Agenda item

Peter Jackson, Head of Internal Audit presented a report which provided an update on the work undertaken by Internal Audit for the period 1st July to 30th September 2022, as attached at Appendix 1 of the report.  The report also included details of planned audit work completed in the period which had previously been reported and the overdue high risk management actions arising from the audit recommendations which were appended to the report at Appendices A and B, respectively.

The Head of Internal Audit provided an update, summarising the key points in the report, and responded to questions and comments from Members in relation to each of the following four sections of the report:-

Section 1 - The Audit Plan / Revisions to the Plan

During the last quarter there had been a number of amendments to the Audit Plan, as set out in the report which help demonstrate that the plan would be kept under review in respect of work required by the authority.

Members welcomed the work carried out to resolve the outstanding high risk actions in the Trading Standards and Food Safety team, which had been a long standing issue and was no longer of concern. In response to a question, the Head of Internal Audit confirmed that the medium to low level risk management actions relating to the Economy and Environment directorate, as identified in the table at 3.5 of the report were low risks. Two of the risks had been approved, with the remaining low risk which related to a long standing issue over reconciliation of licensing income and Internal Audit was awaiting an update on this issue. 

In answer to a query with regard to Foster Care Payments, as set out in paragraph 1.5 of the report, the Head of Internal Audit explained the circumstances around Internal Audit raising specific concerns regarding significant amounts of overpayments previously made by the Fostering Team which had been transferred back into the Council on 1st September this year. The current Internal Audit provider contracts with DCST had also been transferred to the Council. Internal Audit was seeking assurance that the arrangements were working effectively. It was reported that a newfostering payments scheme had been approved during the summer which came into force in September 2022 and Internal Audit would seek further assurance regarding the systems and processes in place.

Concerns were raised regarding the potential impact on the Council in terms of the management of risks and the costs for the Children’s Trust coming back under the Council and whether the Committee would receive regular reporting on this issue. The Committee was assured that the overall transition programme of the Trust was being effectively managed. Internal Audit have liaised with the programme office to better understand the risks and the Trusts budgets had been transitioned and have been allocated against budget holders and these would be monitored as part of the Council’s quarterly monitoring report to Cabinet and Overview and Scrutiny. The reasons for the transferal of the DCST was outlined. The Council would now be in a better place organisationally and would have greater visibility, insight and control of the high risk and high cost areas of the Trust, which would help the Director of Children’s Services to effectively discharge the functions of the directorate.

It was further reported that Internal Audit was working on a monthly basis with the previous suppliers of Internal Audit services of the Children’s Trust in respect of the contract transferred over to the Council and ensuring the work programme would be kept under review. The mainstream Internal Audit Plan for the directorate was to be delivered by the Internal Audit team who had identified new areas of risk. The Joint Resource Panel would cover both placements by the existing service and the incoming services placements. 

Members welcomed the Trust coming back under the management of the Council which they felt the Council would be in a much stronger position to manage the process in a positive way. Members asked about the amount of work required by Internal Audit to undertake the key piece of work in relation to the Joint Resource Panel and the associated costs and financial risk to the Council, and how this issue was to be resolved in future. It was reported that the Internal Audit team was working with the Joint Resource Panel Working Group which made recommendations to the Children’s Services management team on a monthly basis. Arrangements have been put in place to develop an overarching action plan for the Children’s Services directorate, which would be linked to the budget setting process and would map out the different placements from a SEND (Special Educational Needs and Disabilities) and Social Care perspective, including the governance and budget holder responsibilities. Internal Audit would work closely with directorate working groups and the Financial Management team to ensure appropriate checking over placements to ensure they were suitable. The Assistant Director of Finance confirmed that it would take a considerable amount of time before any savings would be made. It was noted that further updates on both an audit and financial perspective would be provided going forward.

Clarity was sought regarding the current audit arrangements and the reduction of available staffing resources since the initial Audit Plan was approved. The Head of Internal Audit confirmed that currently he was able to provide an unqualified annual opinion with the current complement of resources.

Section 2 – Audit Work Undertaken for the Period

Internal Audit had not given any limited assurance opinions for this period and there was no reportable fraud response type work. Substantial work had been carried out with schools as set out in paragraphs 2.8 and 2.11 of Appendix 1 of the report, respectively. The Head of Internal Audit updated Members on overdue management actions. It was noted that there were now only four overdue management actions, two of which had been signed off and there were no high risk actions outstanding for Trading Standards and Food Safety (Economy and Environment) team.

In response to questions, it was noted that Covid-19 related grant work were still being processed. The government had published guidance to support authorities in administering business support grant schemes and reconciliations and the reporting of those grants which were carried out in tranches. An update would be provided to Members on the work that has been carried out in relation to Covid grant work, as part of the Annual Prevention and Detection of Fraud report, which was scheduled to be reported to the Committee in January 2023. It was noted that there were various grants requiring different treatment, dependent upon which government department the funding had been received from. Some grants were audited, signed off by the Head of Internal Audit and Chief Executive stating that the funds have been spent in accordance with the terms and conditions of the grants. Other grants could be signed off by the Assistant Director of Finance. As the receipt of grants goes through the cycle of auditing process, the Committee would receive further updates.

Section 3: Implementation of Management Actions arising from Audit Recommendations

Members referred to the audit work carried out with schools for 2022/23 and the control risk self-assessment process being developed by Internal Audit which was to be issued to all local authority maintained schools, in particular the table at paragraph 3.5 of the report, setting out the high level management actions. The Head of Internal Audit explained that the reason why the figures relating to the number of actions arising from the 3 school audits completed had not being included in the table was that this would disproportionally misrepresent the Councils position due to the number of actions arising from these audits.

Section 4: Internal Audit Performance

There were no new items for inclusion as part of Internal Audit’s work on the Annual Governance Statement for 2021/22 and 2022/23. The work undertaken by Internal Audit to date had not identified any reason to issue a negative or limited annual audit opinion on the Council’s internal control arrangements.

In answer to a question, it was noted that no concerns in relation to any of the primary schools in addressing the actions required to strengthen controls at the school as they were following the timescales for implementation. Any issues of concern would be brought to the attention of management. 

Members welcomed the good progress made on the KPIs and that no areas of concern to be considered for inclusion on the Annual Governance Statement and that the work to date had not identified any reason that would result in a negative or limited annual opinion of the Council’s risk and governance control arrangements. Therefore the Committee was assured regarding the Internal Plan coverage and the rolling audit opinion on the risk governance and control arrangements.

RESOLVED

(1)      to note the position of the Internal Audit Plan;

(2)      to note the Internal Audit work completed in the period;

(3)      to note the position with regards the implementation of management actions arising from Internal Audit recommendations; and

(4)      to note the current position regarding the ability to deliver the annual opinion over the council’s risk, governance and control arrangements.