Agenda item

Internal Audit

  • Outturn Report 2016-17

 

·         Audit Charter 2017

 

  • Strategy and Plan 2017-18

 

Report of the Director of Finance and Resources

Minutes:

Internal Audit Outturn Report 2016-17

 

The Chief Auditor presented the Internal Audit Outturn Report which included the annual internal audit opinion for 2016-17. Internal audit offered an independent, objective assurance and consulting activity designed to add value and improve the organisations operations.  

 

Internal Audit were 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 were 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 2016-17, the Committee had 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 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 minor 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 2016-17. A number of audit reviews during 2016-17 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 of the 2017-18 Internal Audit Plan.

 

Internal Audit Charter 2017-18

 

The Committee considered a report of the Director of Finance and Resources on the Internal Audit Charter for 2017-18.

 

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.  The Internal Audit Charter 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)

 

The report highlighted the small number of revisions which had been made to the Charter since the original was approved by the Audit and Standards Committee in 2014.

 

Proposed Internal Audit Strategy and Plan 2017-18

 

Members considered a report of the Director of Finance and Resources, supported by slides, on the proposed Internal Audit Strategy and Plan 2017-18.

 

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 Strategic Leadership team Members and Commissioners to ensure the Internal Audit work proposed addressed the significant risks facing the County Council and assisted in the achievement of the main priority outcomes. This would allow greater certainty regarding delivery of these audits within 2017-18.

 

In line with the Audit Strategy, the Audit Plan identified the following top risk audits/reviews:

 

·         Staffordshire & Stoke on Trent Partnership – Contract Management

·         Brokerage Services

·         SAP Replacement Programme – suite of reviews

·         Care Director Upgrade

·         Core Payroll & Schools Payrolls – retained Client and Control Function

·         Liberata Payroll System

·         Capital Receipting Transformation

·         Cyber Security – Incident Preparedness & Response Effectiveness

·         Strategic Property Asset Management and Governance

·         Corporate Scheme of Delegations

·         Service & Commercial Contract Management Arrangements

·         Procurement – Commercial Services

 

A level of contingency time, lower than in previous years, had been included. The Audit Plan needed to be continuously reviewed and to remain sufficiently flexible to respond to changing levels of risk. Any major revisions would be brought to the attention of the Audit and Standards Committee.

 

Members discussed the need for flexibility to allow time to address unplanned matters and charging out for external services. The Chief Auditor acknowledged that the considerable time spent in defining the audit plan at the start of the year enabled the programme to have some certainty. A member asked about the Audit Teams resilience and whether additional skilled staff could be brought in if demand required it.     

 

RESOLVED – That:

 

(a)  the Internal Audit Outturn report containing the annual audit opinion for 2016-17 be received and noted;

 

(b)  the Internal Audit Strategy and Plan for 2017-18 be approved and charges to external organisations for audit work undertaken be reviewed and

 

(c)  the Internal Audit Charter for 2017-18, incorporating revisions, be approved

Supporting documents: