The Audit Manager presented a report to update Members on the main findings arising from the internal audit work carried out to date in accordance with the 2013/2014 Audit Plan. In addition, the report provided information on the performance of the Councils Internal Audit Service, Tees Valley Audit and Assurance Services (TVAAS). In accordance with the new Public Sector Internal Audit Standards (PSIAS), the report also presented Members with the proposed Internal Audit Charter for comment and approval.
The total number of planned audit days for 2013/2014 was 1,325. The performance target for the Service was to deliver 100% of the agreed Audit Plan.
A service level agreement for the provision of internal audit services was in place and included a number of performance measures. For 2013/2014, additional performance measures had been introduced by the Audit Manager and were selected based on the perceived development and improvement needs of the Service. The proposed additional measures to be monitored had previously been reported to, and approved by the Audit and Governance Committee. The current status against each of the measures for 2013/2014 was detailed in Appendix 1 to the submitted report.
Generally the performance measures were going well although some areas needed further attention including the overall time taken to complete an asignment. This issue was being regularly addressed with auditors in one-to-one and team meetings. Also, the auditors were relying on managers to respond and there were now fewer managers in post. In addition, some of the assignments undertaken so far this year had been quite large, for example, Housing Benefit. It was highlighted that each assignment was different and the Senior Auditor would set the target at the start of the audit.
A brief summary of all 2013/2014 internal audit reports issued in final was provided at Appendix 2 to the submitted report, whilst Appendix 2b detailed the type of issues being identified by the Auditors.
The Audit Manager commented that there were a number of drafts due to be issued which were awaiting responses from the relevant managers. Two audits - Volunteer Working and Museums - had received only limited assurance. The Deputy Director of Resources confirmed that the Annual Governance Statement would only include audits that had no assurance. Copies of final audit reports on Fleet Management and the Pension IT system, which had also received limited assurance, were circulated to Members as previously requested.
In addition to the final audit reports issued in Appendix 2, TVAAS staff had been involved in a number of other areas of work including:
Detailed housing benefit count testing had involved two senior auditors throughout the summer. As requested by the Deputy Director of Resources, this years work also included the testing usually carried out by staff in resources.
Involvement in the highways and transport project within the Change Programme resulting in the production of an options appraisal report.
Mapping the committee and management decision making structures at the Council to assist the external auditors, Deloitte, in their corporate governance review.
Investigating allegations of theft and/or misuse of Council assets in one service area and also allegations of theft at the Municipal Golf Centre.
Reviewed the issues and problems being encountered by the Council when trying to raise and collect debt relating to social care services.
The Audit Manager confirmed that investigations were currently on-going at the Municipal Golf Club and a final report would be brought to the Committee for information once the work was complete. Members voiced concern that there appeared to be a recurring theme with issues with cash handling. The Audit Manager agreed that there had been several investigations into cash handling and where a criminal offence was committed this was referred to the Police.
The Audit Reports generally recommended segregation of duties when dealing with cash. Unfortunately, this was not always possible and was likely to become more difficult as the number of employees was reduced due to the austerity measures.
Progress to implement any outstanding Priority 1 actions was included in Appendix 3. No further Priority 1 recommendations had been made as yet as a result of 2013/2014 audit work.
With regard to the Foster Carers Payment Module, the Audit Manager confirmed that the new IT system, CHARMS, was being implemented and training was scheduled for December 2013. The system would go live in January 2014 and would address all the issues raised in the audit report. However, the recommendation would remain 'open until after implementation and an update would be presented to the Audit and Governance Committee.
A number of audits had been added at the request of management or in response to emerging risks. The additional days required for these audits had been accommodated by using the blocks of contingency time.
All proposed variations to the agreed Audit Plan arising as the result of emerging issues and/or requests from directorates were communicated to the Audit and Governance Committee for information and comment. To date, only one assignment had been removed from the Plan and this was a Risk Management Audit. The Audit Manager explained that this audit had been removed at the request of the Director of Legal and Democratic Services to avoid duplication. Zurich, the Councils insurers had been asked to undertake a similar audit. Appendix 4 to the submitted report provided more detail as to the one audit removed from the Plan and the main assignments to which the contingencies had been allocated to date.
It was clarified that the audit on Safeguarding Young People would be undertaken in the new year and was at the request of the Executive Director of Wellbeing, Care and Learning in response to recent "grooming" cases nationally. A similar piece of work had been undertaken at Redcar and Cleveland Council and good practice would be shared across the two audits as appropriate. In addition, a data quality review of the submissions made as part of the Trouble Families initiative would be carried out. Again, a similar audit had been undertaken at Redcar and Cleveland Council and it was intended that best practice and any issues could be shared.
The Services opinion methodology was detailed in Appendix 5 to the submitted report.
According to the Public Sector Internal Audit standards (PSIAS), the responsibility for, and ownership of, the internal audit charter remained with the organisation but should be reviewed by the Audit Manager and approved by the Audit and Governance Committee. The Charter should include various statements relating to the scope of internal audit activity, its responsibilities, objectives, independence and reporting lines.
A proposed charter, based on a template used by similar organisations, was included for Members comment and consideration at Appendix 6 to the submitted report.
1. the information provided was received and noted.
2. the Audit Manager would provide a report on the number of investigations completed in relation to cash handling and the sums of money involved.
3. an update on the implementation of the CHARMS system would be presented to a future meeting of the Audit and Governance Committee.
4. the Tees Valley Audit and Assurance Services Internal Audit Charter was approved.