Agenda item

The Head of Internal Audit and Corporate Anti-Fraud will submit a report providing a comprehensive overview of the key activities and findings of Internal Audit based on the Division’s work covering the whole of the third quarter with additional details of audits completed up to the end of December, 2016.

The Head of Internal Audit and Corporate Anti-Fraud submitted a report providing a comprehensive overview of the key activities and finding of Internal Audit based on the Division’s work covering the whole of the third quarter with additional details of audits completed up to the end of December 2016.

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 to the end of the third quarter of 2016/17

·         Details of Internal Audit’s performance for the quarter utilising performance indicators

Reports issued and the Internal Audit work completed during the period had raised two fundamental recommendations relating to a Human resource Governance issue regarding absence management information and a financial management issue concerning the management of service budgets.

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

Of the 25 recommendations followed up, 64% had been implemented by the original target date with a further 24% implemented after the original target date and 12% not implemented with revised implementation dates being agreed by management

In relation to the Audit Plan, actual dates days delivered were broadly in line with the profiled days at the end of the third quarter.

Overall, Divisional performance remained satisfactory and all Performance Indicators were either on or exceeding target levels.

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

·         It was pleasing to see an increase in the percentage of recommendations followed up within the originally agreed timescales

·         It was noted that the first three quarters of the year, audit resources had been directed and prioritised to undertake work for the Council and the reasons for this were outlined.  It was also noted that there would have to be a reprioritisation to deliver more work for non-Council clients.  Work was being undertaken with Executive Directors to review the final quarter activities and to determine which work would slip into the first quarter of the next financial year

·         The Head of Internal Audit and Corporate Anti-Fraud commended that his Annual report would include work undertaken in April and May which, in part, was because of the number of vacant posts within the service.  He stressed, however, that he was satisfied that the work undertaken would still be sufficient to justify his opinion

·         There was a detailed discussion of the limited assurance given in relation to Budget Monitoring and Reporting and Service and Financial Planning and the reasons for this particularly in the light of the reducing number of staff employed within the various service areas.  It was noted that the review had concluded that Budget Managers sometimes did not proactively monitor and performance manage budgets for which they were accountable in line with the Future Council arrangements.  The Service Director Finance stated that he had requested this audit and commented that the issues raised were not in relation to the budget monitoring processes themselves but were about roles and responsibilities of managers and what they did with the information they had/received.  It was noted that work was being undertaken to address the issues raised

·         Reference was made to the feedback sheets and to the way in which suggestion for improvements were addressed.  In relation to the specific issue raised, this was something which the ‘client’ thought audit had missed. However, the fact that this matter had been raised by the client suggested that they were aware of those issues identified

·         Reference was made to the audits that had been deferred together the reasons for this which were largely in relation to the need to implement revised/new policies and procedures in particular service areas.  It was noted that as the Head of Internal Audit and Corporate Anti-Fraud was jointly responsible with the Director of Legal and Governance, for the Corporate Whistleblowing Policy this audit was likely to be undertaken by the Service Director Finance.  The policy was to be revised in the light of legislative changes

·         It was noted that there were currently two vacancies within the service and arrangements were in hand to recruit to the posts

·         In relation to HR E-Procedures and the limited assurance given, in relation to E-Enabled leave, it was noted that these arrangements had been in place less than a year. 

·         There was a discussion of the limited assurance in relation to cash and banking arrangements and to the action being taken to address those issues.  In response to specific questioning, however, it was reported that there had been no identified losses or fraud occurring

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 December 2016 be noted; and

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