Appendix N:
Control processes
Background
The benefits section's control team is responsible for the issue of all RA cheques, the recovery of overpayments, the reconciliation of payments and initial action on lost or stolen cheques. We observed the control section on 1 October 1998. We detail in this appendix the findings from our observations and our interviews with some of the control section staff.
Findings
The control section is in the open-plan office next to the post section and the investigation unit. Currently 4.5 staff work in the control section. Although the office environment is open plan, measures have been taken to restrict access to the control section by placing it at the far end of the office, where it is walled and can only be approached from one direction.
The control section safe is not in the control section, but at the other end of the office and as such is accessible to all staff. This would not be a major concern if the procedures for controlling access to the safe keys were secure.
The safe keys are kept in a key cupboard and the key to the key cupboard is kept in the investigation and control manager’s desk. This desk is not locked, and when the officer is not at her desk all members of staff, including the control section staff, have free access to get the key to the key cupboard. Once the key cupboard is opened the safe key is freely available to all. During our observations we noted that the safe key was passed to a member of staff to give that person access to the safe. We consider this to be bad practice even though, at the time of our observations, the safe was empty. Another time it might not be, and there is a risk of valuables going missing.
At no time was the movement of the key to the key cupboard, or the key to the safe, recorded. Similarly, neither the signatures nor names of the staff in possession of the key were recorded. We see this as a weakness in security that makes internal fraud and abuse easier to perpetrate.
The cheque run on 1 October 1998 was a 4-weekly run, resulting in large number of cheques to be checked and enveloped. The support section helps the control section when there are large cheque runs. On 1 October, 2 support section staff came to the control section to help envelope the landlord cheques and schedules. The support section staff have free access to and from the control section during the enveloping process. The cheques allocated to each member of staff were not recorded, so there is no record of which member of staff (out of a total of 5 on the day) placed which cheques and schedules in envelopes. This is a serious lapse in security.
Thanet told us that normal practice is for there always to be at least 2 staff on the section and one always remains as an observer if the other is called away. We commend this good practice as a means of preventing abuse of the system.
It is noted on the blue withdrawal sheet that the cheques have been withdrawn and passed to the counter for collection by the payee. The withdrawn cheques are kept with the sheet and placed in a folder, which is kept on the control section. The withdrawal sheet and cheques are stored in the safe overnight. The safe keys are kept in the key cupboard. The key for the key cupboard is not signed for and is kept in a desk which, certainly in the absence of the investigation and control manager, is easily accessible to all.
Cheques that are ‘dotted’ for withdrawal, that is, collection by the payee, are taken to the Margate enquiries counter to await collection by the landlords once they have paid off any money that is being recovered from them. The security of these cheques once they leave the benefits section is weak, because they are not signed for either by the control member of staff who takes them across or by the enquiry counter staff on receipt.
Copies of the landlord cheque schedules are kept in a cupboard next to the safe for 3 months as they need to be accessible to staff.
Processes and procedures
Throughout its programme of inspections BFI has identified a series of good practices for the issuing of cheques and the recovery of overpayments, which in Thanet are carried out by the control section. In other LAs it is likely that these functions will be carried out by different sections or teams.
We list the good practices in the following table and indicate where we found Thanet to be using these or similar good practices. We have also indicated, for the issuing of cheques, where Thanet has recorded the process in its Procedure manual. We consider that all processes should be detailed in a procedure manual and we identified a number of processes in the control function which were not recorded.
Issuing cheques
| Fig. N.1: Procedures for issuing cheques | ||
Good practice |
Thanet operational practice |
Thanet benefits section Procedure manual |
| Payments systems should be assessed for risks LA-wide, with the IA section playing an integral role in planning and initiating the appropriate solutions. | ||
| Cheques and giros should preferably be stored in a safe or something similar. | 3 |
|
| Cheques should be transported securely. | 3 |
|
| The issue of cheques should be controlled by a source other than the benefits section. | 3 |
|
| All cheques and giros should be sequentially numbered so that reconciliation can be carried out quickly and easily. | 3 |
3 |
| Spoilt cheques and giros should be cancelled in an appropriate manner and recorded for reconciliation purposes. | 3 |
3 |
| After the printing process, cheques and giros should remain in a secure environment and be dealt with by officers other than benefits assessment or processing officers. | 3 |
3 |
| Cheques that are identified as not being appropriate for payment (for example, if claimants have notified the LA that they have moved out of a property after the cheque was printed, but before dispatch), should be removed from the process by officers other than benefits assessment or processing officers and controlled for reconciliation purposes. | 3 |
3 |
| Cheques which are identified for cancellation should be actioned immediately. | 3 |
3 |
| Cheques which may need redirecting should be dealt with as appropriate. | 3 |
3 |
| At no time should such cheques be returned to the benefits assessment or processing officers (unless cancelled cheques need to be returned to them for reconciliation or other pre-arranged and controlled administrative purposes). | 3 |
3 |
| Cheques secured for dispatch should remain in a secure environment until they are collected by a mail service. | 3 |
3 |
| The mail service will require access to a secure area and negotiations should take place to arrange collection times. | 3 |
3 |
| Bank reconciliation of cheques to bank account needs to be carried out promptly and quite frequently. This is sometimes outside the control of the benefits section, but it is essential that the benefits section is involved in the process at some stage. | 3 |
3 |
| Payments which are identified as not presented for encashment after a specified period should be referred to an appropriate investigative source immediately. | 3 |
3 |
| The specified period should be set according to the LA’s needs, although the longer the period, the greater the risk of being unable to tackle a potential fraud effectively. | 3 |
3 |
| Bank Automated Clearing System (BACS) or similar payments should be reconciled on a regular basis and any rejections should be immediately investigated and rectified as appropriate. | BACS payments are not made | BACS payments are not made |
Source: BFI inspection
