Agenda item

This report provides an update on the progress against the internal audit plan for the period 1 September 2016 to 30 November 2016 and also a summary of counter fraud work for the second quarter of 2016/17.  The appendix to the report also summarises those reports from the 2016/17 plan which have been finalised since the last meeting of the Audit Committee. 

Vanessa Bateman (Interim Head of Audit and Investigation) introduced the report which provided an update on the progress of the Internal Audit Plan and counter fraud work undertaken during the period 1 September to 30 November. 

She began by outlining that this progress report had been prepared shortly after the usual quarterly report to make sure that not too many reports were congregated together. Vanessa Bateman felt more confident as she had been able to settle into the role and the organisation and she had started building the network she required to fulfil the role. She noted the progress achieved with PriceWaterhouseCoopers (PwC) as monthly meetings and a quarterly strategic meeting had been set up. She acknowledged that reports outlining what Brent wanted and needed from its audit service were taken to the Corporate Management Team (CMT) which created useful interaction with CMT.

During the presentation of her report, Vanessa Bateman made the following key points  

•      56 internal audit projects were included within the agreed 2016/17 Plan (excluding follow up and advisory work)

•      11 audits were removed from the Plan agreed at the March 2016 committee (for details see Table 2 on page 56 of the Agenda Pack)

•      12 audits had been added (for details see Table 1 on page 56 of the Agenda Pack)

•      25 audits had reached draft or final stage of completion

She said that the figures demonstrated that momentum had been built. She stated that requests from management had been responded to and where audits were removed from the Plan she had revisited them to ensure that processes had been followed. Vanessa Bateman spoke of the need for the Audit Service to be flexible and adaptable to the organisation, including the necessity to build in contingency at the beginning of the financial year.

Members were informed that 45% of reports had been issued to date (Table 3 on page 57 of the Agenda Pack), with projections improving for the third and the fourth quarter. Special attention had been paid to follow up audit recommendations and to ensure that a structured process had been put in place. Vanessa Bateman informed the Committee that the Service would be able to deliver the Internal Audit Plan for 2016/17, including a few issues which could be added to be looked at prior to the next financial year.  

In terms of the status of 2015/16 Priority 1 and 2 Recommendations, Vanessa Bateman noted an improvement as the percentage of recommendations with unknown status had decreased. However, Members of the Committee commented that having 28 recommendations with unknown status required more work to be put into the matter and requested an update to be provided at the next Committee meeting.       

The Chair of the Committee expressed concern that the amount of additions and removals to and from the original plan was too high compared to what was expected. He advised the Committee that Members should consider carefully what should be included in the next plan.

Members enquired as to why the Parking Enforcement Audit had been removed from the Plan. In response, Vanessa Bateman clarified that it had been taken out because there had been an internal investigation and it had been decided not to conduct risk audit on the top of it. The investigation had not been concluded so the Audit Services would look at the assurance maps, risk maps, risks identified and the auditing needs of Parking Enforcement, including Blue badge, early in the next financial year. She confirmed that this had been agreed with Amar Dave (Strategic Director, Regeneration and Environment). This led to a discussion about the process of authorisation of removals and additions to the Plan and it was clarified that directors had been consulted and information had been provided to the Committee to challenge decisions. Vanessa Bateman added that work on the new 2017/18 Plan would start in January so it could be put in place from April onwards.

The Vice-Chair noted the high number of reports to be delivered in the current plan and asked Vanessa Bateman if she felt comfortable to achieve this target. She responded that it would not be easy to complete all reports on time, but she felt this could be possible as tasks had been moved around and regular meetings with PwC had been set up. She said that the only area where the team was behind was schools because of the complete change in approach. However, this had been prioritised and resources had been allocated to it. This statement raised a question which related to any potential additional fees incurred by the additional work, however, the Committee was assured that the plan would be delivered within the fixed fee.  

The Chair of the Committee commented that 28 recommendations with unknown status were still too many (26.7%) and said that this could not go on being accepted and, therefore, needed to be re-examined.

Vanessa Bateman explained that outcomes of internal fraud investigations were outlined in table 5 and paragraph 5.3 of the report (pages 58-59 of the Agenda Pack). She emphasised that the Service was looking into how it could communicate external and internal messages about fraud. 

Vanessa Bateman gave an overview of the three different types of fraud which were addressed in the report: internal, housing tenancy and other external fraud, information about which could be found in sections 5, 6, 7 of the Report (pages 58 – 62 of the Agenda Pack). In terms of Housing Tenancy Fraud, she drew the Committee’s attention to section six of the report (pages 60-61 of the Agenda pack), stating that fraud managers worked with Brent Housing Partnership (BHP) to prevent and identify fraud. The Chair acknowledged the progress achieved and asked the Service to continue its work as it was on track to achieve its target of 51 cases (26 cases had been identified as fraud since the start of the financial year).

The Committee commented that there had never been a case of fraud involving ZipCar before so ways to prevent it must be looked at.

The Committee acknowledged the Internal Audit 2^nd Internal Audit and Counter Fraud Progress Report – 2016/17 (page 63 of the Agenda Pack) and paid special attention to Business Continuity (page 68 of the Agenda Pack). Conrad Hall (Chief Finance Officer) noted that while there were issues associated with Business Continuity (which related to a lack of sufficient details, implementation at a devolved departmental level, and response to non-standard incidents), positive messages ( improvement of the implementation of current control) had been recognised and a report had been sent to the Corporate Management Team. 

There were no further questions and it was RESOLVED that the progress made in delivering the 2016/17 Internal Audit Plan and the associated counter fraud work be noted.