Agenda item

Purpose: The Public Sector Internal Audit Standards (PSIAS) require the Audit Manager to make a formal annual report to those charged with governance within the Council.

The Committee considered the Internal Audit Annual Assurance Report for 2019/20 (Agenda Item 5). It was noted that it was a requirement of the Public Sector Internal Audit Standards for the Audit Manager to make a formal annual report to those charged with governance within the Council.

The report was required to include an opinion on the Council’s governance, risk management and internal control framework, which in turn supported the Annual Governance Statement.

The audit opinion was based upon the assurance work undertaken during the year; knowledge gained from previous assurance work; as well as intelligence gained from other sources of assurance, both internal and external, for example Ofsted and the Council’s Finance and Governance Group.

Julie Gillhespey, Audit Manager, was able to provide reasonable assurance that the governance, risk management and control framework remained robust.

She reported that there were two audits conducted in 2019/20 that were found to be weak and both would be subject to a follow up review. The outcome of the first follow up review (Purchase of Residential Care) was satisfactory. The second follow up review (S106 Agreements) was currently work in progress.

Four follow up reviews were completed during 2019/20 and for two of these it was concluded that unsatisfactory progress had been made. When these outcomes were reported to Committee in November 2019, it was agreed that a second stage follow up would be carried out to check on progress. This follow up work commenced in June 2020 and was work in progress. The outcome would be reported to the next Governance and Ethics Committee.

Paragraph 5.11 of the report provided a summary of the outcomes of the Internal Audit Team’s assurance work during the year. This showed that the majority of audit opinions were satisfactory or above. This supported the reasonable assurance view given by the Audit Manager.

Julie Gillhespey also reported that the Internal Audit Team had achieved 94% productivity of the audit plan for 2019/20 against a target of 80%. This was a very good result for the team, the performance for 2018/19 was 81%.

An addition to the annual report was contained in paragraph 5.23. This covered the Council’s requirement, under the Local Government Transparency Code 2015, to publish certain information regarding fraud.

Councillor Jeremy Cottam noted from paragraph 5.23 that the Council had no professionally accredited counter-fraud internal investigators and queried whether this impacted on the ability to conduct investigations.

Julie Gillhespey explained that this accreditation had been introduced for the investigation of housing benefit and tenancy fraud. However, Julie felt this would only be necessary if there was a large volume of such cases going to court. She assured Members that while this specific qualification was not held, investigations could still be conducted.

Councillor Cottam followed this by asking if this was a gap which needed to be filled. Julie Gillhespey advised that much experience was held within the team. She held much experience personally in undertaking fraud related work. The qualification would be useful but it was not in her view essential. This was supported by the fact that the Council had no housing stock and housing benefit investigations were conducted by the Department for Works and Pensions. There was therefore a limited number of such investigations.

Joseph Holmes, Executive Director for Resources, supported the view given by the Audit Manager. He did however add that if there became a specific need for an accredited investigator then this could be resourced externally.

Councillor Cottam was reassured by these comments, but queried if this would be kept under review. Julie Gillhespey advised that this was something she would continue to have oversight of. She added that while the specific qualification was not held, all members of the team undertook anti-fraud training regularly. Internal Auditors followed best practice in undertaking investigations.

Councillor Rick Jones commended the achievement of 94% productivity. However, he noted that the level of unplanned work undertaken impacted on the planned work and he queried the impact of this on the workload for future years.

Julie Gillhespey stated that there had been an increase in unplanned work during 2019/20. However, this counted towards the productivity level. This unplanned activity had resulted in some planned work being postponed and rescheduled to 2020/21 if it aligned with the risk environment.

Julie was pleased to report that recruitment was ongoing for an additional Auditor and she was comfortable that, subject to recruitment, this would help the team keep on top of its assurance workload as well as conducting the unplanned work.

Councillor Cottam noted that the Audit Manager undertook a large proportion of the unplanned work and this accounted for 46% of her time. He queried this high percentage. Julie Gillhespey explained that much of the unplanned work related to investigations of employee disciplinary and grievance issues, and she held the necessary investigatory skills for this work. Work was prioritised based on levels of risk and unplanned work often needed to be prioritised ahead of planned activity.

Councillor Cottam followed this by asking if resource levels were adequate, especially if the increase in unplanned work was to continue. Julie informed Members that this had been the second financial year in a row with higher levels of unplanned work and this was a reason why recruitment to a further post had been approved.

Councillor Jeff Beck concluded the item by thanking Julie and the Audit Team for all their hard work and for achieving such a high proportion of the audit plan.

RESOLVED that the report be noted.