed by appropriate individuals with the relevant authority. The signed forms should then be filed on AIMS. error-additional checks have been built into future investment processes. Priority Rating L I S Responsibility of Implementation date Area Managers Implemented

20 Review of National Governing Body Grants and Local Authority Partnership Agreements Ref. Findings Risk Recommendation Management comments 4.10 NGB The application form If information on All documentation, Agreed. Comments for Welsh Hockey on AIMS is not up to including updates, should about timelines to AIMS at the time of date informed be promptly filed on update documentation the audit did not AIMS. onto to AIMS. include targets. Further to the audit query on this matter, an updated form, which included targets, was put onto AIMS. (The Administrator confirmed that this form actually was prepared in January 2012 but not put onto AIMS at that time). decisions may not be possible. Priority Rating L I S Responsibility of NGBS/Institute/ Mark Frost Implementation date Immediately

21 Review of National Governing Body Grants and Local Authority Partnership Agreements APPENDIX 1 EXTENDED MANAGEMENT COMMENTS IN RESPONSE TO OBSERVATION POINT 4.1 NGBS Sport Wales is not totally reliant on the close relationship between its officers and grant recipient partners. Having said this, the nature of the relationship (attendance at Board meetings, close liaison with CEO s, engagement in visioning and long term strategy road show/seminars ) will mean that serious inaccuracies in the trends that NGB s suggest are very unlikely not to be challenged. A more significant safeguard is the self-regulatory nature of governing bodies. Below Board level, the machinations of NGBs often comprise operational type councils/ regional boards/ development committees be they national or regional in nature. If, in the instance that an NGB is claiming inaccurate data about its activity trends, those representative type members of the NGB infrastructure will challenge this robustly. Some governing bodies have coaching associations and / or local league committees who monitor closely actual trends in participation at age group levels. So there is a wealth of data within the NGB that serves to challenge inaccurate NBG claims. We also monitor wider interpretations of sports data through our large sample surveys and where trends vary between NGB trends and the sport specific data (young people and adult), this gives us a fair case to investigate reasons why. We also have a close liaison with clubs and Local Government sport development units. This gives us a reasonable sample of anecdotal evidence in regard to trends typically at club and community level. For example we have lots of evidence of gymnastic clubs growing both in terms of applications to Sport Wales and via intervention work that our local government partners are aware of

22 Likelihood Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements RISK ASSESSMENT CRITERIA APPENDIX 2 Risk classification of internal audit findings The following terms are used to describe the degrees of risk associated with the cells in the matrix: L: Low; M: Medium; H: High; E: Extreme Impact

23 Review of National Governing Body Grants and Local Authority Partnership Agreements MEASURE OF IMPACT Level Descriptor Description 1 Low Financial Loss up to 200. Slight impact on working arrangements, unlikely to damage reputation. 2 Medium Financial loss up to 1,000. Up to 1-day interruption of working arrangements unlikely to damage reputation. 3 High Financial loss up to 5,000. Up to 2-day interruption of working arrangements and short-term damage to reputation. 4 Extreme Major Financial loss > 15,000. Significant breach of policies. Major interruption to working arrangements in excess of 2 days, & long term damage to reputation. 5 Catastrophic Financial loss over > 50,000. Significant breach of policies. Long-term damage to reputation & working arrangements. MEASURE OF LIKELIHOOD Level Descriptor Description 1 Rare The event could occur in exceptional circumstances. E.g. Once a year 2 Unlikely The event could occur occasionally. E.g. once a month 3 Moderate The event could occur regularly. E.g. weekly 4 Likely The event will occur in most circumstances. E.g. daily 5 Certain The event is expected to occur in most circumstance. E.g. Whenever the activity is carried out

24 Likelihood Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements Each audit finding has also been given a risk score by assessing the impact of the risk and multiplying the score for likelihood of it occurring. This gives a minimum score of 1 and a maximum score of 25. A risk score has been shown for each finding in the text of this report. Impact