Agenda item

The Head of Internal Audit, Anti-Fraud and Assurance will submit a report outlining the annual audit planning process and seeking the Committees views with regard to the potential projects for inclusion within the draft Internal Audit Plan for 2021/22.

The Head of Internal Audit, Anti-Fraud and Assurance submitted a report outlining the annual audit planning process and seeking the Committees views with regard to the potential projects for inclusion within the draft Internal Audit Plan for 2021/22.

The report, in outlining the background and timetable for the Annual Internal Audit Planning Process, detailed the actions to be undertaken, key factors to be considered and areas of work to be identified. 

Specific reference was made to the following:

·         The audit of the financial systems (which was completed on a 3-year cyclical basis unless circumstances dictated something different).  This approach had been agreed with the Service Director Finance as part of the annual planning process for 2020/21

·         The need to ensure sufficient overall coverage was provided across all Directorates to enable the Head of Internal Audit, Anti-Fraud and Assurance to give an annual opinion on the effectiveness of the Council’s Control, Risk and Governance arrangements and, in addition, where possible, to have capacity to provide advisory support to management

·         The need for the audit planning process to identify all areas of work that Internal Audit were concerned about and were, therefore, seeking assurance on.  In this respect, this Committee and management would need to be satisfied that where areas of assurance extended beyond resources and/or capacity of Internal Audit, alternative sources of assurance were identified and resourced

·         It was important to ensure that the work of both Internal and External Audit was used to the benefit of both organisations.  This would be both mutually beneficial and more cost effective

·         Members of the Committee were asked to consider key risk and areas of concern where Internal Audit coverage might be appropriate and to pass suggestions to the Chair for collation and notification to the Head of Internal Audit, Anti-Fraud and Assurance

·         The Indicative Plan would be prepared for consideration at the March meeting, however, the difficulties of setting a plan for a 12-month period were referred to and particular reference was made to the circumstances of the past year.  It was proposed, therefore, to adopt a quarterly ‘flexible’ approach to the Plan for 2020/21 as this would enable the Plan to be more responsive to changing needs and requirements.  An assurance was given, however, that because of the liaison arrangements in place with Directorates and Senior Management Team, the Plan would be kept constantly updated to keep it relevant throughout the year.  Revisions and changes would then be incorporated into the quarterly progress reports submitted to this Committee

·         It was felt that the engagement of Senior Management was extremely good and demonstrated a culture of openness and commitment to improve

In the ensuing discussion, reference was made to the following:

·         It was noted that prior to the meeting a number of suggestions for items to be considered for inclusion within the Plan had been submitted.  Whilst it was acknowledged that not all these would be able to be incorporated within the Plan, a request was made that when the Plan was next submitted for approval an update could be provided on all the specific issues that had been raised by members together with reasons as to why any items had not been included.  The Head of Internal Audit, Anti-Fraud and Assurance stated that it was his intention to submit such a list against which would be a rationale as to why issues had not been included within the Plan.  If, however, an issue was raised, against which there was required to be a level of assurance which could not be included within the Plan, then management would have to outline how assurance was to be achieved.  This should assist in developing an holistic approach to assurance

·         Referring to the above, the Head of Internal Audit, Anti-Fraud and Assurance referred to how the PowerBI dashboard would record risks together with how assurances were obtained against each risk.  It was noted that in the event that Internal Audit were not able to give assurance on any particular item, there would, nevertheless be a random sample taken to ensure that management were obtaining adequate assurance against such risks

Written responses to questions asked by Members of the Committee were provided as follows:

·         In relation to potential projects for 2021/22 , it was noted that almost all areas of the council had, to some degree, been exposed to financial risks as a result of Covid 19.  The specific areas of priority would come out of further discussions with the Senior Management Team and with individual Business Units, however, every piece of Internal Audit work would consider the Covid 19 implications/impact

·         The following projects would all be included for consideration

o   Procurement – Partnership Contracts – the approval and validation of contracts – it was noted that Partnerships was an area being looked at from a governance perspective already

o   Validity of Covid 19  grants/grant regimes and business rate relief given to local businesses – the Corporate Anti-Fraud Team would have oversight of the Business Support Grants on an ongoing basis

o   Data Protection – this would always be covered in some way by Internal Audit and the Data Protections Officer

o   Business Continuity Plan/ Counter Fraud Work – this linked very much to the Covid-19 response work

o   Glassworks risk management and financial controls – this would continue to have an Internal Audit oversight

o   Exploration of efficiencies (different ways of working including reduced levels of office and other accommodation, technology, working from home etc.) – this was included within the new ‘Our Even Better’ Strategy as part of the 2021/2024 Medium Term Financial Strategy process.  An update on this would be provided in due course

o   Exploration of different ways of providing services (libraries)

·         It was noted that a key part of the planning process was to ensure sufficient overall coverage was provided across all Directorates to enable the Head of Audit, Anti-Fraud and Assurance to provide a service.  Questions were asked as to whether or not there were currently enough audit staff to provide this.  It was reported that the breadth and depth of Internal Audit coverage was an important factor for consideration but also taking risks into account.  The Head of Audit, Anti-Fraud and Assurance was not unduly concerned about not being able to do enough work

·         Referring to engagement with Senior Management, there was not much more that could be done to bring about further improvements as Internal Audit had clear and unfettered access to management.  Whilst liaison and communication was essential, that needed to be managed to ensure Internal Audit’s objectivity and independence was preserved

·         There had not been an increase in suspected fraud activity as, if anything, there had been a dropping-off of referrals.  Fraud activity was down generally apart from the increase in work around the Business Support Grant work as part of the Covid-19 response

RESOLVED:

(i)            That the report and potential projects for consideration in the Internal Audit Plan 2021/22 be noted;

(ii)          That nominations of items for possible inclusion in the Internal Audit Plan be passed to the Chair for consideration by Internal Audit; and

(iii)              That insofar as this Committee is concerned, the proposed planning process be approved on the grounds that it is satisfied that the process is sufficiently robust and will enable a value-added Audit Plan to be produced that is informed by risk through consultation with appropriate Senior Management.