Agenda item

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 fourth quarter ending 31^st March, 2018.

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 fourth quarter ending 31^st March, 2018 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 fourth quarter of 2017/18

·         Details of Internal Audit’s performance for the quarter which remained satisfactory

Internal Audit work undertaken during the period had identified one fundamental management action.

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

Of the 42 management actions followed up, 26% had been implemented by the original target date, 5% had been completed after the target date, 19% had not yet been completed by had revised dates agreed and 50% were waiting a response from management

In relation to the Audit Plan, actual days delivered were in excess (10%) of the profile as planned at this stage of the year and quarterly performance of the function was satisfactory with all Performance Indicators meeting or exceeding target levels.

The Annual Report would be presented to the June meeting of the Committee and this would summarise all Internal Audit activity and performance for the year for consideration alongside the draft Annual Governance Statement.

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

·         There was a discussion of and concern expressed at the increase in the delay in follow up reports in response to recommendations and in response the Audit Manager made reference to the reasons for this

o   It was noted that the majority of these related to Local Authority Maintained Schools where the delay had been because of the Easter break.  Some responses related to Museums Establishment visits where the delay had been as a result of staffing changes and the remaining were awaiting a revised target date.

o   It was noted that whilst the number of  limited assurance opinions exceeded the adequate/substantial opinions, they had largely been given for control weaknesses in areas with a narrow scope, limited transactions and financial value

o   It was reported that Internal Audit continued to have very good co-operation from management including SMT who closely monitored the implications from the delay in implementing management actions. 

o   In view of the concerns expressed by Members at the worsening position, the Head of Internal Audit and Corporate Anti-Fraud commented that there was a difference between a recommendation in relation to a control weakness and one relating to a suggested improvement and he stated that the priority attached to each would vary.  He felt, therefore, that there was a need for a further analysis detailing the context and risk associated with the delay of recommendations.

·         Arising out of the above, reference was made to the ways in which audits had changed and which now encouraged discussion and challenge of issues with all parties.  In response to specific questioning, reference was made to the action taken in the event that there was disagreement/objection to the audit recommendations.  It was noted, however, that this seldom occurred

·         Whilst the review of the Housing Benefit System Access had identified a significant number of people with incorrect user permissions, no fraud had been identified and there was little potential for fraud largely because of the other systems in place to prevent inappropriate access.  It was noted that a joint project group had been created to address issues identified

·         Reference was made to the HR Baseline Personnel Security Standards review which had identified inconsistencies in relation to the collection of references in relation to agency/temporary staff.  Appropriate action had been taken to address the issues identified

·         In relation to the  review of the Register of Interests, it was noted that whilst there were no particular concerns in relation to declarations by Elected Members, there was a lack of clarity regarding the procedure for employees to declare personal interests and any gifts and hospitality.  Appropriate action was being taken and additional emphasis was being made in communications with staff to remind them or their responsibilities in this regard

·         Reference was made to the action taken in response to the Procurement Themed Review which had identified issues in relation to the compliance with regulatory and procedural requirements when procuring goods of services.  Arising out of this, there was a discussion of the role of Governing Bodies and to the request made for all Governing Bodies to undertake a self-assessment so that there was a assurance that they were aware of their legal responsibilities.  It was noted that in some instances additional training had been requested.  It was also noted that a procurement toolkit was to be made available which would enable schools to undertake the necessary checks and balances.  This resource was to be advertised to all schools.

RESOLVED

(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 March 2018 be noted;

(iii)         that the progress against the Internal Audit Plan for 2017/18 for the period to the end of March, 2018 be noted; and

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