Agenda item

Purpose: To update the Committee on the outcome of internal audit work carried out during the first half of 2016-17.

The Committee considered a report (Agenda Item 9) concerning the outcome of internal audit work carried out during the first half of 2016-17.

The Public Sector Internal Audit Standards, as adapted by CIPFA's "Local Government Application Note", required the Chief Internal Auditor to make a formal report annually to the Council in order to present an opinion of the Council’s internal control framework. In addition to the formal annual report the Chief Internal Auditor provided an interim report to the organisation in the course of the year. The interim report aimed to address emerging issues in respect of the whole range of areas to be covered in the formal annual report. This report provided an interim view looking at the first six months of the year.

Ian Priestley noted that there had been one unsatisfactory audit follow up during the first half of the year. This related to procurement cards. Ironically the cards had been introduced to reduce the risks associated with imprest accounts. The action plan associated with the follow up audit was attached as Appendix C to the report. It was noted that the concerns related to service areas not adhering to the policies introduced to manage the use of the cards. The Portfolio Holder had been informed about the concerns and he agreed to ask his fellow Executive Members to remind services of the need to adhere to the policies.

Ian Priestley noted that the issue of procurement cards would be revisited within the first six months of the next financial year. It had been agreed that the audit would be delayed in order to allow the amended policies to be embedded in service areas. Members noted that at the time of the audit around 30 cards had been issued. Each card had a maximum limit of around £4k but that this varied from card to card as limits were set based on operational requirements.

Officers noted that the risks associated with procurement cards were much lower than those associated with ‘petty cash’ as statements were provided for all purchases and therefore an audit trail was in place. Andy Walker had now had the opportunity to remind Heads of Service about the policies that were in place albeit that this happened later than the recommendation had set out.  Julie Gillhespey noted that the audit had identified a few anomalies including the fact that cards were not only being used by the card holder, purchases did not always receive prior approval and that the card holders were often responsible for reconciling the statements.

Councillor Bridgman was concerned that only two of the 15 recommendations had been fully implemented and two had been partially implemented. In response to a query Officers confirmed that opportunities for fraudulent activity had been greatly reduced. Andy Walker noted that the statements were also seen by the Service Accountants although the returns to accountancy were not always timely.

Councillor Tim Metcalfe was concerned about the cost to the Council when invoices were not attached thereby preventing the Council from claiming back VAT. Ms Gillhespey noted that only one such occurrence had been identified.

The Chairman thanked the auditors for the excellent work that they had undertaken. Although this had been an unsatisfactory follow up it should be noted that procurement cards were to some degree self regulatory and therefore posed a lower risk to the Council. He was pleased to note that this issue would be revisited in the next annual audit plan.

RESOLVED that the report be noted.