Agenda item

The Divisional Director and Group Manager (Audit & Risk) presented the report. The report was in three sections:

• Audit and Risk outturn 2012/13
• Internal Audit Plan 2013/14
• a recommendation for an update report on progress to a partnership model of service delivery

He asked Members to note the performance indicators as given in paragraph 4.6 and Appendix 2. 80% of planned work had been completed; the remaining 20% had been rescheduled or cancelled because of unplanned work or the reduction in audit days available because of the redeployment of staff. 65% of audits had been completed on time, compared with 84% in the previous year; this year a new reporting process was being implemented, so that progress on audits would be reported every two weeks. The percentage of audit recommendations implemented was 65% in 2012/13. Follow ups had revealed that some managers had not implemented recommendations on the agreed timescale, so rescheduling had been agreed. The reduction in the percentage of recommendations implemented could be linked to the financial challenge and the reduction in the number of managers and staff.

A Member said that he was disappointed with current level of response to Internal Audit recommendations; the expectation should be that if Internal Audit made a recommendation, it should be implanted quickly.

A Member suggested that if an audit was completed on time, the client was likely to be more satisfied and more likely to accept the recommendations. The Risk Manager replied that he did not think there was evidence for that correlation.

The Chair asked what percentage of recommendations made in relation to risks where the assurance level was only 1 or 2 had not been accepted. The Group Manager replied that he did not have data for this with him, but it was available.

In reply to a question from Mr Morris, the Group Manager said that every issue with a poor assurance level would be picked up in the Annual Governance Review. The Divisional Director clarified that not all of them would be included in the Annual Governance Statement; a judgment would be made about their significance.

In reply to a question from a Member, the Group Manager said that an allocation was made for sick leave and Bank Holidays in the Internal Audit Plan, but not for unplanned work. Unplanned work could only be accommodated by not doing some scheduled work.

A Member noted that among the high risk items in the Plan, there would be some that were particularly high, involving, for example, revenue protection, the impact of changes to the benefit system, and IT systems. He wondered whether Internal Audit were confident that they would be able to complete audits in all these areas. The Group Manager replied that he was, though some medium risk items might have to be rescheduled.

A Member wondered how far matters of judgment, such as opinions about managerial competence or the possible impact of changes to the benefit system, entered into Internal Audit’s planning over and above the objective factors set out in paragraph 4.10 of the covering report. The Risk Manager said that it was essential that Internal Audit had a feel for issues. In reply to another Member, he said that it was Internal Audit’s role to consider value for money as well as whether or not services achieved their targets.

The Divisional Director then turned to the comments he had made in the final section of the report beginning at paragraph 4.13. He said that with increasing pressure on Council budgets, choices had to be made about appropriate levels of control and the level of risk considered acceptable. It was important therefore that the independent voice of Internal Audit should remain strong as it had been in the past and that the service was able to respond appropriately to the changing risk framework in the organisation. He advised the Committee that whilst the previous budget reductions had been delivered he needed to be cautious over the medium to long-term in considering its capability, capacity and resilience. For various reasons the plans for a different service delivery model had not progressed as planned and it was therefore prudent therefore to refresh the previous assessment and consider future options and he would like to bring an update paper to a future meeting of the Committee. A brief discussion ensued around partnerships with other local authorities which might result in a pool of 40-50 auditors being available. A Member said that it was important how a partnership was structured, given that other all local authorities had had their budgets cut.

[Councillor Simmons left the meeting at this point]

A Member suggested that the Committee set up a working group to look at future options. The Divisional Director suggested that the Committee receive an update paper first as this would explain the position more clearly and there was no immediate need for any sub-groups.

RESOLVED:

1. To note the summary of audit work during 2012/13;
2. To approve the Internal Audit Plan for 2013/14;
3. To request an update on the progress to a partnership model of delivery of the Internal Audit service.