Agenda item

Internal Audit

·         Outturn Report 2015-16


·         Strategy and Plan 2016-17


·         Charter


Report of the Director of Finance and Resources


The Chief Auditor presented the Internal Audit Outturn Report which included the annual internal audit opinion for 2015-16. Internal audit offered an independent, objective assurance and consulting activity designed to add value and improve the organisations operations.  


Internal Audit are required by professional standards to deliver an annual internal audit opinion and report to those charged with governance timed to support the Annual Governance Statement.  The annual internal audit opinion must conclude on the overall adequacy and effectiveness of the organisation’s framework of governance, risk management and control.  Audit opinions are awarded for individual systems and compliance audits within one of the following categories – substantial, adequate or limited assurance. 


A high level summary of the work undertaken by the Section was detailed in the report. For those areas awarded “limited assurance”, action plans had been or were in the process of being agreed with the relevant Director / Head of Service. 


During 2015/16, the Committee continued to receive full copies of all “Limited Assurance”, High Risk Auditable areas (regardless of opinion) and Major Special Investigation reports.  Internal Audit would continue to track and report on the implementation of High Level Recommendations, including those contained within reports awarded “Adequate Assurance”.


Areas where assurance could not be provided in 2015/16 together with areas of improvement and high level recommendations were detailed in the report.


The report included a summary of work undertaken in relation to fraud and corruption and the outcome of special investigations. Overall, there were indications that that there had been some lapses in applications of controls, increasing the risk of potential fraud. Reports had been issued and to ensure that the control weaknesses have been addressed and recurrence prevented.


The methodology used as the basis to form the assessment of the overall internal audit internal control environment had previously been endorsed by the Committee and was detailed in the report. 


Overall, an “adequate assurance” had been given on the overall adequacy and effectiveness of the organisation’s governance, risk and control framework, i.e. the control environment in 2015/16. A number of audit reviews during 2015/16 had identified high level issues, which have resulted in the system being awarded a limited assurance opinion.  The key actions identified must be implemented as agreed and progress monitored to strengthen the control environment. This would be a key focus for the 2016/17 Internal Audit Plan.


Internal Audit Strategy and Plan 2016/17


Members considered a report of the Director of Finance and Resources, illustrated by slides, on the proposed Internal Audit Strategy and Plan 2016/17.


The Audit Plan had been prepared in line with the Audit Strategy detailed in the report.  As part of the agreement process for this year’s plan, detailed discussions had been held with the Commissioners to highlight the Internal Audit work proposed; complimented and added value to the process. This allows greater certainty regarding delivery of these audits within 2016/17.


To meet the requirements of the External Auditor increased emphasis will be placed on fraud and corruption work, particularly in relation to developing the proactive elements of the plan and the work of the North West Staffordshire Fraud Hub. Compliance work within Schools would continue to focus on the key risk areas of income, procurement and community facilities.


The Audit Plan defined the top risk audits/reviews assessed next to the Audit Strategy.


Members discussed individual audit reviews and areas of risk and asked whether the increased volume of commissioned work was impacting on the work of Internal Audit.  The Chief Internal Auditor confirmed appropriate resources were in place to audit the key risks of the County Council outlined in the 2016-17 audit plan. 


Internal Audit Charter 2016/17


The Committee considered a report of the Director of Finance and Resources, supported by slides, on the Internal Audit Charter for 2016/17.


The Public Sector Internal Audit Standards and the Local Government Application Note Standard 1000 required that the purpose, authority and responsibility of the internal audit activity must be formally defined in an Audit Charter  and approved by the Board ie the Audit and Standards Commitee.  The Internal Audit Charter was a formal document, copy appended to the report, which set out:-


  • Internal Audit’s position within the organisation
  • Its reporting lines
  • Access to personnel, information and records
  • The scope of Internal Audit’s activities
  • What the term Board means (i.e. the Audit and Standards Committee)


Only two revisions have been made to the Charter:


·         Defining the mission of Internal Audit

·         Inclusion of the core principles for the professional practice of internal auditing.




(a)  the Internal Audit Outturn report containing the annual audit opinion for 2015/16 be received and noted;


(b)  the Audit and Standards Committee receive a briefing on the management of financial risk around Staffordshire and Stoke on Trent Partnership Trust, at their meeting on 12 September 2016


(c)  That the Internal Audit Strategy and Plan for 2016/17 be approved.


(d)  That the Internal Audit Charter for 2016/17, incorporating two small revisions, be approved.

Supporting documents: