Subsidy audit – backdates and overpayments

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  • #21123
    Anonymous
    Guest

    Our subsidy claim is currently being audited and all was going well(ish) until yesterday. The auditor is looking at the backdate cell and wants to ensure that all backdates are due to good cause (no problem) but that if an overpayment has subsequently been identified that the backdate figure has been stripped out of the backdate cell and only appears on the claim as an overpayment.

    Do you think that this is the correct interpretation? In a few cases we have amounts in the backdate cell which also appear in overpayment cell!

    Any opinions would be gratefully received.

    #4381
    Simo
    Participant

    Good timing – i was on the point of putting the same thing on.

    Having looked at the Cerification instructions from the Audit Commission their interpretation is clearly correct from the instructions. Backdated overpayments should only be in the overpayment cells. I am carrying out the audit for my authority, Northgate site, and have reported the same thing.

    The system seems to be reporting correctly where the period has been paid in 05/06 but if was paid in a prev year showing as a negative value in cell 79.

    #4382
    seanosul
    Participant

    (Edited sharply) The backdate should not be stripped out of the cell as that expenditure has been made. The overpayment should be reflected in the gross expenditure total and the backdate total and appropriate reductions applied for the penalty cells. Backdate cells are informatoin cells.

    Also your auditor should be confirming the follwoing :-

    That a written request was made
    Approriate procedures to determine good cause were followed
    The amount is correct.

    Your auditors should not second guess whether an assessort was right or wrong in deciding that good cause applied.

    #4383
    Anonymous
    Guest

    Just been looking at the Income Related Benefits (Subsidy to Authorities) Order and I think the auditors are right to say the expenditure is not double-counted, but I think they have got it the wrong way round in practice. It’s ever so tortuous, but I think this is how it works:

    – Articles 13 and 14 set the basic rate of subsidy for normal and backdated expenditure – 100% and 50% respectively. That’s your starting allowance.

    – You then make deductions from that under Article 19. Overpayments are deducted, except where the overpaid benefit was backdated: there is no deduction for an ov erpayment of backdated benefit

    – Article 18 then adds back in various rates of subsidy for different kinds of overpayments, but only those that wer deducted under Article 19

    So I would say the correct approach is to leave it in the backdating cell and strip it out of overpayments. Suspect I might be ploughing a lonely furrow on this one though …

    #4384
    Anonymous
    Guest

    Ooops … it hasn’t been 50% for a little while has it?

    OK, then 100%. But I think the logic still applies: there is no Article 19 deduction and no Article 18 addition for backdating – it stays forever backdating. Which means you are quids in if you succeed in recovering it.

    I have also just noticed some further complexity in the Order … it seems that you do make deduction under Article 19(ea) & (f) for claimant error and fraudulent overpayments, and that these are therefore included in the Article 18 additions @40%. Gawd.

    #4385
    seanosul
    Participant

    [quote:16dc1a35fe=”Peter Barker”]Just been looking at the Income Related Benefits (Subsidy to Authorities) Order and I think the auditors are right to say the expenditure is not double-counted, but I think they have got it the wrong way round in practice. It’s ever so tortuous, but I think this is how it works:

    – Articles 13 and 14 set the basic rate of subsidy for normal and backdated expenditure – 100% and 50% respectively. That’s your starting allowance.

    – You then make deductions from that under Article 19. Overpayments are deducted, except where the overpaid benefit was backdated: there is no deduction for an ov erpayment of backdated benefit

    – Article 18 then adds back in various rates of subsidy for different kinds of overpayments, but only those that wer deducted under Article 19

    So I would say the correct approach is to leave it in the backdating cell and strip it out of overpayments. Suspect I might be ploughing a lonely furrow on this one though …[/quote:16dc1a35fe]

    Peter that was correct when backdated benefit counted as penalty expenditure as including backdated awards in overpayment cells and other penalty expenditure would cause a double penalty. Now backdated benefit is in effect treated as normal expenditure, the awards are included in gross expenditure and recorded later largely for information purposes.

    This therefore means backdated expenditure follows the rules for normal awards of benefit and approriate penalties apply in all subsidy “incentive” cells. This would include credit expenditure such as non hra penalty areas and old scheme vulnerable as well as overpaid awards of backdated benefit.

    #4386
    keith j
    Participant

    Quite simply the Backdating must be in the “Top level cell” before it can be deducted by the “overpayment cell” using the mechanics of the form.
    Then according to the Notes for completion….”It should be included in the relevant cell in each section of the form according to the type of payment made.” This would include all reduced rate cells.

    The mechanics of the form strips out reduced rates to leave 100% values, the rest is calculated individually according to it’s %age rate.

    #4387
    keith j
    Participant

    Quite simply the Backdating must be in the “Top level cell” before it can be deducted by the “overpayment cell” using the mechanics of the form.
    Then according to the Notes for completion….”It should be included in the relevant cell in each section of the form according to the type of payment made.” This would include all reduced rate cells.

    The mechanics of the form strips out reduced rates to leave 100% values, the rest is calculated individually according to it’s %age rate.

    #4388
    keith j
    Participant

    Subsidy , so good I sent it twice!!….sorry

    #4389
    Simo
    Participant

    I think we are straying off the purpose of the post.

    Put simply
    1. a claim has not been paid in 05/06 so therefore there is no expenditure in the top level cell.

    2. a backdate was granted in 04/05 and paid in that year

    3. in 05/06 an overpayment was created relating to the backdated period.

    4. this o/p is in the o/p cells BUT is also shown in the backdating cells as a negative value.

    The question being asked is is 4. correct? or should it just be included in the o/p cells which is what the Audit Commissions CI says.

    #4390
    keith j
    Participant

    Logic says “4”, because the subsidy has been claimed in previous years and needs adjusting. This also gives accuracy to the statistical data recorded in the Backdating cells over the years.
    However, there’s always a “however”, logic flies out of the window when you read the notes which state “enter the total amount of expenditure on backdated awards MADE DURING THE YEAR…..”
    By the letter of the “law” the Auditor is right, but I can see a DWP query coming.

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