Technical Guidance Note TGN/BEL/20
Auditor certification of 2019/20 Bellwin Scheme of Emergency Financial Assistance to Local Authorities 
Prepared for appointed auditors in the local government sector
17 April 2020

Who we are
The Auditor General, the Accounts Commission and Audit Scotland work together to deliver public audit in Scotland:
•	The Auditor General is an independent crown appointment, made on the recommendation of the Scottish Parliament, to audit the Scottish Government, NHS and other bodies and report to Parliament on their financial health and performance.
•	The Accounts Commission is an independent public body appointed by Scottish ministers to hold local government to account. The Controller of Audit is an independent post established by statute, with powers to report directly to the Commission on the audit of local government.
•	Audit Scotland is governed by a board, consisting of the Auditor General, the chair of the Accounts Commission, a non-executive board chair, and two non-executive members appointed by the Scottish Commission for Public Audit, a commission of the Scottish Parliament.

About us 
Our vision is to be a world-class audit organisation that improves the use of public money.
Through our work for the Auditor General and the Accounts Commission, we provide independent assurance to the people of Scotland that public money is spent properly and provides value. We aim to achieve this by:
•	carrying out relevant and timely audits of the way the public sector manages and spends money
•	reporting our findings and conclusions in public
•	identifying risks, making clear and relevant recommendations.

Claim overview

Details of scheme	
Description of scheme	
A scheme to provide special financial assistance to councils who would otherwise incur an undue financial burden as a result of providing relief and carrying out immediate work resulting from large-scale emergencies.	
Claim reference	Deadline to auditors	Auditor submission deadline	
N/A
	Advised in activation letter (normally within four months of beginning of emergency incident)	Advised in activation letter (normally within eight months of beginning of emergency incident)	
Risk areas	
1	Eligible expenditure is not included in the claim.
2	Ineligible expenditure is included in the claim.
3	Insurance excesses are claimed above the specified limit.	
Address for certified claim	
Craig Inglis, The Scottish Government, Local Government and Analytical Services Division 3-G North Victoria Quay, Edinburgh, EH6 6QQ	
Technical Guidance Note publication date and relevant year	Professional Support contact point and email address for enquiries	
17 April 2020 for 2019/20 claims	Anne Cairns
Email:TechnicalQueries@audit-scotland.gov.uk  	

Audit Scotland makes no representation that legal guidance is correct. Points of law can ultimately be decided only by the Courts. Audit Scotland accepts no responsibility for any loss or damage caused as a result of any person relying upon anything contained in this note.

Introduction
Purpose
1.	The purpose of this Technical Guidance Note from Audit Scotland's Professional Support is to provide external auditors appointed by the Accounts Commission with guidance on the certification of 2019/20 claims under the Bellwin Scheme of Emergency Financial Assistance to Local Authorities (the Bellwin scheme). The approach set out in this Technical Guidance Note has been agreed with the Scottish Government.
2.	Appointed auditors are required by the Code of Audit Practice to review, as part of their audit appointment, approved grant claims and other financial returns submitted to grant-paying bodies by local government bodies and provide reasonable assurance as to whether they are fairly stated and in accordance with specified terms and conditions. One of the approved claims that auditors are required to certify is in respect of the Bellwin scheme.  
3.	This technical guidance note: 
•	provides guidance for auditors on the examination of the claim, including highlighting the main risk areas
•	sets out and explains the preliminary procedures (at section 1), testing procedures (at section 2), and completion procedures (at section 3) that auditors should carry out (all summarised in the checklist at Appendix 1)
•	provides an external auditor's certificate at Appendix 2
•	clarifies for the Scottish Government the nature of work undertaken by appointed auditors before giving their certificate.
4.	Auditors are required to express their conclusion in a certificate attached to each claim. The assurance process performed by auditors is therefore described in the Code of audit practice as the certification of each claim. 
5.	Although this note provides a concise summary of the scheme, it may still be necessary for auditors to refer to the source material listed at preliminary procedure 1 on which this note is based. 
6.	Auditors should also refer to the general guidance on the certification of claims provided by Technical Guidance Note TGN/GEN/20.
Changes in 2019/20
7.	There are no significant changes to the claim compared with 2018/19.
Nature of scheme
8.	  The Bellwin scheme was established under section 155 of the Local Government and Housing Act 1989 to give special financial assistance to councils who would otherwise incur an undue financial burden as a result of providing relief and carrying out immediate work resulting from large-scale emergencies. The terms and conditions are set out in Bellwin scheme - guidance and claim form issued in April 2013.
9.	The key criterion for the scheme is the safeguarding of life and property and the prevention of suffering or severe inconvenience in a council's area or among its inhabitants. It has most frequently been activated for the effects of severe weather such as flooding or storm damage, although it may be invoked for other types of emergency incident.
10.	The Bellwin scheme reimburses councils for additional revenue expenditure incurred in excess of an annual threshold. The use of a threshold recognises that councils are expected to make contingency provision for such events in their budgets. They have a general duty to deal with emergencies and there is no automatic entitlement to special assistance.
11.	The annual threshold for 2019/20 is 0.2% of the net revenue budget for the year. If the scheme is activated more than once during the year, the threshold is compared with the cumulative expenditure.
12.	The scheme is discretionary, and councils are invited but not obliged to make a claim. It must be demonstrated that an undue financial burden would otherwise fall on the council. 
Activation of the scheme
13.	Where a council incurs expenditure as a result of an emergency incident which it believes falls under the terms of the scheme, and wishes to make a claim, the process is as follows:
•	The council informs the Scottish Government within one week of the commencement of the incident.  
•	The Scottish Ministers consider whether to give approval.
•	Where approval is given, the Scottish Government announces that a scheme has been activated within three weeks of being contacted by a council.
•	The Scottish Government notifies the relevant council and Professional Support.
•	Professional Support notifies the relevant external auditors.  
14.	In certain circumstances, where it is clear that an emergency has taken place, the Scottish Ministers may activate a scheme in which case the Scottish Government writes to the relevant councils to notify them.  
Funding arrangements
15.	The funding arrangements are summarised in the following table:
Stage	Action	
Calculation of grant	Entitlement to grant is calculated at the rate of 100% of eligible net expenditure incurred above the threshold.	
Interim payment 	An interim payment of 90% of the net eligible claim is paid following receipt of a claim certified by the section 95 proper officer.	
Final payment	The balance is paid (or any overpayment recovered) on receipt of a final claim certified by external auditors.	
Submission of claim to auditor
16.	Councils are required to submit the interim claim to the Scottish Government and external auditors within four months of the emergency incident. Councils are required to submit the final claim, certified by external auditors to the Scottish Government within 8 months of the emergency incident. The date is specified in the activation letter sent to the council by the Scottish Government.
17.	A separate claim form should be submitted for each incident, where the cumulative affect has breached the threshold. 
Contact point
18.	The contact point in Professional Support for this Technical Guidance Note is Anne Cairns, Manager (Professional Support).
19.	Enquiries should be sent to TechnicalQueries@audit-scotland.gov.uk.

Section 1
Preliminary procedures 
Purpose of section
20.	This section sets out the preliminary procedure that auditors should carry out when they receive the claim form. 
Preliminary procedure 1 - Completion of form	
Auditors should evaluate whether:
•	the council’s arrangements for the completion of the claim appear adequate
•	all relevant parts of the claim have been completed, including certification by the section 95 proper officer
•	all arithmetic on the claim is correct
•	the entries on the claim agree with the councils’ financial ledger or other underlying records	
21.	A copy of the claim form to be used for both the interim and final claim is provided by the Scottish Government at Annex D of the Bellwin scheme - guidance and application form. A further copy of the claim form is sent to the council when a scheme is activated.
22.	The claim form is divided into the following seven parts:
•	Part 1 requires general details, including the date and brief details of the incident.
•	Part 2 provides notes on completion of the form.
•	Part 3 requires councils to confirm that expenditure claimed is eligible and that the incident has caused an undue financial burden, or to provide an explanation where that is not the case.
•	Part 4 gives financial details and should show the gross amount of expenditure claimed, along with any off-setting receipts and the consequent net expenditure. 
•	Part 5 should show insurance excesses claimed.
•	Part 6 should show the total amount claimed (i.e. the total of part 4 and part 5).
•	Part 7 is the certificate to be signed by the section 95 proper officer.
23.	The following represent key sources of guidance in respect of the claim: 
•	Bellwin scheme - guidance and application form 
•	2019/20 Bellwin threshold levels. 
Section 2
Testing procedures 
Purpose of section
24.	This section sets out the testing procedures that auditors should carry out on the claim form.
Test 1 - Eligible expenditure	
Auditors should obtain evidence that eligible expenditure is included in the claim.	
25.	Part 4 of the claim form should show the total gross eligible expenditure, any receipts (e.g. sale of timber, etc.) and the net total. It requires to be supported by high level summary documentation confirming that the claim meets the overall criteria of the scheme, including a brief description of the type, date and amount of expenditure. Council should have, but are not required to submit, an analysis of this information with accompanying reports, listing the damage sustained and works undertaken in response. 
26.	Section 1 of Annex A to the guidance notes states that eligibility is restricted to revenue expenditure incurred:
•	within a two-month period from the date of the incident (or as agreed between the council and the Scottish Government)
•	in respect of immediate action to safeguard life or property, or to prevent suffering or severe inconvenience, in the council’s area or among its inhabitants
•	as a result of the incident specified by the activation of the scheme.
27.	Annex A to the guidance notes also provides examples of eligible expenditure under the scheme. In summary, this includes:  
•	setting up temporary premises for non‑administration purposes, e.g. removal costs, increased rent, heating, cleaning etc, and hire of additional vehicles, plant and machinery
•	removal of all trees and timber, initial land drainage works to clear debris and unblock watercourses, and the removal and replacement of street lighting, street signs etc damaged by the incident which may be dangerous to the public
•	initial repairs to highways, pavements and footpaths, where the surface must be replaced at the time or temporarily patched, and other work to clear debris causing obstruction or damage to these areas
•	additional temporary employees or contractors to work on the emergency or replace permanent employees diverted from normal work, and special overtime for employees, either during the emergency for overtime worked on the emergency itself, or afterwards to catch up on work from which they were diverted by the incident
•	emergency works required to safeguard dangerous structures
•	evacuating people from dangerous structures and temporary rehousing, providing emergency supplies of food and other provisions and key services to affected communities during the period of the incident, and maintaining key communications, including clearing roads or providing emergency information to affected communities
•	costs of temporary mortuaries
•	legal, clerical and other charges incurred on the above work. 

Test 2 - Ineligible expenditure	
Auditors should obtain evidence that ineligible expenditure is excluded from the claim	
28.	Section 2 of Annex A of the scheme guidance notes lists expenditure that is ineligible under the scheme. 
29.	Ineligible expenditure includes costs which are normally insurable, whether by the council or any other party. The benchmark used by the Scottish Government is the Zurich Municipal SELECT policy. Insurable costs include:
•	the shoring up or dismantling of damaged buildings
•	damage to the structure of private houses and buildings which are normally covered under household/private policies.
30.	The treatment where a council has a policy which bears a different level of risk is set out in the following table:
Level of risk	Impact	
Less risk than benchmark	Council is still bound by definition of normally insurable risks for the purposes of eligible expenditure for the claim	
Greater risk than benchmark	Council should exclude from their claim all expenditure for which they are covered and will be compensated	
31.	Other items of ineligible expenditure listed at section 2 of the guidance notes include:
•	capital expenditure
•	loss of income (e.g. from facilities closed as a result of the emergency incident)
•	the normal wages and salaries of the council’s regular employees even when diverted from their usual work 
•	longer term works of repair and restoration of damaged but not dangerous structures
•	any element of betterment
•	expenditure eligible for any other specific grant.
Test 3 - Insurance excesses	
Auditors should obtain evidence that the amounts claimed for insurance excesses are below specified limits.	
32.	Although costs which are normally insurable are not eligible, an element for insurance excesses is considered eligible under the scheme. Councils may include in part 5 of the claim the lower of the actual insurance excesses and the specified limits set out in Annex B of the guidance notes which are summarised in the following table:
Monetary limit	Application	
£250	Each house owned by the council and/or its contents	
£500	Each general/educational building and/or its contents	
£1,250	Each industrial property and/or its contents	
Section 3
Completion procedures 
Purpose of section
33.	This section sets out the completion procedures that auditors should carry out after they have conducted testing of the claim form. 
Completion procedure 1 - Conclusion on claim	
Auditors should conclude whether the claim form is:
•	fairly stated
•	in accordance with the terms and conditions. 	
34.	Auditors should:
•	evaluate the results of their testing procedures set out in section 2
•	undertake additional procedures where they judge that to be necessary
•	agree with the council any amendments necessary to correct errors found in the claim. This is appropriate where auditors conclude the errors are isolated or have extrapolated findings and are satisfied that after amendment the claim is fairly stated and in accordance with the terms and conditions. A qualified conclusion in a covering letter is not required though auditors should draw attention to the amendment. 
Completion procedure 2 - Auditor's certificate and covering letter	
The appointment lead should complete the auditor's certificate and include any qualified conclusions in a covering letter.	
35.	The claim form contains an external auditor’s report; however, this should not be used. Auditors should instead use the certificate provided at Appendix 2 to this technical guidance note.
36.	The auditor's certificate states that auditors have examined the entries in the claim and accounts and records of the council, and have obtained such evidence and explanations, and carried out such tests, as they considered necessary. 
37.	The appointment lead (or delegated manager) should complete the auditor's certificate and any covering letter in accordance with the guidance provided in TGN/GEN/20. Where, in the appointment lead’s professional judgment, the claim is fairly stated and in accordance with the terms and conditions, the appointment lead should:
•	delete the words ‘Except for the qualification in the attached covering letter dated …..’;
•	sign and date the certificate.
38.	Where auditor testing has been completed and, in the appointment lead’s professional judgment, the claim is not fairly stated and in accordance with the terms and conditions, the appointment lead should:
•	prepare a covering letter explaining the qualified conclusion
•	enter the date of the covering letter to the certificate
•	sign and date the certificate. 
Completion procedure 3 - Submission of certified claim	
Auditors should submit the claim, completed auditor's certificate, and any covering letter by the required date to the Scottish Government.	
39.	The appointment lead should submit the claim, completed auditor's certificate, and any covering letter, within eight months of the incident (or other date specified in the activation letter) to:
Craig Inglis
The Scottish Government 
Local Government and Analytical Services Division
3-G North Victoria Quay
Edinburgh
EH6 6QQ

Appendix 1
Auditor action checklist

Preliminary procedures	Yes/No/N/A	Initials/date	W/P ref	
1	Have you checked that 
•	the council’s arrangements for the completion of the claim form appear adequate? 				
•	all relevant parts of the claim form have been completed, including certification by the section 95 proper officer? 				
•	all arithmetic on the claim form is correct?				
•	the entries on the claim agree with the council’s financial ledger or other underlying records?				

Testing procedures	Yes/No/N/A	Initials/date	W/P ref	
1	Have you obtained evidence that eligible expenditure is included in the claim?				
2	Have you obtained evidence that ineligible expenditure is excluded from the claim?				
3	Have you obtained evidence that the amounts claimed for insurance excesses are below specified limits?				

Completion procedures	Yes/No/N/A	Initials/date	W/P ref	
1	Have you concluded whether the claim form is:
•	fairly stated
•	in accordance with the terms and conditions in the Bellwin Scheme - guidance notes for claims?				
2	Have you completed the auditor's certificate and included any qualified conclusion in a covering letter?				
3	Have you submitted the claim, completed auditor's certificate, and any covering letter by the required date to the Scottish Government?				

Appendix 2
Auditor’s certificate
I/we have examined the entries in this Bellwin scheme claim for 2019/20 and the related accounts and records of the council in accordance with Technical Guidance Note TGN/GEN/20 and Technical Guidance Note TGN/BEL/20, and have obtained such evidence and explanations, and carried out such tests, as I/we have considered necessary. 
Except for the qualification(s) set out in my/our letter dated…………….., I have concluded that the claim is: 
•	fairly stated
•	in accordance with terms and conditions set out in the Bellwin scheme – guidance notes for claims. 

Signed…………………………………….. (Audit Appointment Lead) 
Date……………………………