Agenda item

The Vice-Chairman expressed concern about the increasing list of recommendations from internal audit activity that had not yet been implemented and noted that by not responding to the outcome of internal audit work being done the Council was not living up to its philosophy of continuous improvement nor achieving value for money.

Maggie Rae, representing the Corporate Directors (CDs), acknowledged that the regular contact between the CDs and the committee had drifted due to the recent focus on budgeting and cost cutting processes within the Council. She emphasised that CDs are keen to reinstate this regular contact in order to interface with the team and be proactively involved in resolving issues. Mrs. Rae noted that the reason for recommendations appearing not to have been progressed was mainly due to the impact of policy changes and hence recommendations not requiring any action or indeed requiring to be closed.

She commended the new audit process proposed and commented that it gave a more rounded view of the organisation and enabled the process of delving deeper into areas requiring improvement and success. This was a process that the CDs would want to work on and improve.

The Chairman commented that the response received and action taken since the Committee highlighted the issue of outstanding recommendations was commendable.

Stuart Trubee, Senior Auditor – SWAP, took the Committee through the initial processes for accessing live Audit Reports and related data from the SWAP web portal.  It was noted that the Committee would require adequate training in order to be able to access and use the system effectively.

Resolved

That SWAP would organise a training session for the Audit Committee to enable Members to effectively access audit reports on the SWAP web portal.

Jenny Strahan, Assistant Director – SWAP, presented the detailed findings of

the Internal Audit Activity - Q4 update 2015/16.  In the course of the presentation and the discussion, the issues discussed included: changes in presentation of information, enhancement and volume of reporting, the use of improved charts and graphs, positive results on internal audit activity performance reviews and concerns about findings on schools earmarked for financial health visits.

In response to questions regarding the basis of selection of the schools involved and the subsequent findings Ms. Strahan informed Members that 5 out of 9 schools reviewed had performance issues and that the reviews were done in conjunction with the Schools and Budget team with direction given to focus on schools with areas of high risk. 

Concerns expressed also focused on opportunity for fraud which put individuals, schools and the Council at risk and the challenge faced by schools in recruiting governors with relevant finance skills.

Mr. Hudson commented that there was no evidence to suggest widespread fraud among schools but there were areas for improvement to ensure robust financial controls and strong financial stewardship within schools in the county. He noted that there was doubt as to whether recommendations made were being communicated to relevant finance committees and governors within schools and this was to be followed up.

Ms. Strahan informed the meeting that as a result of the findings made regarding schools and academies, SWAP would follow up on recommendations made and further work would be taking place within the next 6 months focusing on school improvement.

The future role of the Council when all schools become academies was also raised for careful consideration.

Resolved

1. That the Audit Committee notes with concern the findings reported about schools.

2. That the Chairman and Vice-Chairman, on behalf of the Committee would prepare a note to significant people within and outside the Council who are not part of the Committee, to highlight the issues raised and seek a concerted resolution.

Healthy Organisation

Cllr. Richard Britton, Vice-Chairman, commended the Healthy Organisation theme review and commented that it was a well-structured and comprehensive presentation of the organisation and there was huge opportunity to link internal audit work with management performance and use the themed wheels in the diagram as a demonstration of the level of continuous improvement ongoing in the defined areas.

He noted that this integrated approach would make internal audit work the catalyst for achieving green status on the wheel - targeting internal audit work at areas of amber and working with the organisation to move them to green.

On the issue of whether Cabinet should take ownership of this process Cllr Baroness Scott noted that Cabinet would be keen to take ownership of the process and noted that it was important to manage the process well given the political sensitivities surrounding some of the issues.

In response to questions raised regarding the high number of amber themed results, Ms. Strahan responded that most of these emanated from legacy issues inherited and there was more work to be done with mapping and reporting on the various wheels to depict a more accurate picture on performance and improvement. It was also noted that given the challenges surrounding activities and risks the amber status could not be avoided entirely and Members were just seeking reassurance that everything that could be possibly done for improvement was being done.

The issue of cyber risk was also raised and reference was made to the findings of the Information Commissioner’s Office (ICO) audit, improved information governance, control of ICT resources and training provided to all partners on cyber risk. Ms. Strahan informed the meeting that SWAP would be undertaking further work on ICT.

Concerns were also raised regarding the level of training that Area Boards have on risk assessment and how it impacts on their decision making.

Cllr Britton subsequently proposed a recommendation which was ratified by the Committee.

Resolved:

That the Cabinet receive a presentation on the Healthy Organisation system and consider its integration with the internal audit programme and its use in the furtherance of the continuous improvement philosophy.