Agenda item

(Chief Internal Auditor) To consider the attached report (AGC-003-2016/17).

The Chief Internal Auditor presented their Annual Report for 2015/16.

The Chief Internal Auditor informed the Committee that this report was presented in support of the Internal Audit opinion on the adequacy of the Council’s internal control environment and provided a summary of the work undertaken by Internal Audit for 2015/16. The Accounts and Audit Regulations 2015  also included a requirement for the Authority 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.

The Chief Internal Auditor reminded the Committee that, in March 2015, it had approved the Internal Audit Plan for 2015/16, which was designed to allow sufficient audit coverage to support the overall opinion for the Council. There had been some variations to the Plan throughout the year, which had been approved by the Committee, but there had been sufficient audit coverage to allow an overall opinion to be given. A total of 32 audits had been completed throughout the year, with the following results:

·                  full assurance for 2 audits;

·                  substantial assurance for 28 audits;

·                  limited assurance for 2 audits; and

·                  no assurance for 0 audits.

The Chief Internal Auditor reassured the Committee that the two limited assurance audits had tended to relate to a specific area and did not represent a breakdown of controls across the Council. In 2015/16, a new process had been introduced to track and report on the progress of the implementation of agreed audit recommendations; the new process was working well and there were no significant issues to report concerning the implementation of audit recommendations.

The Chief Internal Auditor highlighted that the Internal Audit Service was most effective when its advice was sought to ensure that suitable controls were incorporated at an early stage in the planning of policy or systems. During the year, Internal Auditors had acted in an ex-officio role on the following key business groups:

·                  Corporate Governance Group;

·                  Risk Management Group;

·                  Corporate Green Working Party;

·                  Corporate Debt Working Party;

·                  Personal Data Working Party;

·                  Contract Standing Orders Working Party; and

·                  E-Invoicing Group.

The Chief Internal Auditor reported that the Corporate Fraud Team, which became operational on 1 April 2015, investigated any allegations of fraud and suspected irregularity, and presented an annual report to the Committee on such matters. However, during the year, there were no significant investigations into suspected fraud (in excess of £10,000) and therefore the production of an annual report was not deemed necessary for the Committee to consider.

The Chief Internal Auditor revealed that the Internal Audit Service had undertaken a self-assessment against the requirements of the Public Sector Internal Audit Standards (PSIAS) in March 2016, which had concluded that the Service was compliant. This had been reported to the Committee, along with an Action Plan to address the minor issues where there was partial rather than full compliance with the Standards. The performance indicators for the Service in 2015/16 were as follows:

The Chief Internal Auditor stated that staff within the Internal Audit Service undertook continuous professional development, participated in various networking groups, and maintained close working relationships with other Councils.

The Chief Internal Auditor concluded that no system of control could provide absolute assurance against material misstatement or loss, and the work of Internal Audit was only intended to give reasonable assurance on controls. However, based on the results of work undertaken during the year, it was the overall opinion of the Chief Internal Auditor that the Council had an adequate and effective governance, risk management and control framework.

In response to questions from the Committee, the Chief Internal Auditor stated that the audit of the Langston Road Development had now been issued to management in draft form, and had also been added to this year’s Audit Plan to follow up on. The gross misconduct issue investigated by the Corporate Fraud Team was not a matter which required reporting to the police, although the member of staff concerned was summarily dismissed. The Senior Internal Auditor added that management responses were still awaited for some of the audits whose status was listed as “Draft report”.

The Vice-Chairman thanked the Chief Internal Auditor and all staff in the Internal Audit Service and Corporate Fraud Team for their efforts throughout the year.

Resolved:

(1)        That the Annual Report of the Chief Internal Auditor for 2015/16 and the assurance level given be noted;

(2)        That the Annual Report of the Chief Internal Auditor for 2015/16 be included as part of the review by the Committee of the adequacy and effectiveness of Internal Control; and

(3)        That, for the twelve-month period ending 31 March 2016, the confirmation by the Chief Internal Auditor that the Council had an adequate and effective Governance, Risk Management and Control Framework be noted.