Agenda item

Annual Report on Internal Audit Activity 2011/12 (Agenda item 8)

Report of the Head of Internal Audit.

Minutes:

The Head of Internal Audit presented the report which had been developed to satisfy the requirements of the Accounts and Audit Regulations 2011 and to meet the Head of Internal Audit’s annual reporting obligations as set out in the CIPFA Code of Practice for Internal Audit in Local Government.

 

Additional tables had been added at paragraph 3.3.4 of the report to make the process more transparent with regards to the identification of overall audit opinions.

 

The report gave opinions in three key areas – systems of internal control and corporate governance arrangements with reference to Breckland Council, and governance provisions in relation to the Anglia Revenues and benefits Partnership.  Added to this, Internal Audit service provision and cost information had been documented.

 

On the basis of internal audit work undertaken in 2011-12, the Head of Internal Audit’s opinion was that the overall standards of internal control for the year ended 31 March 2012 were adequate.  An adequate assurance was additionally given to Breckland’s corporate governance arrangements, whilst a good assurance had been awarded to the Anglia Revenues and Benefits Partnership in respect of its governance.

 

The report also set issues of significance to be considered when compiling the authority’s Annual Governance Statement for 2011-12.  At paragraph 3.5.1 of the report, the details of five high priority recommendations (3 applying to 2011-12 audits and 2 carrying over from previous year’s audits) had been reinstated in full, and acknowledged as presenting significant risks to the Council’s internal control environment. 

 

Referring to the aforementioned paragraph, and in response to a question about the outstanding work on the Asset Register, Members were informed that the Asset Register was now complete.

 

Lady K Fisher wanted to know the reason for BRK/12/02 Customer Services being removed from the Annual Audit Plan and asked if there had been any issues.  The Head of Internal Audit explained that initial discussions with management had indicated audit work in this area would have been of limited value, as documented in Appendix 1 of the report.  However, prior to developing new Audit Plans each year, consideration was given to all aspects of Council operations so it was possible that this area would be targeted for scrutiny at a later date affording a more constructive review of arrangements.  The Head of Internal Audit would revisit potential requirements for such an audit in 2012-13 and liaise with the Assistant Director of Finance on this matter.  Lady K Fisher hoped that this would be included as the Council considered customer services to be very important.

 

On page 18 of the report, Mr Ludlow asked if there were any consequences to consider when high priorities had not been implemented.  The Accountancy Manager pointed out that these outstanding high priority recommendations all formed part of the new Performance Plus system and would be picked up.  Mrs Jolly concurred with the aforementioned point and emphasised that anything outstanding would be shown as a ‘red’.  She also mentioned the fact that Executive Members would be made aware of such matters at their Board meetings from now on.  The Assistant Director of Democratic Services thought that such recommendations had always been flagged up and had been unaware that at some stage these matters had not been reported and would investigate.  She explained that a Performance Board had been set up specifically for audit recommendations that had not been enacted.

 

Questions were then taken from Members in relation to the audit review of Environmental Planning and Building Control on such issues as contract monitoring and planning enforcement.  Mr Stevens recognised that contract monitoring had also been a feature of the Culture and Leisure audit and queried the robustness of corporate contract monitoring arrangements generally, at which point the Head of Internal Audit advised that an audit of Procurement was scheduled to take place in August 2012, which could potentially take into account such matters as contract monitoring across the Council.  The links between Breckland and South Holland Council were next subject to comment, in particular contractual arrangements across both organisations. Members were informed that Internal Audit were in dialogue with Audit Lincolnshire and a meeting had been arranged to discuss the 2012-13 Audit Plans for both organisations, with a view to identifying areas of best practice, undertaking joint audits and/or take assurance from each others work.  However, it had already been recognised that there were quite a number of differences in service delivery models adopted by each Council.

 

In response to a further question in relation to target days, the Head of Internal Audit advised that the 25 day reporting target commenced at the end of the field work.  She explained how this worked.

 

Other questions asked related to the cost of systems and upgrades for Capita Symonds and whether the management findings related to Breckland Council or Capita Symonds.  Members were informed that the nominated officers responsible for implementing agreed audit recommendations were Breckland/South Holland Officers and staff from Capita Symonds.  The Head of Internal Audit pointed out that an overview of recommendations had been set out in Appendix 1 of the Status of Audit Recommendations report on page 65 of the agenda.

 

Member focus was then switched to the findings of the audit review of Community Development. Referring to Appendix 2(2) of the report in relation to the contract with AMS and the generated income, Members were informed that if AMS failed to generate an income there would be a penalty; this was an issue for the initial contract.  Mr Stevens had noticed that there was no contract monitoring in place for this contract and asked how the summary of findings had been picked up.  The Assistant Director of Commissioning was confident that the contract was being monitored in the same way as PFI and Capita.  The Head of Internal Audit advised that the Procurement audit due to take place in August could undertake further work in this area.  The Chairman said that he would be astonished if the contract was not being monitored and asked that this be checked.  He also asked that the point in relation to penalties be picked up.

 

In relation to the failure of the Cash Receipting system, the Accountancy Manager advised that there had been many issues when testing the new system; hence the delays.  The new system would be going live on Monday, 18th June and a contingency plan would be put in place if it failed.

 

Mr Ludlow noticed the overpayment of housing benefit on page 42 of the report that did not seem to be being chased. The Assistant Director of Commissioning explained that the Anglia Revenues Partnership Joint Committee had indicators that were measured and monitored and therefore would be chased.

 

In response to a question about how often network passwords were changed, the Executive Member for Finance & Democratic Services confirmed that Members were required to change their passwords every 28 days and were prompted on the 14th day.  The system did not allow the same password to be used.  Further to this Members had a Citrix dongle that also generated a system code.

 

Mr Ludlow asked for the meaning of LALPAC.  The Assistant Director of Commissioning explained that LALPAC was a market leader software package in terms of technology that dealt with licensing applications.  South Holland District Council would also be using it in due course.

 

The Vice-Chairman referred to planning enforcement particularly in regard to documentary evidence not being retained.  Members were informed that the Head of Service now met monthly to ensure that enforcement cases were moving forward.  A much more rigid regime would be put in place in future although the retention of documentation needed to be picked up.

 

Subject to all information being more open and transparent for Members, it was

 

RESOLVED that:

 

1)           the Annual Report of the Head of Internal Audit be received and noted;

2)           it be noted that the overall standards of internal control were adequate for the year ending 31 March 2012;

3)           it be noted that an adequate assurance had been given in respect of Change Control and Corporate Governance arrangements for the year ending 31 March 2012;

4)           it be noted that a good assurance had been given in respect of the Anglia Revenues and benefits Partnership Governance arrangements for the year ending 31 March 2012; and

5)           note that the opinions expressed together with other matters arising from internal audit work contained within the report be given due consideration when developing the Council’s Annual Governance Statement for 2011/12.

 

Supporting documents: