Agenda item

(To receive a report by Lucy Pledge (Audit and Risk Manager), which invites the Committee to note the outcomes of Internal Audit's work and identify any actions that need to be taken)

The Committee considered a report which provided details of the audit work during the period 13 June 2018 to 11 September 2018; advised on the progress with the 2018/19 plan; raised any other matters that might be of relevance to the role of the Audit Committee.

It was highlighted that during the period 13 June – 11 September 2018 four audits had been completed: four to final assurance reports; and one final school audit report.  A copy of the Internal Audit Progress Report was detailed at Appendix A to the report.

Appendix 3 to Appendix A was highlighted to the Committee, which detailed the 2018/19 Audit Plan to date. 

There were currently nine audits at draft report stage; eleven 2018/19 audits in progress; page 21 of the agenda pack referred.

As detailed within the June 2018 progress report, the Committee had received two audits concerning the Capital Programme and Fuel Cards, which had both received Low Assurance.

The Operations and Financial Advice Manager was in attendance at the meeting and provided an update on actions arising from the Internal Audit Report – Capital Programme, which was detailed at Agenda Item 12. 

The Committee was advised that in response to the recommendations as outlined in the Internal Audit:

-      A working group had been established to progress the recommendations on a Capital Reporting project;

-      Any capital schemes that resulted in expenditure greater than £1m were now coded differently within the system to assist with improved monitoring;

-      When major capital schemes were of high risk or high expenditure, a dedicated finance representative was allocated to the relevant project boards;

-      A Capital Strategy was being developed, which would provide a framework for decision-making for future capital expenditure;

-      The reporting of overspend had been formalised so that it was clear when and where the overspend should be reported;

-      Financial training had already been delivered during 2018, which had covered capital and future training sessions would be held during October 2018 covering capital;

-      Work was being undertaken on the procedures and processing of Target Change forms.  This work was expected to be completed by October 2018;

-      The controls that had been put in place had ensured that there was an increase in transparency with the Council's capital programme.  However further work could be undertaken to improve the transparency and that an increase in scrutiny on the approval of capital and accountability was cited as an example.

The Committee was provided with an opportunity to ask questions, where the following points were noted: -

·       Although good progress had been made with the recommendations, the Committee was advised that this had not been initially possible, owing to the focus on the annual closure of accounts.  Following the closure of accounts significant progress had been made with the recommendations and it was advised this would continue;

·       The planned increase in capital expenditure for IMT at the County Council was discussed and it was advised that Finance Service teams were awaiting detailed plans on the proposed expenditure.  The Committee queried whether an audit was planned on IMT capital expenditure and its control environment.  In response, it was noted that an audit had already been undertaken and management action was being implemented.  It was then suggested that IMT capital expenditure be discussed as part of the Combined Assurance Reporting in January 2019;

·       It was advised that work was being undertaken by the Audit and Risk Manager on the County Council's financial resilience in light of the issues encountered at Northamptonshire County Council.

The County Manager for Business Support was in attendance at the meeting and provided an update on actions arising from the Internal Audit Report – Fuel Cards, which was detailed at Agenda Item 11. 

The Committee was advised that in response to the recommendations as outlined in the Internal Audit:

-      All of the recommendations contained within the Internal Audit Report – Fuel Cards had been progressed or implemented;

-      A procurement exercise for the supply of fuel cards was currently underway.  There were currently three contracts in place which would be consolidated into one single contract.  A working group with representation from finance and Serco had been established to work on the procurement exercise.  Tenders were due back at the end of September 2018 and it was hoped that the contract would be awarded to the successful bidder at the end of October 2018;

-      A full review of the governance around fuel cards had been carried out.  Any cards that had been identified as being no longer required had been destroyed.  As a result of the review, 630 active fuel cards remained;

-      The County Council's Travel Policy had been updated and now included a section on Fuel Cards.  A copy of the policy was available for all employees to view on George, the Council's Intranet.  A user guidance note had also been produced; however it was not yet possible to publish alongside the policy until the outcome of the procurement exercise was known;

-      Officers were expected to obtain receipts for fuel and budget managers were now required to review those receipts.

The Committee was provided with an opportunity to ask questions, where the following points were noted: -

·       The Committee was pleased that the recommendations contained within the report had been actioned;

·       It was queried how many cards had been identified as no longer being required and destroyed as part of the review.  As this information was not available at the meeting, it was agreed that it would be emailed to the Committee for its information;

·       Fuel cards were now issued and returned to one central address;

·       Fuel cards could now only be used for the purchasing of standard as opposed to premium fuel and this was outlined in the Transport Policy;

·       A leaver process had been established which ensured the return of fuel cards and the deactivation of those cards.  Managers were encouraged to conduct exit interviews however these were discretionary;

·       The recommendations would be progressed further once the new provider had been appointed.   Although controls had now been put in place, work would be undertaken with the new provider to further develop the control environment.

The Committee was provided with a brief update on the current and recent ICT audit work, page 20 of the agenda pack referred.  It was highlighted that the Committee was due to receive an in-depth ICT update at its meeting on 19 November 2018.

The Committee was provided with an opportunity to comment on the remainder of the report, which covered the following points: -

·       It was requested that detailed written information on the progress with recommendations was included alongside Internal Audit Reports when updates were being received by the Committee;

·       A concern was raised over the number of outstanding audit recommendations, as detailed on pages 26 and 27 of the agenda pack, as this equated to circa 35% of the total number of audit recommendations.  The Audit and Risk Manager agreed to raise this issue with the Council's directors and to seek an explanation;

·       It was queried why two of the planned audits, as detailed in Appendix 3 to the report, had been 'delayed to Q4 by Director'.  The Committee was assured that this was owing to legitimate reasons: For example, the audit concerning Domestic Abuse had been delayed as the service was currently midway through a commissioning exercise for the service.  It was considered an audit would add more value after between three and six months into the contract;

·       Further to the above, the Committee was advised that with regards to the delayed audit on workforce performance and rewards, the audit had been delayed as the Council was currently undertaking a pilot performance and reward scheme and it was therefore considered more beneficial to undertake the audit once the results of the pilot scheme had been implemented.  Furthermore, the Committee requested that the Audit and Risk Manager liaise with the Executive Director as it felt an audit was required during the pilot phase to obtain assurance during this phase of the work.

RESOLVED

(1)  That the outcomes of Internal Audit's work be noted.

(2)  That the Audit and Risk Manager be requested to highlight the number of outstanding audit recommendations with the Council's executive directors and to seek an explanation; and to liaise with the relevant director regarding bringing forward the delayed audit on workforce performance and rewards.