Agenda item

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

The Committee heard how seven audits  had been completed between September  and December 2023, with all receiving satisfactory assurance with no significant issues reported. At that time of this meeting, one audit (Financial Resilience) was at the Draft Report stage awaiting finalization. Seven audits from the 2023/24 Internal Audit Plan were in the fieldwork phase, while the final nine audits were being risk-assessed and allocated based on available resources. Although there were nine audits due for scoping and progress in that quarter, the Internal Audit Team  was not too far behind compared to the same time last year. Hence, there was no concern at that stage regarding the completion of enough audit work by the end of the financial year to provide the Head of Internal Audit with enough evidence for his Annual Opinion. Any necessary changes to the audit plan would be communicated to the Audit Committee. The majority of the key system audits were either complete or nearing completion, which carried significant weight in contributing to the annual opinion. In terms of Quality Assurance, satisfaction surveys  had been issued for each completed audit. Three surveys were received out of the seven reviews undertaken, all providing satisfactory responses.

Members were updated on resourcing: Internal Audit had an establishment of 4 FTE posts with access to a third-party provider of Internal Audit Services for specialist audit days when required. There was a vacant Audit Technician post. One team member had been off sick since the beginning of November 2023, leading to approved overtime for another staff member to ensure minimal delay in delivering the audit plan. At the last committee meeting, it  had been reported that an apprentice had started to provide administrative support. The apprentice had since gained full-time employment within the Council, resulting in the loss of administrative support for the audit team, necessitating the recruitment of another apprentice..

Regarding outcomes of Internal Audit Work, the standards required the  Head of Internal Audit to report to the Audit Committee on significant risk exposures and control issues. Since the last report, nine audits had been completed, and the final report issued, aligning with Public Sector Internal Audit Standards.

In the color-coding approach, both the substantial and adequate opinions were shown in green as both were within acceptable tolerances.

Issues that arose from audits completed in the period under review that had received an 'Improvement Required' opinion  required reporting to the Committee. There were no such significant issues identified within this period of completed audits.

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

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

Update on previous significant issues reported

All previous significant issues were now provided within Appendix B of this  report.

External quality assessment

The Committee heard that an external quality assessment was recommended for Internal Audit functions every five years as per the Public Sector Internal Audit Standards (PSIAS). The five-year External Quality Assessment remained outstanding. However, as the new Global Internal Audit Standards would be  effective from January 2025, it was recommended that the external assessment be delayed until the new standards were  In place. Any assessment undertaken at  this time would have required more work later when the new standards were introduced to ensure that the team met the requirements of the supplementary standards. The Institute of Internal Auditors had released guidance  to be able to undertake a self-assessment as a stopgap until the new standards were released. A Quality Assurance Improvement Programme (QAIP) was carried out against this new guidance to ensure that a review was undertaken between March 2024 and the release of the new standards in January 2025.

A procurement process  would need to be completed to choose an external provider to carry out the external assessment.

The Committee heard an update from the Corporate Director of Operations & Delivery in relation to Waste and Recycling, three issues concerning Northbourne Depot remained on the list  regarding ongoing data integration. The Council had addressed them individually as preferred by the contractor. Progress  had been made, with the first issue, related to site information, now undergoing live testing. Subsequently, the Council had focused on transferring contacts and repair information from the old system to the new one. Though frustrating, the Council had adhered to the contractor's step-by-step approach.

The frequency and effectiveness of the working group diminished as the Council moved closer to a contract. The Council  were awaiting smartphones for operatives to access job data, facilitating seamless workflow across teams. Additionally, there were initiated efforts to expand operational systems to the engineering team. The transition process was slower than desired, but improvements were evident compared to previous periods.

The final issue involved managing stores and waste. Progress was positive, albeit slower than anticipated. A phased approach  had been adopted to recover outstanding debt from customers, yielding £6,000 from the initial phase.  Officers had prioritized enhanced data management, anticipating smoother transitions into new waste management contracts, emphasizing gradual yet impactful changes through data-driven strategies.

After an in-depth discussion it was moved by Councillor Sudra, seconded by Councillor Morrison and  unanimously  RESOLVED that:

a.    the report be noted;

b.    the Five Yearly External Quality Assessment be deferred until after the new Global Internal Audit Standards become effective in January 2025; and

c.     the Audit Committee members be provided with training in relation to “Out Standing Issues”.