To receive a report from the Director of Law and Governance presenting the Internal Audit Progress Report 2018/19.
RECEIVED the report from the Director of Law and Governance presenting the 2018/19 Audit & Risk Management Service Progress.
1. The report was presented by Gemma Young (Head of Internal Audit & Risk Management) and summarises the work that the Audit & Risk Management Service has undertaken for the period 1 April 2018 to 31 January 2019.
2. The team had started 62 assignments which is 98% of the current audit plan and 38% of the current plan had been fully completed. At the same period in 2017/18 99% of assignments had commenced with 49% completed. Chart 1 on page 65 of the report details the progress made so far.
3. As detailed at point 3.5 (page 65) there had been a lot of changes to the audit plan. Twenty new assignments had been added and nine deferred/cancelled as shown in Annex 2 (Page 79 – 80 of the report).
4. Since the last committee meeting, there have been 2 No Assurance Audits and 1 Limited Assurance as detailed at pages 66 – 67 of the report.
5. In terms of implementing audit actions, 61% of High-Risk actions and 49% of Medium risk actions had been fully implemented by the end of February 2019. Compared to last year, 46% of High-Risk actions had been implemented by 1 February 2018.
6. As detailed at 3.14 (page 69) of the report, the annual savings target is £2m and by the end of January 2019 the team had achieved £3.6m. The team recovered 58 Council properties and 31 Temporary Accommodation recoveries.
As detailed at page 71 of the report, 29 Right to Buy applications had been cancelled, submitted by tenants.
7. As detailed at 3.16 (page 72) of the report, 25 applications had been cancelled as regards ‘No Recourse to Public Funds’ equating to a saving of £430K per annum.
8. As detailed at 3.17 (pages 72-73) of the report, the Insurance team’s highlights included a significant new claim and is likely the reserve will exceed the £500K deductible. This was a large claim that Gemma Young would keep Members informed of.
9. As detailed at Table 7 (page 73) of the report, the Current Abuse cases are listed.
10.As detailed at Table 8 (page 73) of the report, several key successes, so far for the Insurance team, resulting in £243K worth of claims avoided and dis-continued pre-trial.
11.The following questions and queries raised in response to the report:
a. The committee queried the audit action implementation of the high-risk items (61%) which equated to 39% of high-risk actions not implemented. How did the team action this. Gemma Young clarified that the implementation of audit actions by managers is monitored via the assurance board. Managers attend the board to provide reasons for non-implementation of actions and this is taken very seriously. Some of the reasons refer to system issues whereby the supplier is contacted to make those changes. They are still high-risk items but have not been able to be remedied. There are robust reasons why these high-risk items have not been implemented yet but are confident that they will be, by monitoring them. Sarah Cary further clarified that from a management perspective, these audit actions can sometimes take between 6 – 9 months to implement. Peter Nwosu (Independent Member) responded that if it is going to take 6 months to implement, then they would not be due by 1 Feb. The deadline for implementation should consider any delays i.e. 6 months.
Gemma Young further clarified that the team try to be reasonable with deadlines, but often we need to extend those deadlines for unexpected reasons. The risk would therefore not be overdue after 3 months if a manager is saying it will take 6 months to implement.
b. Councillor David-Sanders comments that some of the high-risk items relate to the financial management of schools, bearing in mind that many of these schools have business managers. It was concerning that some of the risks were quite basic i.e. no-account checking. Gemma Young agreed and stated that if the Contract Procedure Rules are not followed then you are not getting best value. The Internal Audit team follow up these recommendations until they are implemented.
c. Fay Hammond (Interim Executive Director Resources) suggested that at the year end, all school audits should be looked at and the top 3 issues should be listed and then rolled out to all schools as a prevention measure i.e. looked at 20 schools and these are the top 3 issues. Gemma Young would be taking this suggestion forward with Schools.
AGREED to note the progress made in delivering the Audit & Risk Management Service’s 2018/19 work plan and the outcomes achieved to date, to note managers’ progress with the implementation of agreed actions arising from internal audit work and to note the outcomes from the work of the Counter Fraud Service to date.