Agenda item

Purpose: To update the Committee on the outcome of internal audit work carried out during the first half of 2017-18.

Julie Gilhespey introduced the Internal Audit – Interim Report 2017-18, which provided the annual half yearly update to the Committee on the outcome of internal audit work carried out during the first half of 2017-18.

She noted that two of the eight or nine audits that had completed had been rated as very weak and a third audit was rated as weak. This was an unusually high proportion and was probably due to the fact that the audits had been conducted on areas where weaknesses had already been identified.

Property Database (Very Weak)

The audit had highlighted that there was a difference between how the system was being used and how it was intended to be used. The audit had highlighted that the service continued to rely on spreadsheets to hold their key information.

The project was implemented using the Council’s Project Management Methodology and the project had been broken down into two phases. Phase one had been signed off as having been completed despite the fact that it had not been fully implemented across the whole Property Service. Concerns were raised about the level of challenge by the project sponsor and the I.T. Programme Board.

There was no closure report prepared for Phase two of the project. The system was not being used to record the data it was supposed to capture. Ms Gilhespey drew the Committee’s attention to the Head of Finance and Property’s comments as set out on page 37 of the paperwork. It was noted that a dedicated resource had been allocated to progress the recommended actions of the audit. Unfortunately the post was currently vacant and was in the process of being recruited to. (Post meeting note: XXXXX to be inserted).

Audit was comfortable with the progress update that was provided  but if the follow up was rated as unsatisfactory the Head of Finance and Property would be invited to attend a future Governance and Ethics meeting to provide Members with an explanation as to why that was the case and what was being done to remedy the situation.

Asset Management Strategy (Very Weak)

The Chief Executive had asked audit to look into this issue as some concerns had been raised. While a Strategy was compiled annually it was very brief and did not comply with Royal Institute of Chartered Surveyors’ standards. The document therefore did not comply with professional requirements, there was no performance framework in place and the asset reviews did not set out utilisation/ running and maintenance costs of the Council’s building assets.

The revised Asset Management Strategy would be included in the paperwork for the March Council meeting. Audit were satisfied with the progress update provided but if the follow up was rated as unsatisfactory the Head of Finance and Property would be invited to attend a future Governance and Ethics meeting to provide Members with an explanation as to why that was the case and what was being done to remedy the situation.

Home to School Transport. (Weak) The key issue that had been identified was that although there were a lot of contracts in place these contracts were not being reviewed and market tested regularly. The management of these contracts was not as robust as it should be. The Head of Transport and Countryside had commented that a Transport Quality Officer had been appointed in late 2016 which would help to address this situation. In addition the corporate Dynamic Purchasing System should be in place for early 2018/19 which should also assist matters. If the follow up audit was rated as unsatisfactory the Head of Transport and Countryside would be invited to attend a future Governance and Ethics meeting to provide Members with an explanation as to why that was the case and what was being done to remedy the situation.

Councillor Quentin Webb noted that the high proportion of weak audits was disturbing but he hoped that the follow up audits would be undertaken as soon as possible to ensure that corrective action had been taken. He queried how the Council’s Property Investment activity would impact on the Asset Management Strategy. Sarah Clarke stated that the Property Investment activity was subject to separate governance arrangements, reporting frameworks and was governed by its own strategy (Property Investment Strategy). The Council’s property portfolio would be managed by external consultants, with specialist expertise, that had been procured to undertake this work on the Council’s behalf. It would be referenced in the Asset Management Strategy.  Julie Gillhespey mentioned that the Property Investment Strategy was included in the Audit Plan as an audit in its own right.

Councillor James Cole was concerned about the length of time it took between the start of an audit and it being reported to the Committee especially given the levels of concern that had been identified. Julie Gilhespey explained that there could be a number of reasons for the delay. She noted that audits were often postponed if there was a valid request from the service but that the original date was still included on the programme. Perhaps it would be more beneficial to amend the date to the actual start date. Ian Priestley explained that the audit work was undertaken by a small team and that there was an issue with resourcing but this needed to be considered in the context of a shrinking workforce. Ms Gilhespey noted that if a significant issue was identified then the audits would be reprioritised.

Councillor Lee Dillon stated that he shared Councillor Cole’s concerns and he wondered if it would be beneficial to insert a reason for the delay on the table where appropriate. Members queried whether the audit team was sufficiently resourced. Mr Priestley explained that resourcing was one of the things that CIPFA would consider as part of the external review of Audit.

Councillor Dillon commented that as the Council was identifying new ways of working a number of new systems would be introduced. He was, therefore, concerned that there would be insufficient resources to adequately audit their implementation.

Councillors Jeff Beck and Paul Bryant stated that they too were concerned about the delays and resourcing. Councillor Geoff Mayes noted that the Property Database implementation had been an issue for a number of years now.

Councillor Anthony Pick stated that the weak audits were an indication of some sort of systematic failure. He felt that it would be beneficial to include target dates for resolving issues as these were at times serious failings. Julie Gilhespey explained that the relevant Heads of Service and Service Managers were ultimately responsible for putting together an action plan to resolve the identified issues. The Action Plan at the back of the audit report identified the officer responsible and a suggested timeframe for implementation.  The timeframe took into account the seriousness of the failing and what was reasonable to achieve in the 6 months prior to a follow-up, as it was important to give sufficient time for progress to be made.  She reminded Members that where the follow up audit was deemed unsatisfactory the relevant Head of Service would be instructed to attend a Governance and Ethics meeting to explain to Members how they intended to resolve the issues. It was important that time be allowed for these follow up audits to take place so that Members could be provided with a professional opinion in order to properly scrutinise the explanation provided by the Head of Service.

Members commented that they would like a presentation from the Head of Finance and Property at the next meeting which set out the audit reporting process and also how the service would be resourced going forward. 

Councillor Steve Ardagh Walter commented that unlike other Members he welcomed the report and stated that he would be concerned if no weak audits were identified. This was a complex organisation and because of its nature there would always be a risk of failings. As long as once the problems were identified they could be addressed in a timely manner he was not concerned. Ian Priestley stated that he concurred with Councillor Ardagh Walter. He noted that a lot of work went on in the background once issues were identified and that Corporate Board played an active role in dealing with issues especially if they were of a corporate nature.  Sarah Clarke commented that the important thing was that the agreed process was being followed and that the Audit Team were following due process.

RESOLVED that:

1.    the report be noted.

2.    A discussion on the timeframes for Audit reporting and Resourcing of the Audit Team be included on the agenda for the 23 April meeting.