SIC paid out duplicate Covid-19 grants amid failures to check bank details

The SIC wrongly awarded two duplicate Covid-19 grants, according to an auditor’s report. 

An internal auditors’ report into the council’s awarding of grants during the pandemic, identified failures to check bank details, which led to additional payments being made. 

Since the beginning of the pandemic, the SIC has awarded 732 grant payments totalling almost £7.8m of government money.

Auditor Duncan Black carried looked at a sample of 35 applications, covering Small Business Grants (SBG), Retail, Hospitality and Leisure Grant (RHLG) and the Newly Self Employed Hardship (NSEH) fund. 

His report, presented to the council’s audit committee on Tuesday, found one applicant received a £10,000 payment twice due to error which saw two staff members process  it at the same time.

Mr Black said the error may have gone undetected had the applicant not notified the council of the overpayment

Another applicant received received a £2,000 grant from the NSEH after they had received a £10,000 SBG, which should not have been permitted. 

The report found “basic reconciliations were not being carried out between the grants awarded and payments made and “there was no check on applications for duplicate bank details”. 

Despite the anomalies, the report also found “the majority of key controls are in place and operating effectively”.

The council has made a repayment request to both applicants. 

Councillor Stephen Leask questioned whether the council should carry out a review of other payments “to ensure no further duplication has occurred”.

Mr Leask said he was aware, through the Business Resilience Forum, that there had been a lot of hard work carried out by the economic development team while dealing with a high volume of applications. 

“They were under quite a lot of stress and it was a difficult time,” he added. 

Mr Black also acknowledged it was a difficult situation for the team. 

“I think it’s important to recognise that these business grant process were set up at pace during the strictest lockdown with people working in less than ideal circumstances,” he said. 

“So the recommendation we make here, there’s no blame attached, we’re just trying to assist the service in avoiding pitfalls as best we can.”

The report recommended the council should check applicants’ bank details, prior to approving NSEH funds, to identify whether they had received any other support. 

It also recommended that a periodic reconciliation should be carried out between the log of approved applications and the funds paid.

Although the grants administered by the council ended in July, Mr Black highlighted the likelihood of additional funding support being made available as the pandemic continues. 

He also said there would be “post assurance work” in these areas, using data analytics to ensure no “fraudulent or erroneous”  grants had been paid out. 

Mr Black, who works at Glasgow City Council, said his team was working on a pilot with the Scottish government in that area. 

“If that proves successful we would offer it up to other local authorities and we would be keen to do it in Shetland as well,” he added. 

Speaking after the meeting, Tommy Coutts, project manager for economic development at the SIC said that following the auditor’s report in July his team checked all the other  applications and confirmed no further duplicate payments. 

However, the SIC did find two instances whereby a “phase two” SBG application was paid more than it should have done, as it had been processed as though it was a “phase one application”. Whereas phase one grants were paid up to £10,000, phase two applications were only entitled to £,7,500. 

Mr Coutts said they were the only errors identified from more than 800 applications processed by the team. 

He said the team had “learned its lessons” from the applications processed over the summer ;and followed new practices when following the recent Business Hardship Fund (BHF). 

The BHF was launched recently to support businesses affected by the temporary restrictions imposed in October. 

Mr Coutts said 56 businesses had applied for that fund.