Agenda item
Annual Audit Report 2010/11
This report is the annual report from the Head of Internal Audit. The report includes an opinion on the overall adequacy and effectiveness of the Council’s internal controls and presents a summary of the audit work undertaken during the year.
Minutes:
The annual report from the Head of Internal Audit and Investigations included an opinion on the overall adequacy and effectiveness of the Council’s internal controls and presented a summary of the audit work undertaken during the year. In introducing the report, Simon Lane, Head of Internal Audit and Investigations stated that he had considered all of the work conducted by internal audit staff, the council’s audit contractor, Deloitte and Touche Public sector Internal Audit Ltd and fraud investigation staff for the year ended 31 March 2011 and work undertaken post year end. He continued that in his opinion, the Annual Governance Statement was robust and complied with CIPFA guidance and that with the exception of those issues set out in the next paragraph, the controls in place in those areas reviewed were adequate and effective and weaknesses identified were being addressed by management and followed up by Internal Audit.
In relation to Oracle, the Council’s single accounting system, Simon Lane stated that he had recently issued three draft reports with limited assurance opinions. He accepted that as a new system implemented in 2010/11, there were always likely to be weaknesses identified in such a major change, a situation which he was confident management would address.
He also expressed concerns about the apparent lack of financial control within a significant minority of the council’s schools and the general approach to internal audit findings. Whilst schools were responsible for their own budgets, they were required to adhere to both legal requirements and to financial regulations issued by the council, thus ensuring that public money was properly spent and accounted for. A number of schools are demonstrating a lack of compliance with basic procurement regulations, thus placing schools at risk of failing to achieve value for money and at risk of potential legal challenge where EU procurement regulations apply. Thirdly, a number of schools were failing to adhere to the national rules concerning teacher’s pay, specifically in relation to head teacher pay being outside the prescribed bandings determined by the school size. Although, in certain circumstances schools were permitted to pay above the maximum group range, he considered that in a number of cases school governing bodies were paying above the ranges set out within the national conditions document to facilitate incremental increases in pay once the natural pay cap, relative to the size of school, had been reached. This was further exacerbated by Governing Bodies not always being diligent in their recording of the reasons for granting permission to exceed to cap thus placing the school at risk of challenge.
The Chair sought further information on guidance that had been put in place to assist schools to work towards achieving substantial assurance. Aina Udeihi informed members that a range of measures including governors' support services, frequent meetings with Children & families finance officers and the appointment of dedicated procurement officer were some of the measures put in place to assist schools.
Members noted that the Accounts and Audit (amendment) Regulations 2006 placed a further requirement on the Council to, at least once in each year, conduct a review of the effectiveness of its system of internal audit. Simon Lane stated that CIPFA were yet to issue guidance on how such a review would be undertaken although some authorities had opted to employ consultants to undertake the review; others used a peer review process whilst some relied on their audit committee. The District Auditor added that her team were not required to undertake internal review but to make assessment of the control environment as part of the Annual Governance report highlighting any significant weakness. Members agreed with the view expressed by the Chair that there was no merit in employing external consultants.
RESOLVED:
that the internal audit annual report for 2010/11 be noted.
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