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CYNGORrfltYI{YS ![ONISLEOFAI{GLESEYcouNTrcouNcrr

InvestigationINTERNALUDIT EPORT

ALLEGATIONSF RREGULARITIESELATTNGOA HOUSTNGGRANTTOWNMPROVEMENTRANTMarch 009

FINAL

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Anglesey ountyGouncilMarch 009 1454r1108

CONTENTSsEc?t0NlntroductionFindingsExecutiveummaryConclusion

FAGE1,t

4T

AS$IGNMENTONTROL:Drafteportssued:Responseseceived:Finalreportssued:

11February20092 March0092 March009

Client ponsor: N/ADistribution: Section S1Offieer:Corporateirector- Finance

Printed: 8Manh,2009 File:BlankAssuraneFrenerr:r/t.IntedmReDDraft

J.FidoeHeadfAudi0

tTleoR5ts$rvsMoNzuoFAltdlrsEYcolJrflscdt!fc[,

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Anglesey ounty ouncilMarch 009 r454.08t091. INTRODUCTION1'1 In 2005 napplicantppliedorgnant onieso mprcveisbusinessremise$,ndalso oconverttheupstairsectionnto flatsorfutureetting. eappliedortheollowingligibleo*si

TownmprovementrantExternalWorks)WAG rant) - [gg,22gCommercialmprovementrantYMCC rant Planning) t19,000LandlordsousingnantYMCCrant Housing) -[67,0ggThe olloring rants ere greediTtc - 847,37880% fcost);CIG - Nil schemead inishedue o ack favailableundsLHG -e37,500In inewith he equirementf hese rantsheapplicantas equiredoraise pprox4gKTlGlAKI LHG 30K) yothermeans r romhisown esource$.heproiect assanctionedn November2006withRGRPartnenhips he nitial gentsndheworks wardedo W.R.Peterrstd followingtheusualtenderingroceduresndertakenyRGR artnership).Theapplicantecidedo changegentso BestValueU.K.Ltdnd heyadvisedheapplicanthattheywould ppoint contractorocanyout heworksnaccodanewiin neprevious"dchedulefWorkspecifications.Wewerenfonnedy BVUKhatnew endemad'beenbtainedor heTIGworks nd heir etterdated 0October 006 tateshat5 tenders adbeenattained ifr theworks wardedoffwho weunderstandhave gred to carry ut heseworks t theoriginal rice f fi| t isnotdearwhyfwasapproachedtoundertaketheTlGwofuatiheorigina|pricedespitehe ender rCIcessr rvhyheres noevidencefcompetitiveenderor heLHG.herearenocopiesfhe tendermumentseld n he ilesmaintainedyPlanningndHousingepartmentsduepresumablyecause VUKdealtwith trese rocedures.e understandhit in oder toundertakeheworkswithinhegrantigures,hat henewagent adomittedeveraltemsromheoriginalpecifications.Conespondencen file ndicateshat he contract orkswerenotgoingo plan esultingn thewith he servicesf bothheagentBest alueuK ttd) and hebuilderon he4 october007. he uilder as ubsequenflyeinstatednzshoctober007a consequencethasbeen ifficulto obtainhe elativeaper orknorderocalcrlatehe inaloverallojectactountigute, lthough VUK idprovideontractariationsndan unsignedinalaccountor heLocal ousingrant.TheapplicantontactedheAuditSectiontatinghathehada longistofcomplaintsegardinghewayhegrant cteme adbeen dministered.ewasparticularlyoncemedegardinghequalilyfthenorkmanshipndallegedhat he Council'snspectorsadsanetioneOunstanOardorkasacceptable,hus uthorisinghepaymentfgrantsmoniesorboth ownmprovementrant nd heLocalHousing rant.Although eunderstandhat t is theresponsibilityf theappointedgentoundertakeualitynspectionf wotrs. t wasexplainedt theoutsethat he AuditTeamwls notqualifiedo commentn hestandardsf fre actualwork arriedut,butmerely n heallegationsf

wffi*

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AngteseycoungCouncil {454.0g109March .009financialinegularign respectfhe contmct.Furtherllegationseremade y heapplicantmplyinghathe stage ayments ade y bothheCouncilndWAG ould ave een uplicated,ithunds aido athird artywhowere oteligibleor-eceiveuch ayments.onespondenceeldon ile ndicateshatSris onhact asbeen subjeetfformalomplainhoboth hePlanningndHousingection's'Corporateomplaintfficerc'.Thematter as efenedn March 008o heOmbudsmany freapplicant,hodeclinedo nterveneuntil te case adbeenully nvestigatedy heAuthorig.Scope f the nvestigationThe nvestigationas imitedo the allegationsoncemingnegularitiesn invoicingndpayments,Thenvestigationid notcover uch ssues s te quality f workmanshipr fre decisions o therecipientfany uture rants oniesaid y heCouncil.

2. FINDINGSPayments ade yWAG ndYffiCCInorder o asertainwhich aymentsadbeen aidby heWAGn respectf theTIGgrantwecsntactedhemand heyconfirmedhat hebllowing laims ubmittedy thegnantsnspectoradbeen aid irecto te applicantsperthe rantonditionsi1.27M14728,4862.04/09t0714,8923. 18/0?08 e4,000(Total -e47,378)Weestablishedhat heHousing rant ectionad lso aid irecto hebuilderaymentsn respeetof heLocal ousingrant fi1. AW07t}l810,299.922. 06n?,07 e9,450.07(Total - 18,749.99)lnorderoclarify hichnvoicesadbeen aid,woof heauditorsisitedhebuilder,Ion he 14 anuary009 nd eceivedhe ollowingonftrmationfpaymentseceivedoGG:-TablePaymentDate Inv.No. Amount SourceNo.1 01.04.07 070401 e2$75.00No,2 05.05.07 070504 t17625.00No.3 42.47.47 070703 810299.90No.4 02.07.07 070701 910299.92 PerYMOCNo.5 26.09.07 070939 t8450.07 PeTYMCCTOTAL t?6049.Ss

A letter ated 5September008ssuedyapplicanfsccountanttateshat he ollowingaynentsweremadeo hecontractoryhisclient.glrwRqIHYSMC'NI$ICOFAl{r.Sf,Ydilla6{rnI,

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AngleseyountyCouncilMarch 009 1454.08t09

It wasnoted udnghe nvestigationhatan nvoiceor817625ubmittedy heagentorpaymentwasonly art aid y heCouncilo heamountf 10299.92.hebalancef he nvoiceotal avingbeen aidby heapplicantccordingo a letterromBVUK ated 2{7-07whichweunderstandsnormalracticeorsucfi ayments,EnoneousnvoicesIt seemshat3 furthernvoieswere ssued y heContnactor,ut here s no record fpaymentnevidenceither y heWAG r heCouncil'srantsection.hese reallegedy hegrant pplicantto be enoneousnvoicesssued y theBuilderor thesameworks s above. hedehilsof theinvoicesnquestionrcas ollowsiTable

Table16April2007 t29375.0009Mav 007 tl7625.0005Julv2007 r10299.00TotalPayments t57299.00

Date lnv.No. Amount243n7 070326 129375.00nnn7 070327 917625.0007!6t07 070612 e17625.00When uestionedboutheseaternvoices,hecontractorndhissecrehry tatedratthey eemedlikeduplicates.heye;plainedhatduringhepedod henhesenvoicesere aisedheyemployeda clerkwhowas esponsibleor raisinghe nltialnvoices.n receivingaymentor he nvoicesshownn table1 sheraisedhreenew nvoice umbersur reasonsnknown.hebuilder ndseoetary idnotknowwhyshedid hisand heno onger orksur hebuilder.Audit'snvestigationonftnnedhat heamountshownn able1onlyhave een aid.A urtrer heckof heCouncil'sreditotsystemstablishedhatonlywoHousingrant aymentsnrelationoheworksat Holyhead adbeenmade.Wealsoconfinnedom lhe Gouneil'seeordshat nvoicenumbers70326, 0327 nd070701 ere otpaid y re Council. ealso ookedt heCouncil'spaymentecordselatingo hebuilder, VUK ndhegnantpplicantut ound oamountsverandabovehe wopreviouslyentionedocalHousingrant aymentsave eenmade.(However.nyVAT mplica$qnshatariseom the ssue f hese pparentlvnoneousnygicesillhaveo beaddressedy heBuilder).During visit o the ormer gentBWK wewere nfonnedy the agenthatas regardso theeroneousnvoices,edidnot eeprack f nvolcesssuch.n elationo he 'ltAGnantesentheoriginalso heapplicantith opieso heAuthori$'slanningectionor heattentionf heGrantsManagern oder thathecould repareis reporto WAG.Theoriginalnvoiceselatingo theLandlordsousing rantweresentdirecto fte Authoritt's ousing ection.udithasverifiedhatinvoiceumbers70612nd070939, hich reon hebuilder'seadedaper ndnotcopies,reheld n heHousingrantile.Verificationf tlforksnvolcedWecheckedheCouncil'siles or hegrants eldby heHousingndPlanningepartmentsor5crr60[$trYIITSMON$torr$c$sEYcoFcro|lK!,

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AngleseyountyCouncilMarch 009 1454.08'09supportingocumentsncludingetails f workclaimedoron nvoicas. opies f nterimplogresspaymentertificatesssued y heagentBVUKIweren ilewithnelatednspectionheets.Wewere nformedy bott departmentshat t wasnormal ractice n inspectionur suchgmntinvoicesat authorisationorpayrnents based n a visual ssessmentf theprogressf worksratherhana detailed reakdownfworkdown r,omhebuilder r agenl.Weundentandhat t isusualura more etailednspectiono becanied utat he inalaccounttagewhich asnotbeenreachedor heLHG t he imeof he nvestigationFebruary009).Wealsocontactedte builder ndvisitedheagento obtainelevantetaitedupprting ocumentsrefeningo the wod< aniedout relatingo eachpaymentWe were nformed y both hatsuchdetailedecordsfworkwereotmade eforenvoicingorstage aynents.FinalAccountlgurewe hen ttemptedoverify hathe inalaccountigureor hecontnct houlde.Anotherisitwasundertakeny wooftheauditors.on9January009o the qrmer gent, amelyBestValueUKLtd, o endeavourogatherurthernformationtrichmight e of benefiinclarifyingthesituation. ewerenformedhatdue othe act hat heagent'services eredispensedithbytheapplicant hilsthe wo*s were n progrcss,heycouldnotproducen accuratevenallnojectfinal ccountigureor hecontractTlG& LHG).hey id,however,stimatefre igurassbllowsiTownmprovementrantelated ork t54213plus AT)Landlordsousingrantelatedork t53149plus AT)-TotalCost -t107362plus AT) 126150.35.. Althoughhe Housingtlecontains finalactountiguretomBVUKor heLHGofE5S02lwhichfigurewehave sedn hecalculationselow.Recordshowtat a sumof t76049hasbeenpaid o date,eaving balanceigure f 952308outstandingdueupon ompletionf all heworks.With grant idedigure f 18750obe urtherpaid,hiswouldeave sum f 33558 wing y heapplicant.TheHousingepartmentasalsoprovidedn estimatedinalaccountigureestimatedor heTIGandbased n BVUKinalaccountigureor heLHG)whichnmrponatese relevantmitsladdsnconnectionithheworks. his iguresh elg7z7-(Tlc10195 ndLHG9532) fterhepaymentftheoutstandingocal ousing nntf18750.heseigures enow ndenhndohave een erballyagreedy hebuilder.Thebuilder dvisedhat heres onlyabout ne otwodayswork tillouFtandingnordero completethis ontract,hich ould robablyostn he regionf 1k. He urthernformedheauditorshatheestimatedheapplicant wedhim n theregion f t30ldt35k excludingheoutstandingRGof18.7k)orworkwhidr ehasnot et nvoiced.

clrEoisYNCSMOtiIs[.sorArGtsETcolNT?c{ll{cf.

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Anglesey oungGouncilMareh 0119 r454.08t093. EXECUTIVEUMMARY

Investigationsave hownhatonlyive nvoicesave een aido date. wo nrelationo heLHGgrantby heCouncil nd hreeby heWAG, heresnoevidencerat thepaymentserenotbeenpmperlyrocessedy heCouncil'slanningndHousingepartment.lnvestigationsevealhatwhist&erearesofite oncmscgardingrewayenoneousnvoicesavebeen aised n hree ccasions,heres noevidene omnfinnrat paymentsave een ffectedyduplicationr hat ny negularransactionsave een ndertaken.It wasobservednsitevisits o thecontnacto/sfficehathisbook eepingccords eren anuntidystateand hisand nexpedenedtafi couldhave esultedn invoicingmrs. Furthermqre,hedispensingf heservicesf BestValueUKLtdas heagent asaddedo re problemsfobtainingpaperworkor heTIG hatpruvidesnappropriateuditrailofwod