Agenda item - Annual Internal Audit Report 2016/17

Report of the Executive Director, Finance & Resources

1)           That the Committee notes that the Head of Internal Audit has given reasonable assurance on:

·         the overall adequacy and effectiveness of the council’s framework of governance, risk management and control for the year-ended 31 March 2017

·         that the council’s arrangements continue to be fit for purpose in accordance with Delivering Good Governance in Local Government Framework 2016 published by CIPFA/SOLACE.

2)           That the Committee notes the council has an effective internal audit function which has achieved some notable successes in 2016/17.

3)           That the Committee notes that opportunities to strengthen the function further have been identified and will be implemented as part of Orbis IA.

4)           That the Committee considers the implications of the Annual Audit Report for the Annual Governance Statement.

10.1      The Committee considered a report of the Executive Director, Finance & Resources that provided the Head of Internal Audit’s opinion on the council’s control environment and governance arrangements, a summary of the results of audit work for the year and an assessment of the effectiveness of internal audit against the UK Public Sector Internal Audit Standards.

10.2      Dr Horne stated his concern that the proportion of high priority recommendations not implemented had increased from 5% to 14% and asked whether the officers responsible for those risks should be invited to the committee. Dr Horne stated that the two areas of challenge would be Information Governance and improvements to contract management and he would welcome details of the plans in place for those areas. Dr Horne also noted that the actions to improve controls to prevent parking fraud and losses had been slower than anticipated and questioned whether the committee should receive an update on the issue if progress continued at the same rate.

10.3      The Executive Director, Finance & Resources agreed that accountability was welcomed and consideration could be given to requesting officers that had not implemented high priority recommendations to attend the committee. The Executive Director, Finance & Resources clarified that Information Governance would be the subject of a deep dive by the committee and a Strategic Risk focus on the next agenda. The Head of Internal Audit added that parking controls would continue to be monitored closely and an update could be considered should progress continue to stall.

10.4      Councillor Sykes asked if the council had been fortunate to avoid a ransomware attack or because effective security controls were in place.

10.5      The Head of Internal Audit answered that the council did have more up to date operating systems compared to some authorities although there were certainly vulnerabilities in other areas that would need to be addressed.

10.6      Councillor Morris asked for clarification on the statement on improving controls on the use of debit cards and collecting cash income in schools.

10.7      The Head of Internal Audit explained that as schools financial stability was decreasing, more events were being held by way of fundraising and improvements to controls and recording of both cash income and debit card expenditure required improvement.

10.8      Councillor Taylor asked what the liability to the council was if a school went into deficit.

10.9      The Executive Director, Finance & Resources explained that every effort would be made by the council to support schools in their financial challenges and significant time had been spent with Headteachers and Governors to ensure proper financial plans were in place.

10.10   Councillor Taylor enquired as to the possible challenges of the National Funding Formula due to come into full effect in 2019/20.

10.11   The Executive Director, Finance & Resources stated that the council had discretion on whether to support a school and it may well be that the Formula may be revisited by central government before 2019/20.

10.12   The Chair asked for further information on the improvement required in income controls from life-events.

10.13   The Head of Internal Audit stated that the issues were similar to those in schools and related to financial management with the finance team now working closely on improvement measures with staff in the service.

10.14   RESOLVED-  

1)           That the Committee notes that the Head of Internal Audit has given reasonable assurance on:

·         the overall adequacy and effectiveness of the council’s framework of governance, risk management and control for the year-ended 31 March 2017

·         that the council’s arrangements continue to be fit for purpose in accordance with Delivering Good Governance in Local Government Framework 2016 published by CIPFA/SOLACE.

2)           That the Committee notes the council has an effective internal audit function which has achieved some notable successes in 2016/17.

3)           That the Committee notes that opportunities to strengthen the function further have been identified and will be implemented as part of Orbis IA.

4)           That the Committee considers the implications of the Annual Audit Report for the Annual Governance Statement.