Agenda item

To present the Internal Audit Progress report.

The report of the Head of Internal Audit on the work of the Internal Audit service during the period from 1 April, 2015 to 31 December, 2015 was presented for the Committee’s consideration. The report provided information about the nature of the work undertaken during the period and the results thereof including  the audit opinion and recommendations pertaining to each area reviewed; audits resulting in Limited Assurance opinion; audit follow- ups and recommendation tracking along with a schedule of outstanding High and Medium recommendations.

The Audit Manager reported that an analysis of the Internal Audit Service’s performance for the period from 1 April to 31 December, 2015 demonstrates that performance levels are more or less on target. However, the ability of the service to achieve the 2015/16 Operational Plan will be dependent on the level of demand for audit resources in respect of referrals, unplanned work prior to the year end and sickness absence levels. The Officer updated the Committee with regard to the staffing position and said that up to December, 2015, 101 days had been lost to sickness absence and, because of a vacancy within the team there were 135 unfilled audit days making a total of 236 days or 20% of the resources available for the 2015/16 audit plan. However, the Officer confirmed that she remained confident that the service would be able to deliver 60% of the Audit Plan by the end of the month.

The Head of Resources and Section 151 Officer said that the delivery of the audit service is dependent on the availability of staff and that the Audit Manager is endeavouring to manage the team to improve the situation. A trainee accountant has been assigned to the service on a temporary basis to provide an additional resource. The Finance Service has received confirmation by the Audit Manager that the Internal Audit Service is able to provide the necessary level of coverage to provide assurance with regard to the audit of the Authority’s key financial systems; what is being lost at present is the added value the Internal Audit service is able to bring to other areas of the Council with the service being restricted instead to concentrating on the core deliverables. Looking forward over the next 3 years the Internal Audit Service in line with many other services, will  be reviewed to  determine how the service is to be delivered in future.

The Head of Internal Audit said that a number of factors had made it a challenging year for the service. There are increasing pressures on the service which management need to recognise as regards their impact on staff. The primary task at present is to ensure that Internal Audit can provide the necessary assurance based on the work undertaken; the Officer said he was confident that that would be the case.

The Committee considered the report and highlighted the following issues –

•           The Committee noted the Internal Audit staff position in the context of the delivery of the audit plan along with the professional views expressed, and reiterated its concern that the Internal Audit Service may not be sufficiently resourced to be able to discharge its duties to the best effect and in a way that adds value to the Council. The Committee emphasised the importance of the Internal Audit function both to the Committee and to the Council in providing assurance in relation to the robustness of the Council’s system of internal controls, its risk management arrangements and corporate governance processes, and the need therefore to ensure that it has the resources to carry out those responsibilities. The Committee sought clarification whether the audit plan is too ambitious as regards the staff resource available to execute the plan or whether the service is fundamentally under-resourced.

The Committee was informed that the plan is based on the number of staff available and staff absences are factored into it; sickness levels are unfortunate and are not controllable.

The Assistant Chief Executive (Partnerships, Community and Service Improvement) noted the point made and said that she would convey the Committee’s concern about the resourcing of the Internal Audit Service to the Senior Leadership Team; however that concern is articulated in a context where every service is being asked to formulate a three year savings plan.

•           The Committee noted that a Debt Summary Report from 14 January, 2015 showed that the total amount of sundry debt outstanding to be £3.192m.The Committee sought clarification whether there is an underlying problem with debt collection or whether the position has improved.

The Head of Resources and Section 151 Officer said that this was a historical problem. A Scrutiny Outcome Panel is reviewing the Council’s debt management arrangements and is due to report on its findings shortly. The volume of historical debt on the system has made it more difficult to manage new debt. The Finance Service has instigated a process of writing off longstanding debts which are deemed to be uncollectable and a significant amount has been deleted through that process which will continue with the closure of the 2015/16 accounts. A review of the structure of the Revenue and Benefits team responsible for income collection and sundry debtors has been carried out and additional resources will be put into the team. Recording procedures have also been reviewed to ensure the Council has the necessary supporting documentation to facilitate debt recovery through the courts where necessary.

•           The Committee noted that an audit review of Ysgol Cemaes produced a Limited Assurance opinion and it sought clarification of the steps taken to improve financial controls within schools.

The Audit Manager said that follow up audits of schools have begun and will be referred to the attention of the Lifelong Learning Service. The Audit Service has also carried out a thematic review of five schools regarding the collection of school meals income and this will also be referred to the attention of the Lifelong Learning Service.

It was resolved to accept the report and the assurance provided to the Committee regarding the internal control, risk management and corporate governance processes in place to manage the achievement of the Authority’s objectives, subject to noting the Committee’s concern about the resourcing of the Internal Audit Service.

ACTIION ENSUING: Assistant Chief Executive to raise the Committee’s concern about the resourcing of the Internal Audit Service with the Senior Leadership Team.