ENTRUST Compliance Risk Model Update

As part of this consultation, we ran a sounding board event on 23 May 2017, which was attended by representatives of eight Environmental Bodies (EBs) and a member of the ENTRUST Board. Further meetings were held with EBs who were not able to attend the event. The presentation slides used at the event, along with feedback from EBs were published on the ENTRUST website on 30 May 2017 and we requested that EBs should provide any further comments they had regarding the model to us by 9 June 2017. These documents are on the right hand side of this page.

After taking into consideration the feedback from stakeholders, the following recommendations to improve the operation and transparency of the risk model have been approved by the ENTRUST Board and the proposed changes will be submitted to HMRC for their review and approval, prior to final publication of the risk model indicators in September 2017.

After taking into consideration the feedback from stakeholders, the following are recommendations to improve the operation and transparency of the risk model:

• We will further review all scores and weightings in light of the reduction in the size of the fund, for example some indicators contain bandings of level of contribution which are now too high;
• The risk model review has in part been initiated in response to larger EBs suggesting that they are not the highest risk and that level of funds received should not be highly weighted, instead we will further review additional indicators for unspent funds held and related project expenditure levels where these indicate that the EB is not distributing funds in a timely manner;
• We will consider whether application of percentages rather than absolutes to risk indicators, e.g. on administration funds can be developed within ENTRUST Online (EOL) or used as a secondary measure at allocation of review stage;
• We will review our approach and focus on Control Framework Inspection (CFI) reviews to consider the implications and impact of:
  
  - If no non-compliant or guidance findings are raised at a CFI inspection in one year, the CFI inspection will not be repeated in the following year. This means that large EBs may not automatically receive an annual CFI inspection where there are no issues identified so processes will not be repeatedly reviewed. However, project compliance reviews may still be undertaken via a desk top review at any time to ensure that appropriate sampling of the outcome of processes are assessed. This will reduce the need to visit the EBs where no issues have been identified with processes but will still ensure effective levels of assurance can be achieved with minimal disruption to the EB; and
  
  - More reliance is placed on previous compliance work so that if a CFI review is required the following year, then governance questions will be addressed on an exception basis rather than asking the same questions each time, i.e. focus on reviewing what has changed and not re-reviewing what remains in place.
• We will consider how a self assessment process could feed into the Risk Model or compliance inspection process, without placing an onerous administrative burden on EBs and adding to EB running costs. There is potential for a self assessment approach to reduce the frequency of compliance inspection visits, this will need to be balanced by the additional requirement for EBs to complete the assessment and this type of approach has been previously rejected by EBs, following our recommendation as part of our response to HMRC's consultation on Reform of the LCF.

If you have any questions or feedback regarding the consultation of our Compliance Risk Model please contact Deputy Chief Executive, Alison Bennett.