Agenda item

The Internal Audit presentation was given by the Associate Director for Finance and the Executive Director (SWAP). It was noted by Members that there was a need to reduce the internal audit fee and future audits would be focussing on adding value. The Audit process would change and detailed training process would be provided. The new approach could be seen at other Local Authorities such as Lincolnshire. There was a need for the audit plan to be more risk focussed.

The presentation discussed how internal audit had changed. The need to ensure value for money was discussed. It was noted that managers must work with Audit to identify additional risks. 

Changes to local authorities were raised, including fewer staff, less money and a greater reliance on IT. There was also an increased public demand and expectation of their local authority. The role of greater partnership working and external monitoring was also discussed.

The need to ask if Internal Audit was adding value was previously raised. Audit’s focus was seen as being too broad and it was necessary to look at a different approach. There would be shared risk and a control assurance map for each functional area. Internal Audit would meet with managers to find issues and create assurances. Suggested key risks and projects were raised as a point of focus. The role of benchmarking in risk was also highlighted. It was heard that this should not be seen as a short-term audit plan.

The three lines of defence were explained: firstly, management controls, secondly, functions that oversee risk and finally, internal audit. Internal Audit would work outside of the first two lines of defence. It would focus on areas where there was the greatest need. The new approach would see a reduction in the number of audits and eliminate silos. This process would promote the efficient use of assurance resources and decrease the overall costs. It was explained to Members as a ‘health check rather than heart check’ as it looked at the organisation overall rather than a specific process in isolation. Gaps in service area risk profiles would be raised with the relevant manager.

Combined Assurance Planning was explained by the Executive Director (SWAP) and would be piloted in Children’s Safeguarding and Public Health. It would be mapped across other SWAP Local Authorities. The model of Lincolnshire County Council would be used but this model would be new to Wiltshire Council. The Lincolnshire County Council public audit reports pack would be circulated to Members. Training sessions would supplement additional reading materials to explain the changes that were to be made. The Associate Director for Finance explained that this approach would be stopped should it not be successful.

It was noted that this approach would be reviewed with the Audit Committee before being taken to Cabinet. The Associate Director for Finance explained that this approach had been presented to the Corporate Directors and the need to add value was emphasised. 

The Chairman invited Members to give their input on the changes proposed during the presentation. Members discussed the evolution of the internal audit process and the Associate Director stated that this process would show dividends. The need for managers to provide evidence in relation to their performance data and risks was raised. The need for a cultural change in the approach to Internal Audit was stated; it was necessary for peer to peer interaction to see the benefits of this process. Concern was raised that this would be a bottom up approach but reassurance was given that the Corporate Leadership team supported the plans at this time. 

Feedback would be given in July 2015 by the senior management who were involved in the piloting phase.

The Associate Director stated that all audits that were in process would be completed as planned. The Audit Committee’s potential input into which areas would be prioritised was discussed. Members would be given the opportunity to steer towards the prioritisation at the training session.

Members asked questions in regards to the work of the risk management team and the continuing reduction of the internal audit fee. It was explained that the audit fee could change should new risks be identified. The Executive Director (SWAP) explained that there had been personnel changes that had had an impact on risk. It was stated that there had been no rate change in regards to the Internal Audit fee. It was explained that audits would only be carried out when absolutely necessary.

Debate continued to discuss the changes to internal audit with focus on the need for an open culture from managers. The Associate Director for Finance gave assurances that the process proposed encouraged a culture in line with the Council’s Behaviours Framework.

The Chairman wished the Internal Audit team success on behalf of the Committee.

Resolved:

To note the report and request further training in next six weeks. To also request a further progress report and presentations in relation to the pilot work being undertaken.