Chwaraeon Cymru Sport Wales

CHWARAEON CYMRU SPORT WALES INTERNAL AUDIT REPORT Review of National Governing Body Grants /Local Authority Partnership Agreements May/June 2012 REPORT STATUS: FINAL DISTRIBUTED TO: Director of Corporate Services: Chris James Central South Manager: Tom Overton Sport Wales Manager: Debbie Austin Sport1/2012/2013/Review of LAPAS & NGB/July 12/Review of LAPAS & NGB July 12 Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 CONTENTS Page(s) Executive Summary 1-2 1. Introduction 3 2. Objectives 4 3. Scope 5 4. Summary of findings 6 - 18 Appendices 1 Extended Management Comments in Response to Observation Point 4.1 2 Risk Assessment Criteria Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 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procedures that appear to be supplemental to the revised decision making procedures (ie certain procedures are now superceded).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 Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 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 Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 1 INTRODUCTION 1.1 An internal audit of the review of NGB’s and LAPAs was undertaken in May/June 2012 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 Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 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 Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 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 Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 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 Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 Priority Ref. Findings Risk Recommendation Management comments Rating Responsibility Implementation L I S of date 4.1 LAPAs The audit points Weaknesses as Sport Wales to consider Agreed 5 4 20 Corporate Review to be included in the LAPAs identified by the the recommendations Directors completed by 30th follow up audit in previous audit may made in the follow up September 2012. 2011 were revisited still exist and have audit as part of their and each point was not as yet, been fully planned strategy towards discussed with Sport addressed an outcomes approach. Wales Central South Manager. To date no action has been taken relating to these points but a board meeting was planned for 9th 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. - 7 - Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 Priority Ref. Findings Risk Recommendation Management Rating Responsibility Implementation comments L I S of date 4.2 NGB/LAPAs LAPAs At present, Sport Wales Inaccurate data may Consideration be given Sport Wales Senior 5 3 15 Sports April 2013 relies on the close be presented to and to the introduction of Officers work with LA Development relationship between its accepted by Sport sample checking of data partners to ensure Managers officers and grant recipient Wales which could provided by partners in targets, outputs and partners to obtain influence investment order to verify the outcome measures are confidence in the accuracy decisions. Inaccurate accuracy and reliability of both challenging and of information presented data may also result in data presented by accurate. Measures have regarding targets at both trends and partners. been put in place to the application stage and benchmarks being better evidence more importantly, in the difficult to interpret outcomes: presentation of data in over time. a) School Sport respect of outcomes during Survey launched in the review processes. In addition close 2011 will provide relationships may benchmark data impact the ability or every other year at desire of Officers to a national and area challenge fully the data level. presented by Partners. b) Output measures have been reduced to 7 key indicators on the PIS Sheet. NGBS See Extended Response in Appendix 1. - 8 - Sport Wales Review of National Governing Body Grants and Local Authority Partnership Agreements May/June 2012 Priority Ref. Findings Risk Recommendation Management Rating Responsibility of Implementation comments L I S date 4.3 NGB/LAPAs LAPAs Sport Wales has been Lack of clarity in Procedures to be Corporate support to 5 3 15 Sarah Powell/ December 2012 moving towards an relation to systems updated to reflect the update procedures Graham Williams outcomes basis for at operational level.

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