Agenda item

(Chief Internal Auditor) To consider the attached report (AGC-002-2015/16).

The Chief Internal Auditor presented the Internal Audit Annual Report for 2014/15, incorporating the Review of the Effectiveness of the System of Internal Audit.

The Chief Internal Auditor stated that this report had been presented in support of the Internal Audit opinion on the adequacy of the Council’s internal control environment. It provided a summary of the work undertaken by the Internal Audit Unit and detailed the overall performance against the Audit Plan for 2014/15. The Accounts and Audit Regulations included a requirement for the Council to carry out an annual review of the effectiveness of its system of internal audit as part of the wider review of the effectiveness of the system of governance. A review had been undertaken by the Corporate Governance Group and was presented to the Committee to assist it with assessing the effectiveness of the system of internal audit on behalf of the Council.

The Chief Internal Auditor advised the Committee that the work of Internal Audit continued to improve awareness of Governance requirements and promote improvement in the Council’s systems. During the year, 35 audit reports had been issued, of which 4 had full assurance, 26 had substantial assurance and 5 had limited assurance. Therefore, it could be concluded that the Council’s systems were generally operating satisfactorily and appropriate follow-up action had been taken where necessary to reduce the risk of error or fraud.

In respect of Performance Management for the year, the Chief Internal Auditor informed the Committee that the final figure for the planned audits completed (94% against a target of 90%) had been met, along with the targets for chargeable staff time (73% against a target of 72%), average cost per audit day (£218 against a target of £245 per day), and user satisfaction (98% against a target of 85%).

The Chief Internal Auditor reported that the Internal Audit Section could demonstrate that it had a good understanding of the functions of the Council and had achieved the Council’s objective to identify improvements to its control systems. The performance of the Unit had remained close to or exceeded its key targets and all fundamental financial systems had been examined and reported on. The Council’s External Auditors were able to place reliance on the work of Internal Audit when conducting their formal assessment of the Team’s work as part of their review of the 2013/14 accounts, and the Internal Audit Unit fully met the Public Sector Internal Audit Standards introduced in April 2013. In addition, Officers felt that the support of the Audit and Governance Committee, particularly in insisting on timely and positive responses to audit report recommendations, was invaluable in maintaining sound governance throughout the Council.

The Chief Internal Auditor stated that, in her opinion, the Council had in place a satisfactory framework of internal control, which provided reasonable assurance regarding the efficient and effective achievement of its objectives in 2014/15. Consequently, having considered all the issues, the Corporate Governance Group was satisfied that the Council’s System of Internal Audit had been effective during 2014/15.

The Committee noted that the report had indicated there were no causes for concern at the current time, and would continue to support Officers in maintaining sound governance. The Chief Internal Auditor reminded the Committee that 100% assurance could not be given without verifying every transaction undertaken, as only a sample was ever checked by the Auditors. The part-time Fraud Auditor post listed in the report had been replaced with an Auditor post, but this post was currently vacant.

Resolved:

(1)        That the Audit Plan Status Report for 2014/15, as at 31 March 2014, be noted;

(2)        That, in the context of the Council’s Governance Statement, the Review of the Effectiveness of the System of Internal Audit for 2014/15, as undertaken by the Corporate Governance Group, be noted; and

(3)        That the satisfaction of the Committee with the Effectiveness of the System of Internal Audit during 2014/15 be confirmed.