Agenda item

Internal Audit Quarterly Report - Quarter ended 31st December, 2017


The Head of Internal Audit and Corporate Anti-Fraud will submit a report presenting a comprehensive overview of the key activities and findings of Internal Audit based on the Division’s work for the whole of the third quarter ending 31st December, 2017 for the 2017/18 audit year.



The Head of Internal Audit and Corporate Anti-Fraud submitted a report providing a comprehensive overview of the key activities and findings of Internal Audit based on the Service’s work covering the whole of the third quarter ending 31st December, 2017 of the 2017/18 audit year.


The report covered:


·         The issues arising from completed Internal Audit work in the period

·         Matters that had required investigation

·         An opinion on the ongoing overall assurance Internal Audit was able to provide based on the work undertaken regarding the adequacy and effectiveness of the Authority’s internal control environment

·         Progress on the delivery of the Internal Audit Plan for the period up to the end of the third quarter of 2017/18


Details of Internal Audit’s performance for the quarter, which remained satisfactory, were reported at the meeting (rather than being included within the report due to the timing of the meeting).


Internal Audit work undertaken during the period did not identify any fundamental recommendations.


The internal control assurance opinion overall remained adequate based on the results of the work undertaken during the quarter.


Of the 10 recommendations followed up, 40% had been implemented by the original target date, 10% had not been implemented within the revised implementation dates agreed by management and 50% were awaiting a response by Management.


In relation to the Audit Plan, actual days delivered were in excess of the profile as planned at this stage of the year and Internal Audit resources would be directed towards external clients in the last quarter of the year.


In the ensuing discussion, and in response to detailed questioning, the following matters were highlighted:


·           There was a detailed discussion of the reasons for the failure of services to adhere to deadlines for implementing audit recommendations.  This was a continuing concern for Members of the Committee.  Reference was made to the reasons for this and to the steps that had been taken to address the issue.  It was thought that the majority of the current outstanding recommendations probably related to historical/legacy audit reports as procedures now adopted by Internal Audit tried to ensure that there was significant dialogue between the auditor and auditee to ensure that there was accountability for recommendations made and that realistic dates were set for meeting those recommendations.  The Head of Service was confident that the Committee would see an improving picture in the future

·           Arising out of the above it was reported that there were no particular problem areas or developing themes relating to the non-compliance with target dates.  Executive Directors and Service Directors were clearly aware of their responsibilities of ensuring compliance with audit recommendations and of the fact that they could be called to address this Committee. 

·           Recommendations that were delayed were often of a lower priority and would not compromise the control environment as any fundamental or significant recommendations would be dealt with more urgently

·           Referring to the revised audit approach adopted over the las 4-6 months, particular reference was made to the time spent on the Highways and Transportation audit referred to above (minute 49 refers).  This piece of work had accounted for approximately 10% of the Audit time this year because of its significance.  The Highways and Transportation Service had been very open and accepting of the input and challenge.  In addition, the response from management had been very positive and, because of the positive interaction between that Service and with Internal Audit, there was a higher degree of confidence of a successful outcome and compliance with agreed timescales 

·           Arising out of the above, the Risk and Governance Manager referred to the manner in which the recent audit of his Service had been undertaken, to the way in which the recommendations arising therefrom, actions and timescales were made in a collegiate manner

·           Reference was made to one fundamental recommendation which had been rescheduled and subsequently implemented – details could be provided.  It was noted that management had undertaken more work than originally recommended and this had led to the delay in sign off

·           The Committee was informed that regular meetings were held with Senior Management Team, Executive and Service Directors to discuss the progress of audit reports

·           The Head of Internal Audit and Corporate Anti-Fraud reported that a further analysis of recommendations that had a significant impact on processes and procedures could be included within the next quarterly report

·           In response to specific questioning, the Head of Internal Audit and Corporate Anti-Fraud outlined the way in which the response to audit recommendations were tracked and triggers, where appropriate, produced.  It was not possible to monitor progress on all individual recommendations although this would be undertaken if circumstances dictated such action.  Officers within Internal Audit used an appropriate touch using their professional judgement under the guidance of  Audit Managers

·           Further information on an independent investigation within the Finance Directorate (added to the Audit Plan as an urgent piece of work at the request of management)  would be provided once complete




(i)           that the issues arising from the completed internal audit work for the period along with the responses received from management be noted;


(ii)          that the assurance opinion on the adequacy and effectiveness of the Authority’s Internal Control Framework based on the work of Internal Audit in the period to the end of December 2017 be noted;


(iii)         that the progress against the Internal Audit Plan for 2017/18 for the period to the end of December 2017 be noted; and


(iv)             that the performance of the Internal Audit Division for the third quarter be noted.

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