Agenda item

To present the report of the Head of Audit and Risk.

The report of the Head of Audit and Risk incorporating the proposed Internal Audit Strategy and Plan for 2018/19 was presented for the Committee’s consideration.

The Head of Audit and Risk reported that the Public Sector Internal Audit Standards (PSIAS) require the chief audit executive to establish risk-based plans to determine the priorities of the internal audit activity, consistent with the Council’s goals. In prioritising resources, Internal Audit is expected to undertake sufficient work to enable the chief audit executive to deliver an annual internal audit opinion for the Council to inform its Annual Governance Statement. Historically, Internal Audit has planned its work on the basis of a three or five year planning strategy. However, the External Audit Quality Assessment undertaken in March, 2017 highlighted that although this planning methodology complied with the PSIAS, consideration should be given to whether this approach is effective given the difficulty of trying to predict what will matter to the Council in three years’ time. The assessor stated that the rate of change in local government suggests a maximum of one-year planning. With this in mind, Internal Audit has adopted a new approach to developing the Annual Plan for 2018/19 using the corporate risk register to determine the priorities for Internal Audit activity whilst also being mindful of the Audit Strategy for 2017/18 to 2019/20. Additionally, meetings were held with the WAO, the Head of Function (Resources) /Section 151 Officer, Head of Function (Council Business) and most Heads of Service to canvass their views on the proposed areas for review. This has resulted in a much more focused, relevant and risk-based plan for 2018/19. The plan is also a dynamic plan and will be reviewed and adjusted as necessary in response to changes in the Council’s business risk, operations and programmes to ensure it remains relevant. Any changes will be reported to the Head of Function (Resources) /Section 151 Officer and to the Audit and Governance Committee.

The Committee considered the report and made the following points –

•           The Committee noted that the Internal Audit service structure is compact and carries no spare capacity. The Committee sought assurance therefore that the service is confident that it has the staff resources to be able to deliver the Audit Plan to target. The Head of Audit and Risk said that the new audit approach and streamline way of reporting will   reduce much of the administrative burden and non-productive days spent. Even if the audit reviews conducted are not in-depth they will be sufficient to identify any substantive or material risks/issues in the area audited; Internal Audit can then decide whether the matters raised require further investigation and can either rearrange the audit and/or modify the work plan to make the accommodation.                                             

•           The Committee sought clarification of the process whereby the Committee is able to ensure that timely corrective action is taken by Management to issues raised by Internal Audit. The Head of Audit and Risk said that the Audit and Governance Committee can require a Head of Service to attend before it to explain compliance or otherwise; Heads of Service are aware through the internal tracking system, of recommendations that have not been implemented by their managers. In addition, a culture change from the top downwards means that overview and scrutiny of areas where there are outstanding issues/actions is now more focused and is becoming more embedded in practice, hence the significant improvement in implementing outstanding recommendations and addressing issues/risks as reported on earlier. The Head of Function (Resources)/ Section 151 Officer said that one of the elements of this year’s service challenge reviews was the implementation of Internal Audit recommendations.

It was resolved to approve the Internal Audit Strategy and Annual Internal Audit Plan 2018/19 and to note the new audit approach to audit planning.

NO ADDITIONAL ACTION WAS PROPOSED