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Letters to Managing Directors
MD 220 20 December 2006 Review of companies' systems, procedures and controls for compliance with the GSS Regulations and reporting of customer service data in the June return In MD209 Philip Fletcher highlighted the responsibility each company has to provide information to Ofwat that is reliable, accurate and complete. We also asked you this year to set out in your June return how your Board satisfies itself that the company's submission is robust. As a result of our investigations at three companies about customer service data we have given notice of our intent to impose financial penalties for these companies' failure to meet the performance standards set by the Water Supply and Sewerage Services (Customer Service Standards) Regulations 1989 (the GSS Regulations)(1). We have looked carefully at what each company said about compliance with the GSS Regulations in its June Return 2006. In order to assure ourselves that your company is in compliance we have decided to require each company to undertake a specific review and document its systems, procedures and controls it uses to manage and report its compliance with the GSS Regulations. This request is in accordance with Condition M of your Instrument of Appointment. Details of your current systems, procedures and controls for securing compliance with the GSS Regulations and for compiling your June return data must be set out in a methodology statement. A detailed information requirement is attached at Annex 1. If, as a result of this work, you consider there are any weaknesses in your systems, procedures or controls, you must report these together with your assessment of the risk associated with each weakness. This should include, in relation to each weakness, the potential for non-identification of a relevant event or non-payment of a relevant amount under the GSS Regulations or mis-reporting of data to Ofwat in the June return. You must explain how you currently mitigate existing risks and how you plan to eliminate the weaknesses identified. Plans for improvement must include a clear timetable. Your auditor must audit your systems in order to verify the outcome of your review and your methodology statement. Annex 2 contains indicative terms of reference for this exercise. This work is a specific exercise distinct from that carried out by reporters in relation to the June return. Auditors are expected however to liaise with reporters for background before carrying out their verification and to share their reports. Timetable and next steps Please provide a copy of your report endorsed by a director on behalf of your Board, to your auditor by 16 February 2007. You should confirm to Sheila Miller in writing that you have done this. You should send the your report and your auditor's report outlined above to Sheila Miller by 30 March 2007. You should send your report to your reporter and ensure that your auditor does the same. We will review your report, your action plans and methodology statement, taking your auditors findings into account to consider whether it is satisfactory. We will also consider whether any further regulatory action is necessary. We will provide feedback to you and your auditor by the end of May 2007 and copy this feedback to the company's reporter. A copy of this letter has been sent to your reporter and auditor. If you have any questions, please contact Sheila Miller on 0121 625 1464 or at sheila.miller@ofwat.gsi.gov.uk. Regina Finn (1) SI 1989:1159 as amended by SI 1989:1383, SI 1993:500, SI 1996:3065, SI 2000:2301 and SI 2005:2035  |
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