Agenda item

(Director of Governance) To consider the attached report (AGC-014-2016/17).

The Senior Auditor presented the Internal Audit Monitoring Report for the period September to November 2016.

The Senior Auditor advised the Committee that four reports had been issued since the previous meeting, of which three had been given Substantial Assurance – Corporate Procurement, Cash and Banking, and Off-Street Car Parking Income. No assurance level was awarded for the analysis of the Human Resources Sickness Absence Performance Indicator; this was an additional piece of audit work requested by management, and it was found that the performance data should be subject to a more rigorous local independent review.

The Senior Auditor reported that the Recommendation Tracker contained eight recommendations which had passed their due date; five of which were medium priority and three were low priority. Monitoring had demonstrated that progress continued to be made on all of these outstanding recommendations. The only high priority recommendation currently on the Tracker related to the Health & Safety issues at Townmead Depot, which was not currently overdue. Since the last meeting of the Committee, a site meeting had taken place which had led to the establishment of a plan to address the key actions required at the depot, and the Cabinet had agreed an allocation of £75,000 within the Capital Programme for 2017/18 to install new gates, refurbish the toilet facilities and improve the boundary fencing.

The Senior Auditor stated that the Corporate Fraud Team had stopped a further four fraudulent Right-to-Buy applications and had recovered another property as a result of fraud. The team was engaged in a number of criminal investigations, including active money laundering investigations, and three criminal prosecutions were currently being prepared. A Standards investigation had recently been completed, and discussions were underway with another Essex Local Authority concerning the formation of a joint working relationship for anti-fraud work.

The Senior Auditor added that the Service was also represented on a number of business groups and project teams to provide advice and guidance, including:

·        Project & Programme Management;

·        Corporate and Business Planning;

·        Electronic Invoicing;

·        Customer Self Service Kiosks; and

·        Information Management.

Finally, the Senior Auditor informed the Committee of the progress that had been made on addressing the issues identified in the Annual Governance Statement 2015/16:

            (a)        Procurement Rules – training sessions on the new rules had been   held and documentation published on the intranet;

            (b)        Corporate Policies – the Corporate Fraud Team was reviewing and updating the anti-fraud policies; and

            (c)        Project Management – a potential Project Management system would         be tested in the near future.

In response to questions from the Committee, the Chief Internal Auditor stated that the electrical substation at Townmead Depot was in an unsafe state; the energy provider responsible for the substation had been informed and if there was no action taken then the Council would secure the area with fencing. The Senior Auditor explained that the risk assurance methodology was currently being reviewed by the Health & Safety Executive, which could lead to further work having to be undertaken by the Council. The Chief Internal Auditor reassured the Committee that the Corporate Fraud Team did liaise regularly with other Local Authorities, and this liaison included the exchange of pertinent information.

Cllr Wagland highlighted that, in respect of corporate fraud, the setting up of sophisticated bogus companies online had led to a large increase in identity fraud, and this might be an issue that the Committee would want to monitor. The Chief Internal Auditor reassured the Committee that the Corporate Fraud Team received national alerts concerning bogus companies, and the Council did have robust processes in place to deal with the setting up of new suppliers and the paying of invoices. The Director of Resources added that one attempted fraud in relation to the Epping Forest Shopping Park project had been recently thwarted. Cllr Wagland cautioned the Committee that some of these companies had the ability to set up a mirror entity which checks would not necessarily highlight as being false.

The Senior Auditor clarified that the work undertaken on the Human Resources Sickness Absence Performance Indicator had been classed as consultancy work, and therefore this was the reason for no assurance level being awarded. The Chief Internal Auditor reminded the Committee that the Audit Plan was kept under constant review throughout the municipal year, and that the Corporate Fraud Team was also involved in investigations concerning the sub-letting of Council properties as well as well as the activities outlined in the report.

The Committee welcomed the report, and the Chairman suggested that the issue of online identity fraud, and the associated risks to the Council, should be investigated.

Resolved:

(1)        That the progress made against the Audit Plan 2016/17 and by the Corporate Fraud Team be noted; and

(2)        That the issue of online identity fraud and the associated risks to the Council be investigated and reported back to the Committee at a future meeting.