Guidance

S12/2018 Assurance of Housing Benefit subsidy following the end of Public Sector Audit Appointments transitional arrangements (England only)

Updated 5 November 2018

Applies to England, Scotland and Wales

Who should read this

All Housing Benefit staff

Action

For information

Guidance Manual

The information in this circular does not affect the content of the HB Guidance Manual.

Queries

See our Housing Benefit subsidy circular page if you want extra copies of this circular and copies of previous circulars.

For general or technical content of this circular, contact
Tel: 01253 689184 (Rob Prentice) or 01253 688956 (Graeme Long)
Email: hb.assurancequeries@dwp.gsi.gov.uk

For distribution of this circular, contact
housing.correspondenceandpqs@dwp.gsi.gov.uk

Introduction

1. In March 2018, the Department for Work and Pensions (DWP) published the first Housing Benefit (Subsidy) Assurance Process (HBAP) Modules 1 and 6, forming part of the arrangements for assurance of Housing Benefit (HB) Subsidy Grant claims in England commencing with the subsidy period 1 April 2018 to 31 March 2019. The publication was accompanied by circular HB S7/2018, setting out the department’s requirements to maintain assurance of the final grant claim form and outlining the detailed tasks and working papers that underpin the arrangements including the procurement of Reporting Accountants.

2. DWP will be responsible for the HB assurance framework instructions and the control of grant payments based on the assurance reports supplied under the new arrangements.

3. The current transitional arrangements managed by Public Sector Audit Appointments (PSAA) will expire at the end of November 2018. From this date local authorities (LAs) will be required to appoint their own external reporting accountant for the assurance of their 2018-19 subsidy claims including any agreed ‘further work’ required to finalise the 2017-18 certification process.

4. Requests for further work following the end of the PSAA transitional arrangements will take the form of a separate tri-partite engagement between an LA, DWP and a Reporting Accountant. Further detail on the terms of any further work engagement are contained in HBAP Module X published on www.gov.uk.

5. This circular confirms the standard arrangements under which requests for further work may be agreed in cases where these are requested by LAs.

Further work under HBAP

6. Work carried out under Module X is only at an LA’s request and does not replace the obligations to carry out testing under HBAP. All parties still need to provide clarification on matters contained in HBAP Reports where the department considers there is insufficient detail on which to base a decision, or where the department considers that HBAP testing has not been completed in accordance with the requirements set out in Modules 1 and 6.

7. DWP has developed Module X to provide a formal framework for further work requests and subsequent testing. It replaces the arrangements previously relied upon under the HB COUNT model currently in use by PSAA.

8. HBAP Module X ‘Further work arrangements’ provides a comprehensive guide to providing assurance of further work carried out at an LA’s request before the DWP can consider including the results in settlement of HB Subsidy claims.

9. The Module contains standard terms of engagement for the formation of a tri-partite agreement, a model letter from DWP to an LA confirming agreement to further work and indicates a standard level of re-performance testing required by DWP in order to provide assurance that the results of the further work can be relied upon when considering the settlement of subsidy claims.

10. The HBAP procedures relating to further work are contained within HBAP Module X published on www.gov.uk.

Procurement

11. Once DWP has agreed to a further work request, LAs will need to procure the services of a Reporting Accountant to undertake the re-performance testing set out by DWP.

12. The Reporting Accountant will carry out the specified levels of testing and compile a report based on an ‘agreed upon procedure’ (AUP report).

Assurance procedure

13. The department will be responsible for supplying the instructions and guidance to complete the further work testing process as set out in Module X. Final adjudication of disputes based on interpretation of the instructions remains the responsibility of the DWP.

Testing

14. The testing process will be defined by the LA and Reporting Accountant to ensure that the Reporting Accountant can carry out re-performance testing in line with the timescales and requirements set out in Module X.

Reporting arrangements

15. Once all testing is complete, the accountant will produce a report stating the facts of any exceptions identified and any errors found during the LA’s further work.

16. The report will be produced in line with the timescales and in the format specified in Module X.

Annex A

Questions and answers

Q. Is further work mandatory?

A. No. Further work is carried out at an LA’s request. Historically the number of requests received by DWP have been small.

Q. Why is further work not covered in HBAP Modules 1 and 6?

A. The numbers of further work requests are expected to be small and are not part of DWP’s requirements. Furthermore, by their nature, they are unique to a particular LA’s subsidy claim in a particular year. Therefore, each request will be considered on its merits and a decision taken individually. Module X is designed to put in place a framework for further work engagements and give an indication of the terms and conditions under which engagements should be carried out and the level of re-performance testing required to allow LAs to make informed judgements when considering a further work request.

Q. Who carries out the testing when further work is agreed?

A. The expectation is that the LA will carry out the testing. It should be recorded in a format agreed with the Reporting Accountant to allow them to check a sample of the work done.

Q. Why does a Reporting Accountant need to carry out re-performance testing?

A. This is to provide DWP with assurance that the results of further work can be relied upon when considering the impact on subsidy claims.