Agenda item
Internal Audit Progress Report
This report provides an update on progress against the internal audit plan for the period 1st April 2014 to 28th February 2015. The report also provides a summary of counter fraud work for 2014/15.
I have attached an appendix to the report.
Minutes:
Members considered a report that provided an update on progress against the internal audit plan for the period 1 April 2014 to 28 February 2015 and a summary of counter fraud work for 2014/15. In agreeing to receive first Chief Officers who were in attendance to explain the results of their service area’s audit, members welcomed Chris Whyte (Head of Recycling and Waste), Phil Porter (Strategic Director, Adult Social Care) and Rakshan Pindoria (Head of Client Team, Adult Social Care).
Simon Lane (Head of Audit and Investigations) reported on the weaknesses he had identified on the ECHO application audit. He explained that ECHO was a business information system designed and managed by Veolia under the Public Realm Contract with the Council. Simon Lane brought to members' attention the following key areas of weakness as part of the audit:
Failure to review and update the training matrix to confirm that all staff have been adequately trained; lack of a clear indication of the current license arrangements in place; use of weak passwords to authenticate access to the ECHO system; storing of user passwords in unencrypted format; weak user access management processes; absence of a process to report and review critical changes on the system; absence of adequate up to date restore and recovery arrangements; and absence of service level key performance targets. He made the point that the current issues around password security do not conform to minimum PSN standards. As a result of the audit, one priority 1, four priority 2 and one priority 3 recommendations were raised.
Chris Whyte (Head of Recycling and Waste) explained that the main areas of concern involved security and use of the system which had been live for less than a year. He added that the recommendations of the audit as set out in the report would be carried out and that the system controls would be subject to a review by the technical team of Veolia, the owners of the system. He was confident that Veolia would comply with the Council’s request as they were keen to partner the Council in the management of waste. In respect of timescale, Chris Whyte stated that it would take about 3 months to carry out the recommendations effectively.
Members instructed the Head of Audit and Investigations to oversee the implementation of the recommendations and if dissatisfied the Chief Finance Officer should report back to the Committee. Chris Whyte was thanked for his contribution.
The Head of Audit and Investigations then reported on the audit findings of
Appointee and deputyship audit within Adult Social Care as follows;
• Documentation for Appointeeship & Deputyship clients not always retained on Framework I to support applications, income received and expenditures paid;
· Exceptions identified by Softbox were not resolved within a timely manner;
· Softbox Exceptions reports were not flagging all exceptions;
· Reconciliations were not being carried out on a monthly basis.
As a result of the audit, four priority 1, eleven priority 2 and one priority 3 recommendations were raised.
By way of introduction, Phil Porter clarified the differences between Appointeeship, and Deputyship and their respective duties as set out in the report. He added that as from 2013, the Council decided that due to cost pressure and the inability to collect any fees from the Appointeeship clients to cover the administration costs, it would no longer accept any new Appointeeship clients (unless there were exceptional circumstances). As this decision was expected to result in an increase in the number of Deputyship clients managed by the Council, the Council was now planning to charge for appointee and may start accepting new Appointeeship clients once the plan was finalised.
In respect of the audit findings the Strategic Director submitted that the current Procedures Manual for Appointeeship Clients and Deputyship was being updated with a separate document outlining the policies and procedures regularly being reviewed. He continued that the annual audit on valuable items would be undertaken by 27 March 2015 and that this would occur on an annual basis. Raksha Pindoria added that income and expenditure discrepancies were being accurately identified in the exceptions report which was being signed off to evidence a review. She continued that she was liaising with IT to address any functionality issue. The Strategic Director added that reconciliation between SoftBox and Appointee & Deputy Bank Account and also between ResFunds and old bank accounts were being undertaken on a monthly basis as were direct expenditure payments and prepaid card payments. Members also heard that since migration to One Oracle, the Team had been unable to complete reconciliations but that solution to address this issue had only just come to light. The Strategic Director acknowledged the issues with storing source documents on shared drives and the lack of security but that Framework I was not an appropriate repository for invoices etc.
In the discussions that followed, Members shared the view that maintaining documentation including invoices on shared drive was risky as they could be deleted accidentally, expressing preference for a more secure method. In response to a member’s question, the Strategic Director stated that the department would have carried out all the recommendations in the audit by 30 June 2015 and that appropriate checks and balances were in place to ensure that the target date could be met.
Phil Porter and Raksha Pindoria were thanked for their presentation.
Simon Lane then gave a regular update on the internal audit plan including internal fraud, external fraud and housing tenancy fraud. Members heard that out of a total of 1,200, 840 days had been delivered and that there were 84 projects on the current plan (excluding follow up and advisory work). Limited assurance reports for the current year was 26% compared to 42% in the previous year. The Chief Finance Officer pointed out that this level of limited assurance reports was still too high.
Councillor Filson queried whether it was possible to complete the plan within the available days, given the level of achievement so far. Simon Lane pointed out that the benefit of outsourcing was that the contractor to flex resources into the contract and was confident that the outstanding projects would be completed within the remaining days. In respect of the presentations by the Andy Monkley (Subsidy Manager, Housing Benefit) and Andy Donald (Strategic Director of Regeneration and Growth), Simon Lane drew members’ attention to the written update circulated by Andy Monkley and reproduced in paragraph 3.6 of the report by the Chief Finance Officer.
Members took note of the limited assurance rating reports for JFS and Princess Frederica earlier and bearing in mind the Chief Finance Officer’s advice on delegated powers to Governing Bodies, members were minded to invite the Chair of Governors/Financial Director of voluntary aided and maintained schools to future meetings to explain their limited assurance rating and outline measures to address it. In welcoming the report, members expressed their appreciation to Simon Lane and his team for the excellent work particularly for the recovery of 51 properties which would be released to homeless families, a substantial financial saving to the Council.
Members requested details of the number of staff who have been prosecuted for fraud for 2014/15.
RESOLVED:-
(i) that the report the Chief Finance Officer’s report on internal audit be noted;
(ii) that Strategic Director of Regeneration and Growth and the Housing Subsidy Manager (Housing Benefit) be re-invited to give progress reports on their responses to the limited assurance ratings;
(iii) that Chairs of Governors/Financial Directors of voluntary aided and maintained schools with limited assurance rating reports be invited to future meetings to explain the results of their schools’ audits and to provide measures to address them.
Supporting documents:
- Internal Audit Progress Report 2014-15 - Cover Report v4, item 7. PDF 268 KB
- Internal Audit Progress Report appendix 1 - March 2015 docx v2, item 7. PDF 363 KB