Agenda item

(To receive a verbal update from Fiona Thompson, Service Manager – People, on the latest developments with the Payroll Control Environment.  Councillor B Young, Executive Councillor for Community Safety and People Management will also be in attendance)

The Committee received an update from Fiona Thompson, Service Manager – People, on the latest developments with the payroll control environment.  It was reported that Serco were making progress which was evidenced by weekly and monthly progress updates.  The audit team were also in the process of finalising an audit.

It was acknowledged that progress had been slow and there was still work to do.  Members were advised that there was now a new payroll manager in place who was putting in place very solid processes.  There was an expectation that if Serco continued to progress in a positive direction then it was likely that the assurance opinion would move from low to limited.  It was noted that a more detailed report would be provided to the next meeting of the Committee.

The original go live date for the Agresso upgrade had slipped by one month which would have an impact on timescales for the other planned improvements.  It was reported that there been some down time to address system performance issues.  It was also noted that as a result of this, payroll staff had had to work weekends to ensure that the march payroll was delivered.

In relation to historic payroll issues, there had been some slippage of the timescales on this project.  Validation was expected to be completed by May/June 2018.  The Executive Director for Children's Services was overseeing the governance of the project.

The Committee was advised that in relation to the control environment, internal audit were providing an update audit and there were a number of controls now in place, and work was taking place on the time scales for the audit.  In terms of the internal improvement projects, these were mainly around issues such as starters, movers and leavers.  The new processes should be introduced early in the new financial year.

In summary, it was reported that the position had improved but at a slower rate than expected, but it was believed that if Serco continued to progress in a positive direction, then the payroll function should reach substantial assurance by the autumn.

Members were provided with the opportunity to ask questions to the officers present in relation to the update provided and some of the points raised during discussion included the following:

·         It was noted that 1 April would be the third anniversary of Serco taking over the contract from Mouchel, and the change from SAP to Agresso.  It was queried what the delaying factors had been, and now there were three years of history which should be able to be put to use.  However, it was noted that this had been three years of poor practice and low assurance, but a new manager had been in place since the middle of November 2017, and there were now 6 months of embedded control practices rather than just design.

·         In relation to the expectation of payroll reaching substantial assurance by the autumn, it was queried whether this was a challenging or realistic target.  It was believed that this was realistic, as additional resources had been brought in, particularly for work around the pension's administration.  However, issues could arise if there were other problems which had not been anticipated which could draw resources elsewhere.  There would be a need to maintain focus on resolving the payroll issues.

·         It was also noted that Fiona Thompson's team had increased its resources, and the Commercial Team was also involved in keeping this work going.

·         It was acknowledged that the slower progress than anticipated had been disappointing, but the new payroll manager was of a different calibre to those who had been in post previously. 

·         There had been some wider issues around capacity, but additional resources had now been put in place.  But, competition for these resources was being seen.

·         It was reported that there had been 47 fixes required for the Agresso payroll system, with some being more significant than others.  It was noted that there were still 30 outstanding issues to be resolved.  However, manual work arounds had been put in place for these.  The concern was if there was competition for resources, whether those work arounds would continue to be done.

·         The continued risk area was the retention of good resources and the ability to bring in others where required.

·         With regard to the payroll having low assurance for three years, it was queried whether there would have been differing grades of low assurance, with the possibility of gradual improvements being made, but assurance still being assessed as low.  It was confirmed that this was the case – the assurance levels were based on a defined criteria but at the beginning of the audit work the assurance was very low.

·         It was queried whether there were risks to other projects in relation to the diversion of resources.  However, it was noted that other IT projects were not necessarily competing with this one.

·         In relation to the manual interventions it was reported that this meant that individuals were manually performing tasks throughout the payroll process instead of them being carried out automatically by the system.  This brought in additional scope for error as well as being a very inefficient way of operating.

·         Despite the issues being experienced, it was believed that Agresso was the right system for the Council to be using, and following the upgrade, improvements had already been made.  This system was a lot more adaptable than the SAP system.  Many of the issues experienced by the system were due to processes and human error.

·         It was expected that the need for manual adjustments would continue into the new tax year.  But officers were confident that the risks were minimal and not material issues were anticipated for the year end close down.

·         It was confirmed that reports would be coming back to the Committee in June and September 2018 and the Committee hoped to see improvements in the assurance levels in the mean time.

RESOLVED

            That further reports be brought back to the meetings of the Committee in June and September 2018.