Agenda item

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

The Annual Report of the Internal Audit Service for 2021/22 was presented for the Committee’s consideration. The report outlined the Internal Audit work carried out during the year ended 31 March, 2022 based on which the Head of Audit and Risk gave her overall opinion on the adequacy and effectiveness of the Council’s framework of governance, risk management and control during the year which also informs the Council’s Annual Governance Statement. 

The Head of Audit & Risk highlighted the work undertaken by Internal Audit and referred to the audits of the Strategic Risk Register which monitors the comprehensive review of the Council’s risks to achieve its corporate priorities.  During 2021/2022 13 risks were rated as having a red or amber residual risk rating and were recorded in a strategic risk register.  Other Audit work undertaken include concerns raised by the Director of Function (Resources)/Section 151 Officer, Chief Executive and Senior Leadership Team.  Overall, the Audit Section were able to provide ‘Reasonable’ assurance or above for 67% (78% in 2020/2021) of audits undertaken during 2021/2022.  Six audits (25%) received ‘Limited’ assurance during the year, compared to five (25%) in 2020/2021.  The ‘Limited’ assurance reports are submitted to the Governance and Audit Committee together with the Action Plan which highlights the intentions of management to manage the risks that Audit has raised and the Committee will have an opportunity to question the relevant service where ‘Limited’ assurance has been provided. She further said that no audits received ‘No’ assurance and no ‘Critical’ (red) ‘issues/risks’ were raised during the year.  The Head of Audit & Risk referred to the modern approach which is to raise ‘Issues/Risks’ rather than make recommendations which allows the Services to manage their own risks and resolve issues.  She referred to the ‘Current and Overdue Actions’ at page 10 of the report and noted that the Audit Section monitor all actions and pursues them with management when they become due to ensure that they have effectively been addressed.  As can be seen on the chart at page 12 of the report, management has addressed 94% (90% in 2020/21) of ‘Issues/Risks’ raised.  Occasionally target dates are extended for some actions, but only if the service can demonstrate a legitimate reason for the extension.  Due to the Covid-19 emergency, several target deadlines were extended for services whose priority over the last two years has clearly been focused on responding to the pandemic. 

The Head of Audit & Risk further reported that there were no issues which are of significant high risk that warrant inclusion in the Annual Governance Statement and during 2021/2022 it was found that senior management were supportive and responsive to the issues raised.  She further referred to a self-assessment review of good practice of the Governance and Audit Committee, which was undertaken in March 2020 by a Panel consisting of the Chair and Vice-Chair of the Committee, a Lay Member and the Principal Auditor. It provided a high level review that incorporated the key principles set out in the CIPFA’s Position Statement and the associated guidance.  The self-assessment concluded that the Governance and Audit Committee had a high degree of performance against the good practice principles.  She further referred that there were 3 improvement areas identified i.e. Self-assessment with wider stakeholders, self-assessment of the Members training needs and the added support by Democratic Services to the Governance and Audit Committee.

A quality assurance and improvement programme has been put in place to ensure continuous improvement to the internal audit service.  In April 2021, the Governance and Audit Committee agreed a number of performance targets within the Strategy for 2021/2022 which could be seen at page 15 of the report.  Normally the Internal Audit would benchmark its performance against 22 members of the Welsh Chief Auditors Group, but due to the pandemic, benchmarking was cancelled for a second year.  All current members of the Internal Audit team are professionally qualified, which includes CIPFA, CIIA, IRRV and ACFTech and the service has invested to ensure staff continue their professional development.  She further said that the Public Sector Internal Audit Standards require internal audit services to have an external quality assessment every five years.  The next assessment will be undertaken during the summer and arrangements are being progressed with the Welsh Chief Auditors Group for a peer review by Flintshire County Council.    The Head of Audit and Risk further highlighted the challenges and opportunities within Internal Audit and considered that achieving required trained internal auditors supported by a modern approach and professional standards is key.  Staff turnover has created a challenge to ensuring there are sufficiently experience auditors to complete more complex work, as well as to provide coaching and support to new staff members.

In response to a questions raised as the ability of Internal Audit being able to move a target date with regards to statutory target audit dates, the Head of Audit & Risk responded that it has been fortunate that no statutory target audit dates have been overdue and have been resolved within the target dates.

In response to a questions as regards to the recruitment and retention of staff and remote working. The Head of Audit & Risk responded that there is an UK recruitment crisis at present, however, remote working can be an advantage to enable to recruit staff.  She noted that 5 risks have been raised for management to address, including workforce development planning and the Senior Leadership Team reviewing the recruitment data to form a view as to the problem with posts having to be re-advertised on numerous occasions.  The Human Resources Department has recently recruited a Marketing and Recruitment Officer to work on the recruitment of staff to the Council.

Internal Audit Limited Assurance Reports

·           The Administration of Teachers’ Pensions

The Head of Audit & Risk reported that following complaints of gaps in some retired teachers’ pensionable service records, the Director of Function (Resources)/Section 151 Officer requested Internal Audit to review the process of submitting pension contribution and service information to the Teachers’ Pensions Scheme (TPS).  The view of Internal Audit was that in the majority of instances, the Council pays the correct pension contribution deducted from member’s salaries to the TPS. The issue is not isolated to the Isle of Anglesey County Council, a number of press articles highlight advice given by teachers’ unions for their members to check their service information with the TPS.  A review of the report submitted to TPS containing pensionable service information concluded that it does not consistently extract data from the payroll system.  The UK Government’s Department of Education is the scheme manager of the TPS and administers the Scheme on behalf of England and Wales.  The TPS is replacing the MDC process with the Monthly Contributions Reconciliation (MCR) data collection process and will be the new method of submitting service, salary and contribution information to the TPS.  A report on the new system will be hopefully submitted to the September meeting of this Committee. An Action Plan was included within the report.

The Director of Function (Resources)/Section 151 Officer reported that he requested the Internal Audit to review the Teacher’s Pensions records system as some of the pensions records were incorrect and it was evident that problems seemed to occur with software as regards to their service records.  The Internal Audit has confirmed that there are inconsistencies within the Authority’s payroll system with data produced each month.  The Council has been trialling the TPS’s new Monthly Contributions Reconciliation process since October 2021 but it seems there are still irregularities within the system.  The software provider is currently investigating the problems at present.  He further said that teachers have been advised to regularly check their pension records on a regular basis and to report any irregularities to the Council.

Members of the Committee raised the following:-

• The UK Government is intending to introduce a Pensions Dash Board for people to be able to view their pension details.  Questions were raised whether the Council is putting in place a procedure where the Pensions Dash Board can be monitored.   The Director of Function (Resources)/Section 151 Officer reported that the Council’s employees are within the Local Government Pensions Scheme (LGPS) which is administered by Gwynedd Council and the Teachers Pensions Scheme administered by the Teachers Pensions Agency.  Employees in both scheme can access their pension records through the pension portals for their relevant schemes whether they are employed or since left the employment of the Council.  The LGPS scheme is working well but since access to the employees has been afforded to the Teachers Pensions it has become apparent that some issues have arisen. 
• The Council’s arrangements for the provision of suitable housing

The Head of Audit & Risk reported that the review of the Council’s arrangements for the provision of suitable housing provide reasonable assurance that an effective framework is in place to manage the risk of a lack of suitable housing that local residents can afford in their communities.  However, there are opportunities for strengthening this framework by reviewing the take up of Discretionary Housing Payments and developing a strategy for acquiring land.

The Director of Function (Resources)/Section 151 Officer referred to an amendment to  the Table referring to the Discretionary Housing Payments for 2021/2022 which should read £192,793 (80% of the allocation spent).

• Recruitment and Retention

The Head of Audit & Risk reported that there is reasonable assurance that the Council, within the scope of its control, has adequate arrangements in place to be able to recruit and develop staff with appropriate skills to deliver efficient and effective services.  However, the effects of a UK-wide recruitment crisis are inevitably having an impact on the Council’s ability to recruit staff.  Internal Audit has identified some areas for improvement in respect of regular analysis and reporting to the Senior Leadership of recruitment data, workforce development planning and job advertising, which is considered would help to strengthen current arrangements.