Agenda item

INTERNAL AUDIT ANNUAL REPORT 2017/18

Minutes:

The Head of Audit West and the Audit Manager (Audit West) presented the report.

 

The Audit Manager (Audit West) reminded Members that the 2017/18 Audit Plan had been presented to the Committee in April 2017, and that an update to the end of September 2017 and been presented to the Committee in December 2017. He drew attention to the Internal Audit performance dashboard on agenda page 48 and to the Audit Plan position statement in Appendix 1 of the report.

 

He asked Members to note that though there had been a significant amount of unplanned work, effective working with Internal Audit’s strategic partner, the Devon Audit Partnership, had allowed 80% of the Plan to be completed. The high level of unplanned work and the number of investigations being carried out had been discussed at the December meeting, as had the Senior Auditor vacancy and the long-term sickness of two members of staff. The amount of unplanned work had continued to increase in the second half of the year.

 

Time spent on investigations during the year had exceeded 94 days. In addition, the three items of unplanned audit review work referred to in paragraph 4.9.2 of the report had accounted for 29 days. The contingency for unplanned work had been exceeded by 20%. He asked Members to note the 92% of audits completed in planned time and the high level of customer satisfaction.

 

He said that the fact that only 58% of recommendations had been implemented might at first sight appear disappointing, but this had to be put into context. During the year 20 audits had been followed up, of which 10 had high risk-rated recommendations. Only 3 of these had high-risk recommendations that were not implemented, as detailed in paragraphs 4.6.3-4.6.5 of the report. The 58% figure indicated that there was a problem, but non-implementation related to only a minority of audits.

 

Two audits had resulted in an Assurance Level 2 “Weak Control Framework”, as detailed in paragraphs 4.8.2 and 4.8.3. In both cases management had accepted the recommendations and both audits will be followed up during the first half of the current financial year.

 

A Member questioned the value of the customer satisfaction survey, since, in his view, managers were very unlikely to express negative opinions. He thought the focus of Internal Audit and of the Committee should be on whether recommendations were implemented or not. The Head of Audit West responded that during audits there was quite often an element of disagreement or conflict with management, so the 100% figure for customer satisfaction was meaningful and significant. Collecting customer satisfaction information did not require the expenditure of additional effort. The Audit Manager (Audit West) added that satisfaction feedback allowed Internal Audit to monitor the work of the strategic partner, Devon Audit Partnership, and it was important to do this. Mr Barber said that he thought using customer feedback to inform how future audits were conducted was a sensible approach.

 

A Member asked about the audits whose status was given as ‘postponed’ in Appendix 1. Why, for example, had the Your Care Your Way contract management audit been postponed? The Audit Manager (Audit West) said that the reason was simply a lack of available resources. This audit was regarded as a high priority; it had been put into the 2018/19 plan and would be carried out fairly early this year.

 

Replying to questions from a Member the Audit Manager (Audit West) said

 

  • Approval had been given to fill the Senior Auditor vacancy.

 

  • Internal Audit was now satisfied that the payroll issue (paragraph 4.7.2) had been satisfactorily resolved.

 

The Head of Audit West commented on 4.10, Compliance with Public Sector Internal Audit Standards, and on 4.11 his formal opinion on the internal control framework. Final written confirmation had been received from the assessor that the Council was “general conforming” with the Public Sector Internal Audit Standards. This was the highest rating of the three that the assessor could give, which were “generally conforming”, “partially conforming” or “not conforming”. The assessment is very detailed, with the assessor speaking to stakeholders and clients of the Council, and uses a methodology that takes a holistic view of the audit service.

 

As far as his formal opinion on the internal control framework was concerned, continuing reductions in Council budgets were placing intense pressure on all services, including Internal Audit, which constitutes the third and final line of defence of the internal control framework.

 

A Member wondered whether the audit plan was too ambitious, given the amount of unplanned work that had to be undertaken every year. The Head of Audit West responded that contingency for unplanned work was built into every annual audit plan. However, the previous year the contingency had been exceeded by 20%. Unplanned work was disruptive, and had a disproportionate impact on planned work. Very few local government audit teams completed 100% of their plans and the Committee was kept fully informed of the impact of unplanned work.

 

RESOLVED to note the Internal Audit Annual Report 2017/18 and formal opinion on the internal control framework.

Supporting documents: