Agenda item

To provide the Committee with a periodic report on the Internal Audit function for the period June 2023 – August 2023, as required by the professional standards.

Members considered a periodic report on the Internal Audit function for the period June 2023 – August 2023 and which also provided an update on the Internal Audit Charter, for approval by the Audit Committee, as required by the professional standards.

Members were aware that the Public Sector Internal Audit Standards (PSIAS) required the Chief Internal Auditor (Internal Audit Manager) to make arrangements for reporting to senior management (Management Team) and to the board (Audit Committee) during the course of the year, and for producing an annual Internal Audit opinion and report that could be used to inform the Annual Governance Statement.

The Committee was also aware that the Accounts and Audit Regulations 2015 required that: “a relevant authority must undertake an effective internal audit to evaluate the effectiveness of its risk management, control and governance processes, taking into account public sector internal auditing standards or guidance”.

INTERNAL AUDIT PROGRESS 2023/24

It was reported that five audits had been completed since the last meeting of the Committee in July 2023. Four audits had received a satisfactory level of overall assurance. The other audit had been undertaken as a consultative piece of work as a lessons learned review (Jaywick Sands – Sunspot). It had now been provided to the service to contribute to future similar projects and to support any reporting arrangements required from the economic growth team.

The Committee was advised that a further 16 audits from the 2023/24 Internal Audit Plan had been allocated, four of which were currently at the fieldwork phase.

Members were made aware that Officers were currently in the ‘Key Systems’ phase of the audit plan whereby all financial and core service systems and processes were reviewed. Each area was tried and tested as they were very important to the Council’s day-to-day activities. Officers did not anticipate any significant issues in this area as historically they had been managed well; however, it was very important to ensure that those systems and processes continued to work as expected and remained well controlled.

Quality Assurance

As per the usual practice, the Internal Audit function had issued satisfaction surveys for each audit completed. In the period under review, 100% of the responses received had indicated that the auditee was satisfied with the audit work undertaken.

Resourcing

Members were reminded that Internal Audit currently had an establishment of 4 FTE posts with access to a third party provider of Internal Audit Services for specialist audit days as and when required. An Audit Technician post was currently vacant.

It was reported that the team had recently transferred an Apprentice from the Council’s housing department. That individual was keen to gain experience in Internal Audit and was now part of the team, training and providing much needed additional support.

The Committee was informed that the Internal Audit Manager had also recently taken on additional responsibilities in managing the Fraud, Risk & Compliance and Health and Safety teams whilst the Assurance and Resilience Manager was on secondment. That arrangement was expected to last until December 2023 unless the secondment was extended.

It was felt that there were many similarities between Health and Safety, Compliance and Internal Audit. Work had been undertaken to synchronise the follow up processes between all three services and to identify synergies in order to effectively oversee the service. The Internal Audit Apprentice would be supporting all teams with their administrative requirements in order to free up time for Officers to spend more time on inspections and audit work. This would enable all teams to deliver against their objectives whilst still delivering against the audit plan.

The Committee was assured that if the secondment was extended then the Committee would be provided with periodic reports on the above areas in order to provide overall assurance on all areas covered under the responsibilities of the Internal Audit Manager.

Outcomes of Internal Audit Work

The Standards required the Internal Audit manager to report to the Audit Committee on significant risk exposures and control issues. Since the last report four audits had been completed and the final report issued. The PSIAS required the reporting of significant risk exposures and control issues.

For the purpose of the colour coding approach, both the substantial and adequate opinions were shown in green as both were within acceptable tolerances. There had been no issues arising from the audits completed in the period under review as none had received an ‘Improvement Required’ or ‘Significant Improvement Required’ opinion which would have required reporting to the Committee.

Management Response to Internal Audit Findings

There were processes in place to track the action taken regarding findings raised in Internal Audit reports and seek an assurance that appropriate corrective action had been taken. Where appropriate, follow up audits had been arranged to revisit significant issues identified after an appropriate time.

The number of high severity issues outstanding was as follows:-

The Committee was reminded that it had requested more detail on the outstanding actions within the above table and on previous significant findings as a matter of context. Appendix B to the Internal Audit Manager’s report provided a summary of those findings and agreed actions as well as including the relevant service’s response and an internal audit status. This would become a regular appendix of the periodic progress reports going forwards.

Update on previous significant issues reported

All previous significant issues were now to be found within the aforementioned Appendix B to the Internal Audit Manager’s report.

The Corporate Director (Operations & Delivery) (Damian Williams) attended the meeting and updated the Committee on the progress made in relation to the actions arising from the internal audits of Depot Operations, Housing Repairs & Maintenance and Housing Allocations. He also outlined how the Council was responding to the implications of the enhanced powers granted to the Regulator of Social Housing under the Social Housing Regulation Act 2023 and also particularly in relation to stronger enforcement powers; tenant empowerment; and standards for Registered Providers contained within the Act. Mr Williams then responded to Members’ questions thereon.

The Assistant Director (Housing & Environment) (Tim Clarke) and the Environment Portfolio Holder (Councillor Bush) attended the meeting and updated the Committee on the progress made in relation to the actions arising from the internal audit of Recycling and Waste (specifically Garden Waste service income). They then responded to Members’ questions thereon.

INTERNAL AUDIT CHARTER

Members were reminded that it was a requirement of the PSIAS for the Audit Committee to review and approve the Internal Audit Charter on an annual basis. As such, the Charter had been last updated, and approved in September 2022. There had been no changes to standards or processes since the last review, therefore no amendments were required.

The Committee was advised that global Internal Audit Standards had recently changed with guidance expected and that therefore there might be a requirement to update the Charter during the year or when the Charter was next reviewed in 2024.

The Charter was included as Appendix C to the Internal Audit Manager’s report.

After an in-depth discussion, it was moved by Councillor Fairley, seconded by Councillor Steadyand:-

RESOLVED that –

(a)    the contents of the report be noted; and

(b)    the Internal Audit Charter be approved.