Agenda item

Draft Internal Audit Strategy 2021/22

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

Minutes:

The report of the Head of Audit and Risk incorporating the draft Internal Audit Strategy for 2021/22 was presented for the Committee’s consideration.

 

The Head of Audit and Risk highlighted the following key elements of the Audit Strategy –

 

           The current context whereby the unprecedented circumstances of the global coronavirus pandemic has shaped the outlook for 2021/22 leading to a refocusing of priorities.

           Adopting a risk-based and agile approach to audit delivery meaning that internal audit activity will be aligned with the corporate risk registers. In agile auditing activity is based on risks and the organisation’s needs; there is focus on collaboration  and communication between the audit team and stakeholders, the priority is on speed and efficiency leading to a more streamlined process and more rapid audit delivery.

           Utilising the three lines model (First line – operational functions; second line – functions that support, monitor and facilitate e.g. Legal, Quality Assurance, Information Security; third line – functions that provide independent assurance e.g. internal and external regulators) as a framework to bring sources of assurance together.  Internal Audit will work with the first and second line to secure these assurances and the Council’s Corporate Business and Performance Team to support the Council’s Annual Governance Statement.

           Concentrating on what matters most to the Council meaning that the majority of Internal Audit activity will be a review of  the red and amber residual risks on the Corporate Risk Register including the seven risk areas listed in the report where the Council has assessed both the inherent and residual risk as Red.

           Reviewing the management of the Covid-19 risk register to ensure that the Senior Leadership Team continues to effectively manage the risks associated with the pandemic.

           Managing the risk of fraud which has been exacerbated by the current pandemic. During 2021/22 Internal Audit will deliver training and an e-Learning package to raise awareness and proactively identify fraud in the organisation; undertake targeted counter fraud activities and continue with the review of the Council’s approach to counter-fraud, anti-bribery and corruption, anti-money laundering and terrorism financing and will update the Fraud Response Plan accordingly.

           Conducting reviews of areas in response to Heads of Service’s assessment of current risk and control issues as outlined in the report.

           Resuming work which was identified and planned before the pandemic took hold when internal resources were redeployed and focused on supporting the emergency response.

           Continuing to implement the established follow-up process to ensure that management has effectively addressed the risks raised by Internal Audit.

           Implementing a streamlined suite of performance measures to determine the effectiveness of Internal Audit’s work.

           Committing to the ongoing training and development of the Internal Audit Service’s staff. The team continues to include a wealth of internal and external audit experience along with an excellent mix of professional qualifications. Staff turnover remains an issue despite a recent recruitment exercise. However, the experience from last year has provided valuable learning and together with a new and dedicated team and new action tracking software, has placed the Internal Audit Service in a good position to deliver its strategy

 

In discussing the report and strategy, the Committee made the following points –

 

           With regard to the designated red risk in relation to the real term reduction in the Council’s funding and the potential effect on services, priorities and the Council’s financial resilience, reference was made to the legal challenge to the decision by Gwynedd Council to raise its council tax premium on second homes to 100%. Should the challenge prove successful, the Committee wanted to know if there were implications for this Council in terms of having to reimburse premiums paid and whether it needs to be identified as a risk.

 

The Director of Function (Resources)/Section151 Officer advised that he understood that the legal challenge has been mounted on the basis that the increase in the second homes premium approved by Gwynedd Council is unfair and discriminatory. The Housing Wales Act 2014 allows local authorities to levy a premium of up to 100% of the standard rate of council tax on long term empty homes and second homes in their areas   meaning that Gwynedd Council has therefore acted within its legal rights. A court will likely look at the process by which the decision was reached and the consultation process undertaken. The Director of Function (Resources)/Section 151 Officer said that  in Anglesey the Executive has determined that the Council will over the summer months consult on increasing the premium for second homes in its area and in doing so it will have regard to the conduct of the consultation process held by Gwynedd Council. In the event that a legal ruling on the fairness of Gwynedd Council’s process is made in the meantime, then Anglesey would take that into consideration prior to commencing or completing its own consultation process and amending the premium level.

 

           With regard to the Corporate Risk Register, the rationale for the designation of Ash Die back and Poverty as red inherent risks.

 

The Head of Audit and Risk clarified that Ash Die Back is considered a significant issue given the number of trees that are affected and will have to be felled during the next 15 years with many being in high footfall areas near buildings, highways and private property. The issue has been raised as a high risk by the Council’s insurers and a dedicated Officer has been engaged by the Council to look into the matter. Whilst Poverty as a risk was originally designated as the Introduction of Welfare Reform, it was decided to expand the scope of the risk from welfare reform as a cause to include the wider effects of poverty on individuals’ wellbeing and the impact on Council services and their ability to support people in poverty.

 

           Whether in developing the Internal Audit strategy consideration has been given to the changes to the Committee’s responsibilities which the Local Government and Elections (Wales) Act 2021 is introducing and any resulting impact on Internal Audit activity.

 

The Head of Audit and Risk clarified that whilst she could not immediately think of any way in which the new legislation would affect the activity of Internal Audit if, after reflection, she considered otherwise she would report back and advise accordingly. 

 

It was resolved to approve the Internal Audit Strategy for 2021/22 and to endorse the approach and priorities outlined thereon as fulfilling the Council’s assurance needs.

 

NO PROPOSAL FOR ADDITIONAL ACTION WAS MADE

 

Supporting documents: