Agenda item

To provide a periodic report on the Internal Audit function for the period March 2018 – June 2018 and the Acting Audit and Governance Manager’s Annual Report for 2017/18 as required by professional standards.

REPORT ON INTERNAL AUDIT FOR MARCH TO JUNE 2018 AND INTERNAL AUDIT PLAN PROGRESS 2017/18

The Council’s Acting Audit and Governance Manager (Craig Clawson) provided a periodic report on the Internal Audit function for the period of March to June 2018.

The Acting Audit and Governance Manager informed the Committee that 92% of the 2017/18 Internal Audit Plan had been completed as at 31 March 2018 and 99% by 30 June 2018. Fifteen audits had been completed in the quarter of which thirteen had been given Adequate Assurance. One audit had been rated Substantial Assurance and one audit had been rated Improvement Required. No audits had been rated Significant Improvement Required.

The Acting Audit and Governance Manager also informed the Committee of the current position in relation to:

(i)           Quality Assurance;

(ii)         Health and Safety audit;

(iii)        Section 106 update; and

(iv)        Management response to Internal Audit Findings.

OPINION OF THE ACTING AUDIT AND GOVERNANCE MANAGER

The Committee was reminded that as set out in the Public Sector Internal Audit Standards (PSIAS) there was a requirement under PSIAS 2450 that the Chief Audit Executive must provide an annual report to the Audit Committee, timed to support the Annual Governance Statement and that this must include:

• an annual internal audit opinion on the overall adequacy and effectiveness of the organisation’s governance, risk and control framework (i.e. the control environment);
• a summary of the audit work from which the opinion is derived (including reliance placed on work by other assurance bodies); and
• a statement on conformance with the PSIAS and the results of the internal audit Quality Assurance and Improvement Programme.

It was reported that the Internal Audit function undertook a risk based programme of audits each year in order to provide the Council and its Audit Committee with assurance on the adequacy of its system of internal control, governance and risk management arrangements.

Members recalled that a qualified opinion had been provided in 2016/17 based on a number of significant issues being identified within some of the core activity areas of the Council. However, the Acting Audit and Governance Manager was pleased to report that based on the work completed in 2017/18, significant work had been undertaken to ensure that improvement action had been implemented in all of the areas where significant exposure to risk had been reported. He had therefore given an unqualified opinion of Adequate Assurance.

The corrective action taken by Officers with regard to the issues raised by Internal Audit had aided the improvement / maintenance of the control and governance framework. Robust mechanisms were now in place to monitor progress of corrective action, with follow up audits scheduled as necessary.

It was reported that Internal Audit had been working with services on a consultancy basis to support the implementation of new processes and to ensure that all relevant employees had the appropriate training to competently carry out their role. Procurement, Risk Management and Health and Safety were the three areas where this type of work had been undertaken.

The Committee was informed that in 2017/18, only two audits had received an overall audit opinion of “Improvement Required” where significant issues had been identified. Those audits were Walton-on-the-Naze Lifestyles and Health and Safety.

As Health and Safety issues had already been reported above, the Acting Audit and Governance Manager now reported on the high priority issues and mitigating actions for Walton on the Naze Lifestyles in respect of the following matters:-

(i)           Card Payments – PCI Compliance;

(ii)         Unauthorised Refunds; and

(iii)        Inadequate record of Refunds.

UPDATE ON OTHER MATTERS

The Acting Audit and Governance Manager also gave an update to the Committee in respect of:-

a)           Internal Audit Plan Progress 2018/19;

b)           External Quality assessment Update; and

c)           Internal Audit Charter.

The Chairman requested the Acting Audit and Governance Manager to provide a glossary of terms at the beginning of each report in future.

Following discussion and questions by Members, it was:

RESOLVED that the contents of the report be noted.