Agenda item

Report of the Shared Services Director for Audit, Fraud, Risk and Insurance.

7.1       The Committee received a report that summarised the work of Internal Audit in 2016-2017 and provided the opinion of the Interim Shared Services Director of Audit, Fraud, Risk and Insurance on the adequacy and effectiveness of the Council’s governance, risk management and internal control environment. 

7.2       The Committee noted that the work carried out by the Council’s Internal Audit Service, in the financial year 2016/17 found that, in the areas audited, internal control systems were generally effective with 82% of the audits undertaken receiving a positive assurance opinion. This was an improvement on the number of positive assurance audits issued in the previous year. 

7.3       There were a few areas where control improvements are required and compliance with agreed systems could be improved. In each case action plans are in place to remedy the weaknesses identified. 

7.4       The Council was found to be effective, in most areas, at implementing recommendations where concerns in respect of controls were identified.

7.5       The Committee noted that to provide the Council with some assurance over the key financial and HR systems, a number of internal audits of Managed Services had been undertaken during 2016/17.  In response to questions, Moira Mackie advised that although an end to end payroll audit had not been undertaken sample testing on key areas of the payroll process had been.  While the testing had identified a number of exceptions, no material issues were identified.  The exceptions identified need to be addressed by BT and at present Internal Audit was some way off from reporting anything other than a limited assurance in this area.  The same applied to the audit of the pensions returns to Surrey County Council.  There had been some difficulty in undertaking testing due to the lack of information being provided by BT to Surrey County Council.  Generally, once such information was provided the latter were updating the member data appropriately.  In response to questions, the City Treasurer advised that it would be important to undertake further audits of transactional HR, payroll and finance services to receive assurance that BT will provide the correct data to the new the contractor in 2 years time.

7.6       Members asked whether the number of audits that were deferred during 2016/17 was typical.  Moira Mackie provided assurances that the number was not out of the ordinary and highlighted that a good level of audits had been undertaken across all service areas of the Council within the year. Members commented in respect of the audit of local authority schools that the results revealed the same type of generic issues as TMOs.  Members questioned how this would be addressed.  Moira Mackie commented that generally schools were much better and professionally managed than TMOs.  A number of actions for management to consider had been put forward.  The main recommendations of the Children’s Services Department should take proactive action, in collaboration with schools, to improve control and address the common areas of weakness identified.

7.7       RESOLVED: That the results of the internal audit and internal control work carried out in 2016/17 be noted.