Agenda item

To receive, the Internal Audit Report from the Interim Chief Finance Officer, Michael Hudson.

Estelle Sherry, one of the three Principal Auditors presented the Internal Audit Annual Report 2010/11.  She explained that the report had been drawn up differently than in previous years drawing attention in the report onto internal audit work and its outcomes.  Internal audit opinion, work completed and key risks arising have been brought to the front of the report.

Key areas of note were;

• The IA Opinion

The Council has improved its overall control environment, the opinion given is substantial assurance in spite of;

• IA Work 2010/11 and Direction of Travel

Internal audit finalised reports on a total of 44 planned audits and completed 30 follow up reviews.  None of the planned audits received a no assurance statement.

• Summary of Audits Completed – key issues and high risks included
  • Housing Rents – failure to conduct effective verification checks on standing data changes to rent liabilities prior to adjustment and implementation.
  • Bridge Management – failure by the Bridge Team to undertake inspections of bridges formerly the responsibility of District Councils.
  • Passenger Transport Procurement – limited scope for further procurement savings due to pressures being experienced by suppliers.
  • 5 Rivers Leisure Centre – breach of CRB requirements through failure to hold evidence that staff are CRB checked.

• Summary of Follow ups – follow ups have found that management have taken effective action in response to reported risks in the vast majority of cases.

• Management Engagement with Internal Audit Process – Internal audit has the responsibility to report on results of work and on management responses to risk reported.  Effective and timely implementation of actions to mitigate or eliminate risks is management responsibility.  Included within the internal audit report is a section (para 14, page 55 of the agenda refers) highlighting where management have not been acceptably responsive and have sought to avoid engagement.

• Key Risks Arising – In year 48 high risks were reported in 23 of 44 audits completed.  Examples where there were multiple high risks were:

In addition to the audit work undertaken internal audit staff have provided help and advice across the directorates.  National Fraud Initiative (NFI) work has also been ongoing as has Financial Management Standard in Schools (FMSiS). The requirement to undertake FMSiS ceased in December 2010; final assessments were still completed as a service to schools.  From Sept 2011 it is likely that Schools Financial Value Standard (SFVS) will start. Guidance from the Department of Education is awaited.

Despite a challenging year for the internal audit team, where there has been reduced capacity, and the proposal of an alternative vehicle for the delivery of the internal audit function, internal audit has delivered 91% planned audits with 96% of staff time being spent productively.

Members of the Committee congratulated the team for a good report under challenging circumstances.

Concern was raised regarding the high risk areas of CRB checks and care homes. Members agreed that 33 weeks was to long a timeframe for management response.  The Chairman suggested that a letter be written to all managers stipulating their responsibilities in light of internal audit highlighting risk areas.  A report would be brought to the next meeting to give the Committee guidance that these issues were resolved.  It was noted that in respect of the CRB issue both OFSTED and CRB were issuing conflicting guidance to schools and youth centres.

Members of the Committee expressed concern over the issue of VAT receipts and allowances.  Ian Gibbons, Monitoring Officer explained that this had been referred to Group Leaders and a further note had been issued to members confirming the position.  He agreed to look into any particular concerns about VAT receipts.

Issues were raised over Land Charges and that discretion should be given.  It was noted that there had been impact due to staff turnover.  Should members know of delays then members of the public should be directed to Cllr Sturgis.

Resolved:

That the internal audit report is noted and that internal audit reports should be sent to relevant Cabinet members where areas of concern have been highlighted.