Agenda item
Annual Internal Audit Report 2011/12
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 report before the committee summarised the work of Internal Audit and the Investigations Team and provided an update on progress since the previous report on 22 February 2012. Andrea White (Audit Commission) advised that the level of their testing was relatively high in the light of concerns in the previous year. Members questioned the findings of the Conflict of Interest audit which had only limited assurance and heard that the Internal Audit Team were working with departments to ensure consistency, not helped by the timing of the introduction of HR Oracle. Martin Searle (Audit Commission) made reference to the general ledger and the steps being taken with service areas to improve and embed processes. Elements relating to Oracle were taking longer to address.
In response to an enquiry, Simon Lane (Head of Audit and Investigations) referred to the summary of assurance opinions and direction of travel for the past three years and explained that issues with schools had a distorting effect on the figures. On priority recommendations where 86% had been fully or partly implemented he felt that this was an acceptable level, given the high numbers involved and emphasised the importance of the direction of travel. Members asked that consideration be given to how to provide qualitative analysis in addition to quantitative currently available.
The Annual Report on the work of Internal Audit 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. He drew attention to the qualified opinion in relation to the effectiveness of financial and other controls in schools, which had been raised in the previous year’s report. Specific areas of concern were failure to adhere to the national legal requirements concerning teachers’ pay, specifically in relation to head teachers’ pay and the appointment of relatives and also the procurement of equipment through finance leases. In regard to the investigation of fraud Simon Lane referred to the National Fraud Authority’s new strategy for local government, the implementation of which was being reviewed. He drew members’ attention to the 2011/12 fraud case load statistics and the sanctions that had been imposed on the closed cases. It was noted as part of new proposals for fraud investigation, a Single Fraud Investigation Service would operate under the remit of the Department of Work and Pensions and in the long term local authority staff would transfer to the DWP. A further report would be submitted on the implications of this and the government’s recently released document ‘Fighting Fraud Locally – The Local Government Fraud Strategy.
Andrea White (Audit Commission) emphasised the need for controls to be place to limit internal fraud and supported the council’s zero tolerance approach. She acknowledged that the council was working with limited resources however noting that a number of cases had resulted in dismissal. Simon Lane explained that none of these dismissals related to incidents affecting the key financial systems or had a material impact upon finances and undertook to provide the Audit Commission with a detailed breakdown.
Members questioned the extent to which risk assessments were working given the finding of 33 cases of fraud and irregularity during a one year period. They were reminded that it was for this committee to take a strategic approach and consider the extent to which controls in place were effective.
RESOLVED:
that the report be noted.
Supporting documents: