Agenda item

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

Submitted - the Internal Audit Strategy 2022/2023.

The Head of Audit & Risk reported that the Public Sector Internal Audit Standards (PSIAS) requires the Head of Internal Audit & Risk to establish a risk-based strategy to determine the priorities of the internal audit activity, consistent with the Council’s goals. In prioritising the finite resource, sufficient work needs to be undertaken to enable the Head of Audit & Risk to deliver an annual internal audit opinion for the Council to inform its Annual Governance Statement. The Strategic Risk Register is used to determine the priorities for internal audit activity and in addition, discussions are undertaken with the Senior Leadership Team and Heads of Service to discuss their views on the proposed areas for review and their areas of concerns. In keeping the priorities under review, as necessary, adjusting them in response to changes in the Council’s business, risks, operations and programmes to ensure that they remain relevant. To ensure that the Internal Audit is concentrating on what matters most to the Council, the majority of the work focuses on reviewing the red and amber residual risks on the strategic risk register.  Currently, the strategic risk register includes five risks where the Council has assessed both the inherent and residual risk as red as can been seen within the report.  Having exhausted the technical capabilities in IT, the IT Auditors of Salford City Council have been commissioned to undertake a programme of work to provide the Council with the assurance that its IT vulnerabilities are being effectively managed.  During 2021/22, apart from supporting the Welsh Government with its National Fraud Initiative, undertaking reactive investigations and conducting a review of fraud and corruption in procurement, the counter fraud programme was reduced due to capacity issues.  Plans had included delivering training and an eLearning package to raise awareness and to proactively identify fraud in the organisation.  The Head of Internal Audit & Risk further referred to the Administration of Teachers’ Pensions review which followed complaints of gaps in some teachers’ pensionable service records which was discussed, in detail, within the previous item.  She noted that it has been decided to audit the administration of the Local Government Pensions Scheme as well. 

The Head of Audit & Risk referred to the ‘Unofficial School Funds’ which are funds outside the delegated budget of the schools and the Internal Audit continue to support the Director of Education, Skills and Young People to provide assurance that income and expenditure within unofficial school funds are properly accounted for and the governance arrangements are appropriate.  This will involve further feedback and training to Head Teachers, and the quality assurance of school fund audit certificates.  Discussions have been undertaken with the Director of Education, Skills and Young People that financial management in Schools would benefit from closer review.  Continued monitoring of the creditors system to analyse data in respect of duplicate payments and fraud.  She further said that Outstanding Work from 2021/2022 will be undertaken as regards to : Council Tax and Non-domestic Rates Refunds; Gas Safety Inspection; Adult Social Care Finance and Grant Funding.  She emphasised that the Strategic Risk Register is the priority of Internal Audit & Risk and she referred to Appendix A of the report which highlight the Red and Amber Residual Risks.  

She further referred to the Performance Measures which are more difficult to monitor when applying  risk-based internal audit which involves monitoring progress against a plan that is constantly changing.  A Quality Assurance and Improvement Programme has been put in place to ensure continuous improvement of the internal audit service. A reduced and streamlined suite of performance measures have been adopted to determine the effectiveness of the work which was shown at Table on Page 15 of the report. 

In response to a question raised as to the meaning of Financial Resilience in the Council and especially due to rising energy prices and materials the Head of Audit & Risk said that in 2019/2020  Internal Audit carried out work to benchmark the CIPFA Financial Code of Practice which has six principles with which the Council must comply.  She noted that the key question for the audit in respect of Financial Resilience in the Council will be ‘whether the Council has adequate arrangements in place to manage the implications in real term funding reductions to ensure that the Council continue to ensures that it continues to achieve its priorities and delivers quality services’ and this will be the focus of the work with the Finance Department.  The Director of Function (Resources)/Section 151 Officer said the focus of the work for Internal Audit will be how the Council will plan ahead for the future.  He said that assessing the needs of the services afforded by the Council is unpredictable and especially with the increase in inflation.  

It was RESOLVED that the Governance and Audit Committee considers that the Internal Audit Strategy for 2022/2023 fulfils the Council’s assurance needs.