Agenda item

Progress Report on Internal Audit Activity (Agenda item 9)

Report by Emma Hodds, Internal Audit Consortium Manager (IACM).

Minutes:

Emma Hodds, the Internal Audit Consortium Manager, presented the final progress report on internal activity.

 

The report examined progress made between 28 November 2013 and 16 April 2014 in relation to delivery of the Annual Audit Plan for 2013/14 that included abbreviated management summaries in respect of the audit reviews which had been finalised in the course of this period.

 

Members’ attention was drawn to the progress report on internal activity that had been appended to the agenda (see page 19).    One significant change that had been made to the Audit Plan since its approval in February 2014 was the audit on Affordable Housing Initiatives (BRK1412) which had been deferred until 2014/15 due to the move to review Breckland’s Planning Policies into a single Local Plan which was not due to be adopted until 2016.  Additionally, there was further work that was still on-going.

 

The current position in completing audits to date within the financial year had been shown at Appendix 1 of the report and progress date was in line with expectations – all audits had been completed on time.  On completion of each individual audit an assurance level had been awarded using the definitions shown in the table at section 4.1 of the report. 

 

Members were informed that the Appendix provided an overall view of the assurances awarded.

During the period covered by this report, the Internal Audit Service issued 7 final reports and the Executive Summaries of these reports had been attached at Appendix 2 of the report. In summary, the final reports issued concluded the following:

·              Accountancy Services

A “Good” level of assurance remained in place, indicating a stable control environment which ensured objectives had been met. No high or medium recommendations had been raised.  The Council had sound systems of control in the following areas; Treasury Management, Control Account, Banking, Bank Reconciliation, Asset Register, Budgetary Control and Journal Entries.

 

·              Anglia Revenues Partnership Governance Arrangements

 

         A “Limited” level of assurance remained in place due to one high and 2 medium priority recommendations. The high priority recommendation related to the need to develop a mechanism for the reporting of ARP’s risks to the member authorities, including Breckland Council. In addition, two medium priority recommendations had been made in the following areas:

 

- to ensure an overarching progress report provided a more transparent approach to communicating ARP’s intentions to key stakeholders; and,

 

- a Service Plan should be developed for 2014/15, including the remaining steps for implementation of the strategic direction, along with clear time frames, resource requirements and assessment of risks.

 

·        Work to support the Annual Governance Statement (AGS)

 

Only one low priority recommendation had been made in addition to other work already performed to support the AGS. An overall assurance level was not required for this work. Due to the level of coverage as part of the AGS audits (i.e. the full system was not reviewed, only the key controls), it had not been possible to award a “Good” assurance in this instance. This audit reviewed the fundamental financial systems that had not been subject to full audit review in the financial year and also undertook top up testing of those areas, whereby a full year’s sample was not reviewed as part of the original audit within the year.

 

·              Sundry Debtors

 

The level of assurance awarded had improved from “Adequate” to “Good” since the last review. There was a sound system of control in place and there were no recommendations resulting from the review.

 

·              Receipt, Handling and Banking of Remittances

 

The level of assurance awarded had improved to “Adequate” - there had been only one recommendation (medium priority) resulting from the review, relating to the posting of income in respect of the suspense account. In the areas of policies and procedures, physical security, receipting of monies and the reconciling of income, the controls were sound.

 

·              Firewall Administration

 

An “Adequate” level of assurance remained in place, with two low priority recommendations made. There were sound controls operating in the areas of Firewall Administration, Firewall architecture, Firewall change control, Firewall rules and services, intrusion detection, logging and monitoring and penetration testing. The 2 low priority recommendations would provide enhancements to the current system in relation to Firewall OS and patch management and Firewall backup and resilience.

 

·              Data Centre, Backup and Disaster Recovery

 

A “Limited” level of assurance remained in place. One high and 3 medium priority recommendations had been made during the review. The high priority recommendation related to the need to develop, agree and implement appropriate Disaster Recovery Plans. The three other areas identified would benefit from strengthening – namely,

 

 - to ensure that NCC could adequately support its services should its primary site at County Hall be unavailable for any reason;

 

- the agreed Disaster Recovery Plan should be periodically tested and lessons learned; and

 

- Management should work with NCC Management to understand the nature of the work being done to enhance the System Centre Operations Manager (SCOM) application to incorporate the monitoring of the Council's network switch infrastructure.

 

Breckland Council did place reliance on West Suffolk Internal Audit for certain work where different opinion definitions were used. The summaries of these reports had been attached at Appendix 2, the final reports issued concluded the following:

 

·              Housing and Council Tax Benefit.

A “Substantial” level of assurance had been awarded - this means a small number of significant (but no fundamental) recommendations to improve controls had been made.

 

·              Council Tax

 

A “Substantial” level of assurance had been awarded - this means a small number of significant (but no fundamental) recommendations to improve controls had been made.

·              National Non Domestic Rates (NNDR)

 

A “Substantial” level of assurance has been awarded - this means a small number of significant (but no fundamental) recommendations to improve controls had been made. Four high priority recommendations were made:

 

- one relating to the treatment of valuation office amendments (inaccurate NDR1 forecasting. -properties were not efficiently identified and valued, resulting in loss of income to the authority); and

 

- three relating to NNDR refunds (the need to address reminder parameters to ensure that monies were correctly refunded and not for personal gain, appropriately checked and appropriately authorised).

 

Mr Ludlow referred to page 20 of the agenda where it mentioned target dates and asked if the Council managed to get anywhere near those times.  Members were informed that these times.  Members were informed that these dates were agreed with management and should be achievable.  Members were advised that recently more realistic dates were being proposed by management.  The Assistant Director of Finance explained that with the high priority recommendations, it was not always possible within the three month period, particularly if a policy needed to be introduced which required Committee approval.  The Chairman asked who kept a check on the timescales.  Members were informed that this formed part of the Performance System.  The Chairman felt that Cabinet Members should be made aware.  The Internal Audit Consortium Manager pointed out that Cabinet Members did see sight of the final reports and were aware of the recommendations being made in their Portfolio areas.

 

Referring to page 30 of the agenda and in response to a question in relation to whether the key systems in progress were on track or on schedule, Members were informed that these were not due for implementation and were work in progress.

 

RESOLVED that the outcomes of the 10 completed audits finalised in the period covered in the report be noted.

 

Supporting documents: