Agenda item

Payroll Update

(A report by Fiona Thompson, Service Manager (People), which provides an up-to-date briefing on the payroll position and the steps being taken to address any risk of an inaccurate payroll)

Minutes:

Consideration was given to a report which sought to provide the Audit Committee with an up to date briefing on the payroll position and the steps being taken to address any risk of an inaccurate payroll.

 

Members were advised that it was a disappointing report that there was no change in the current low assurance levels and there was some significant work still required to improve the payroll control environment.  It was reported that Internal Audit would support the implementation of control environment improvements.

 

The report set out some of the rationale for why work had been focused in a particular direction.  It was highlighted that one of the key considerations had been the number of high priority issues and risks pulling on the same resources.  So some pragmatic risk based decisions were made by the Corporate Management Board to focus on those areas of most.

 

In relation to the overall control environment, it was reported that there were still issues around people, processes and the system that needed to be addressed.  The focus of Corporate Management Board and the Assurance Board was the Agresso upgrade, as it was important that this was successful.  It was noted that the upgrade would involve a 'lift and shift' from the old version to the new version.  This upgrade would ensure that the essential updates would be in place for year-end payroll processing for 2017/18 and that budget changes would be in place (e.g. tax and NI uplifts) would be in place ready for the new financial year.

 

It was reported that the Head of Internal Audit opinion would once again be caveated this year around the payroll environment which was disappointing.  It was noted that progress had been slow and work was unlikely to be completed by the end of March 2018.

 

It was acknowledged that this was a disappointing picture to report to the Audit Committee, the Council was doing all it could to monitor progress and delivery.  However, this was difficult when there were some fundamental issues around resources and systems.  It was planned that once the upgrade had successfully occurred, the focus would be on moving forward with the other projects.

 

The Committee was provided with the opportunity to ask questions to the officers present in relation to the information contained within the report and some of the points raised during discussion included the following:

·         It was accepted that this report was about the control environment, and that it was an issue of capacity in relation to people and systems and there was some effective monitoring, but it was queried what the underlying reason for these issues was.  It was noted that there had been some very tight timescales, and it was queried how the council had allowed itself to get into such tight timescales.  It was noted that Serco did not have a reputation for being able to work to 'just in time' deadlines.

·         It was reported that a scrutiny panel had been established to look at the role of IT in taking the Council forward and the added value which could be brought by having up to date technology.

·         It was emphasised that the County Council, Serco and the supplier all had a part to play.  It was also noted that one of the issues raised by Capgemini (who provided independent delivery assurance) was that some of the processes could be quite convoluted as sign off on projects could take a long time, for example deciding what should be included in the upgrade.  However, there were a lot of interdependencies which made things quite protracted.

·         Within the process of the upgrade, it was noted that the Council was in a commercial dispute about who should pay for the upgrade.  A 50/50 split had been agreed pending the arbitration process.

·         It was queried why the discussions over payment had become a delaying factor.  Members were advised that this had occurred as Serco would not start the project until they were satisfied with the outcome.  It was acknowledged that one of the issues identified had been the way that commercial discussion had affected progress.  It was also noted that the same people had been involved in the implementing the upgrade as the day to day operations.

·         It was noted that recruitment plans had been requested by the assurance boards, but there was also difficulty in retaining staff when they were recruited.

·         It was noted that the existing IT infrastructure was not a major cause of these problems although it did impact on the effectiveness and efficiency of the system.

·         Members were advised that Phase 2 would be to look at improving the customer experience and the control environment, and it was noted that that latest upgrade would have features which would make the customer experience more modern.

·         It was commented that many of the issues seemed to be due to people, either not having the right people in post or not having the right number of people.  It was queried whether officers were confident that the upgrade would be successful.  Members were advised that officers were very confident that the upgrade would work, as it would not be adding much new functionality.  Two payroll parallel runs had been carried out successfully.  It was also noted that there was also a contingency plan to retro-fit the payroll system to enable it to run into the new year if necessary.  However, it was commented that it was unlikely that the contingency would be required.

·         It was important to ensure that people were held to account for their decisions.

·         It was queried whether, if it was felt that the upgrade would be successful and would iron out most of the problems which had been identified in the control environment, would an improvement be seen in a years' time.  Members were advised that this assurance could not be given, but it was thought that some improvements would be seen however it could not be determined at this stage how the assurance opinion would be changed, as past delivery did not provide that confidence.

·         The Councils' client for Payroll had received advice from Audit on the need to challenge Serco more robustly on progress when implementing improvements.

·         A rigorous action plan was expected at the March 2018 Committee meeting, and it was suggested that that would be the more appropriate time to challenge to seek confidence, or escalate to Corporate Management Board.  It was noted that the Committee did have the choice to escalate the issue at this time.

·         There was a suggestion that this issue should be escalated immediately, however, it was countered that as the delays were due to a contractual dispute the system upgrade should be allowed to be rolled out and then give a set time scale to see progress.  It was thought that Serco should be given to opportunity to implement the system upgrade before further action was escalated.

·         It was reported that the Council was not happy with the situation it was in.  It was noted that the authority was now halfway through the initial Serco contract and a decision would need to be taken on whether to go ahead with the extension.  If the extension did not go ahead, then there would be a need to start the procurement process in spring 2018.

·         It was noted that one of the things which was being looked at in more detail was whether Agresso was fit for purpose as an HR and payroll system.

·         The scheduled go live date for the upgrade was 19 January 2018.  Therefore, by the January meeting of the Committee, it would be known whether the upgrade had successfully gone live.

·         A definitive action plan should be in place in January of how improvements were to be put in place.  The Committee should be able to get a feel for how changes were being implemented by the meeting in March 2018.

 

RESOLVED

 

1.    That the Audit Committee noted the report with great concern and would continue to monitor the situation closely.

2.    That the Chairman would meet with the Leader and Chief Executive to highlight the concerns of the Audit Committee.

Supporting documents:

 

 
 
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