Agenda item

To present the Internal Audit Annual Report for 2014/15.

The Internal Audit Annual Report summarising the work of the Internal Audit Service in 2014/15 in terms of output, performance, the overall conclusion of the areas audited and how this reflects on the efficacy of the Authority’s internal control system, was presented for the Committee’s consideration.

Mr John Fidoe, Baker-Tilly highlighted the main points from the report with regard to the total number of final and draft reports issued; the percentage of High and Medium category recommendations implemented as at 31 March, 2015 and the overall opinion for the systems reviewed which, as a positive Green/Amber opinion  translates to a minimal to low risk to the Authority based on the scope of the work carried out, the action recommended to management being implemented and those systems continuing to operate as intended. The Officer said that on the basis of the Internal Audit work carried out in 2014/15 and taking into account the outstanding areas of concern as documented under section 4.4 of the report and the number of Red/Red Amber reports issued as at sections 6.3 and 6.4, the Council is considered to have in place adequate control arrangements to manage risks with the caveat that action needs to be taken in 2015/16 to address those areas of ongoing concern to which attention has been drawn.

The Committee considered the report and raised the following points on the information presented –

•           The continuing issue with regard to the implementation of internal audit recommendations by schools. The Committee was particularly concerned that internal audit recommendations to improve schools’ financial controls are not being implemented in a timely manner and the risk which this might pose, and it sought clarification of the actions being taken to rectify the situation. Mr John Fidoe said that there is a difficulty due to Head teachers not being able to access the 4Action system meaning that updates with regard to implementation are provided via the Education Service thus leading to a time lag between recommendations being issued and confirmation that they are being or have been implemented. There are also other issues that need to be addressed. Possible solutions to the schools problem have been discussed with the Director of Learning. However, an annual review of the outstanding internal audit recommendations relating to schools is carried out and a follow up report brought to the Committee.

•           With reference to Partnerships Framework and the weaknesses which Internal Audit had identified in relation to aspects of internal control in respect of partnership working the   Committee sought assurance that Management is taking ownership of this matter and is committed to moving the Partnership Framework forward in accordance with Internal Audit recommendations. The Interim Head of Resources and Section 151 Officer said that the Partnerships issue will now be taken up by the new Chief Executive and that issues around Partnerships are on the agenda of the Senior Leadership Team. Considerable work has already been undertaken in respect of the Authority’s relationship with the Third Sector and a robust framework to that end is now being put in place.

•           The Committee sought and was given assurance that the corporate issues listed at section 4.4 of the report as areas of ongoing concern to Internal Audit are covered by the 2015/16 Internal Audit Operational Plan. The Committee noted that it would need to keep these specific areas under regular review, and it was suggested and agreed that once the new Chief Executive is in post and is established, the Committee be provided with a progress report on the status of those areas listed as areas of continuing Internal Audit concern in order to be assured that steps are being, or have been taken to put in place appropriate governance and control processes for each of the areas noted. The Interim Head of Resources and Section 151 Officer said that whilst he believed there is movement on all of the areas outlined he would seek to raise the profile of these issues within the SLT and report back to the Audit Committee.

It was resolved to accept the Annual Report of the Internal Audit Service for 2014/15 and to note its contents.

ACTION ARISING: Interim Head of Resources and Section 151 Officer to report back to the Audit Committee in due course on progress on addressing the areas highlighted under section 4.4 of the Annual Report in line with Internal Audit recommendations.