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Housing Benefit Subsidy Services

These services are available to Local (Housing) Authorities in England and Wales. These are usually district or borough councils or unitary authorities. We also provide modelling package for the DWP Subsidy Claim so that authorities can predict for themselves the impact of adjustments to their claim and a series audit commentaries on particular issues.

The annual certification of an authority's Housing Benefit Subsidy claim is frequently a stressful time for both the managers and the staff involved. The stresses concern the need to respond promptly to your external auditor's queries and to the (almost inevitable) qualification letter. The impact of a qualification letter can have a profound effect on an authority's finances depending on the Secretary of State for Work and Pension's decisions.

The ACBA (UK) LTD services are designed to calm the stresses and to mitigate any apparent seriousness of your external auditor's opinion. The staff has many years of experience of working under contract to the Audit Commission on housing subsidy certification and of working independently. The services comprise several component parts

For the most part these components are independent of each other. It is for the authority to select which of the services is appropriate to its needs. Each of the components is considered in some greater detail below.

Investigations and Analyses

It is common during the course of a year to identify problems that need further investigation. Mostly these are simple and will be undertaken by members of the authority staff. Less frequently these issues require extended investigation and a technical understanding not available internally. Examples of the latter are

Such investigations will often need to be shown or referred to your external auditor, since they can have a direct impact on your subsidy claim. Accordingly the record of the investigation, and the evidence on which certain critical decisions were made, need to be presented and retained in such a way that permits easy and effective review by your external auditor. The ACBA (UK) LTD electronic working papers software meets these requirements very effectively.

Documenting the Claim Preparation Process

There is frequently an extended gap of several months between claim preparation and the start of the certification process. Plenty of time in which to forget the specific reports that were used to prepare the figures on the claim form and to lose the audit trails that support those reports.

It is an essential part of the external auditor's certification process to prove the value of each cell against a valid systems report and to ensure that there is a supporting audit trail for it. The documentation of the precise sources of each cell value (including, where appropriate, any adjustments you have made) and their supporting audit trails can save much time and stifle a wide range of external auditor queries at birth.

Once again, the ACBA (UK) LTD electronic working papers software meets these documentation requirements very effectively. We have also identified cases where an audit trail, as required by the external auditor, cannot be produced directly from the benefits control system. In such cases we have always been able to generate an audit trail outside the control system but reconciled to it using our ACBA Tools package.

Responding to External Auditor Queries

This can be a time consuming and highly disruptive part of the certification process. But it is vital to the interests of both the authority and the external auditor that sufficient resources be devoted to this aspect.

It is essential for the authority to be involved actively in determining whether an auditor finding should be treated as an "error". Failure to come to a consensus leads to opposing priorities in assessing the level of extra testing that is needed. Not all external auditors are expert in the field that they are auditing. Audit assumptions about the existence, nature and significance of "errors" need to be confirmed by the authority at the earliest possible stage; preferably before any decisions on extended testing are taken.

The problem the authority faces is that the person delegated to respond to the auditor must have a detailed understanding of the administrative processes/procedures, the operation of the software control package and the legislative framework of the benefits system. Such staff are rare and always in demand.

We have reviewed the legislative framework in detail and have a broad knowledge of the processes and procedures adopted by authorities. While the staff at ACBA (UK) LTD are not conversant with every housing benefits software package, we have examined several in sufficient detail to appreciate the variety of approaches that packages adopt in calculating individual claims and preparing the subsidy claim.

Undertaking Extended Testing

It must be the objective of every local authority to avoid extended testing for errors because of the costs and disruption associated with it. But sometimes it is essential and unavoidable. At this point the detailed understanding of the symptoms or underlying cause of the error becomes vital to determining the nature of the test and the methodology employed within the investigation.

In general, the testing approach should be specific to the nature of the error. More than one type of test may be required within a single cell if distinctive errors are identified. It should not repeat the broader cell testing adopted by the external auditor during the discovery investigation.

We have extensive expertise and experience in generating testing programmes, and carrying them out on behalf of clients. Once again, the ACBA (UK) LTD electronic working papers software meets the testing and recording requirements very effectively. The retention of evidence within an ACBA-EWP project usually means that the external auditor has sufficient information on which to review the work and verify findings, with out requiring an on site visit.

Consulting with the Benefits Software Supplier

When identifying a problem or error an underlying question needs to be answered. Is it a processor entry failure or not? Where the answer is "not" further investigation is needed.

Most benefits packages employ a series of "lookup tables" to maintain the essential values and constants needed to support the legislative framework. These are frequently up dated and provided by the software supplier to their clients. The client administration teams are required to validate the detail of these lookup tables and to incorporate them within the package. There are a variety of opportunities for error at the various stages. Pinpointing exactly where an error has been generated often requires close consultation with both the local systems administration team and the software supplier.

A rarer but more difficult circumstance occurs when the benefits software program itself is working incorrectly. Here ACBA's experience at mimicking programs built on other platforms and building its own operational systems can be used to demonstrate where and why errors occur.

Systems Interface Reconciliation Processes

The UK central government subsidy for for Housing and Council Tax Benefits is cash based. That is, subsidy is only payable on benefits that have been received by the beneficiary. To prove this case, authorities are required to reconcile the values that their Benefits control system says have been issued with

This is an important process because the Secretary of State will only accept, as bona fide payment, the system that has the lower amount. Reconciling differences can have a significant impact on the subsidy value that may be claimed.

The reconciliation processes must be formally documented and submitted to your external auditor for review. This process is simplified greatly if carried out on a regular basis throughout the year. ACBA (UK) LTD has wide experience of building and documenting systems interface reconciliation processes.

Responding to the Qualification Letter

Normally a response to a qualification letter is both a plea of mitigation and a promise to do better next year. Your assertions need to be seen to be both factually based and realistic. Since authorities are frequently in defensive mode at this juncture, an independent view is helpful in getting the balance right.

A more difficult case is where an authority does not agree with the conclusions drawn by its external auditor. There is only one qualification letter; that written and submitted by your external auditor. Even though your response normally accompanies the qualification letter to the Secretary of State for Work and Pensions, it does not form part of the qualification and is not essential to it. Despite this, a carefully prepared rebuttal of your external auditor's conclusions can be helpful to the interests of the authority. Unless the authority presents its own views robustly these will not be taken into account by the Secretary of State.

Experience has shown that external auditors are unwilling to acknowledge differences of opinion within their qualification letters or even the evidence on which those differences are derived. Preparing a response to a qualification letter in these circumstances is much more like preparing a minority audit report.  The response must be specific, objective and factual. The staff at ACBA (UK) LTD has over a quarter of a century's experience of writing audit reports and/or letters.

Monitoring the Impact of Adjustments on the Subsidy Claim

The arithmetic structure of the subsidy claim is complicated, with a number of internal inter-depencencies that are not easy to follow with out help. For example were you aware that prior to reaching the threshold points for LA Error subsidy, the overall subsidy award actually increases the more LA Error you declare - see the graph below.

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You can predict exactly how specific adjustments and changes will affect your overall award by building one or more models of the subsidy claim and applying the proposed changes to your original claim. The ACBA claim modelling package mimics the DWP Electronic claim precisely and in such a way that it exposes exactly how and where the changes have an impact. The package is structured to advise you when the total expenditure cells for Rent Rebates, Rent Allowances and Council Tax Benefit have been unbalanced by the changes entered.

ACBA Electronic Working Papers

Three of the components refer to the practical value of using our Electronic Working Papers software - the link takes you to the web page that describes it in more detail. You can, however, download the ACBA-EWP package for a trial period and evaluate it for yourself.