Issue - meetings

The Committee considered a report on progress made by the Council’s internal audit manager (KPMG) on their internal audit plan for 2022-23 for the period April 2022 to March 2023, which included a summary of the work that they had concluded since the previous report to Committee. 

The report had reviewed the design and effectiveness of:

(a)   budgetary controls for which KPMG had provided ‘partial assurance with improvements required’ (amber/red rating) in that regard;

(b)   controls over the general ledger for which KPMG had provided ‘significant assurance with minor improvement opportunities’ (amber/green rating);

(c)   controls over receipt and expenditure of s.106 contributions for which KPMG had provided ‘significant assurance with minor improvement opportunities’ (amber/green rating); and

(d)   controls around the preparation and posting of journals for which KPMG had provided ‘significant assurance with minor improvement opportunities’ (amber/green rating);

An additional review of the payroll budget discrepancy against the expected control environment had also been undertaken and KPMG had provided ‘partial assurance with improvements required’ (amber/red rating).

As part of their 2022-23 internal audit plan, KPMG had also followed up actions in previously audited areas and had prioritised looking at the 2021-22 reviews which had received ‘no assurance’ or ‘partial assurance with improvements required’, alongside a sample of reviews which received ‘significant assurance with minor improvement opportunities.

Following completion of all the programmed activities in the internal audit plan for 2022-23, KPMG had also produced their Head of Internal Audit Opinion for 2022-23, for which significant assurance with minor improvement opportunities had been given on the overall adequacy and effectiveness of the Council’s framework of governance, risk management and control.

In debating this item, the Committee raised the following points:

·       Concern over the auditor’s finding of a lack of clarity of the total number of employees across the Council, and the apparent lack of progress to resolve the issue.

·       Concern as to how the audit of Financial Controls: Payroll in October 2022, which received significant assurance contrasted with the additional audit review of Payroll Budget Discrepancy which received only partial assurance.  In response, Mr Crouch of KPMG confirmed that the two reviews were two separate pieces of work with very different scopes.  The Executive Head of Finance confirmed that the payroll discrepancy was on the budget not on the payroll itself. The scope of the October 2022 audit on payroll had focused entirely on the accuracy of the payroll which was reported as being compliant. The payroll discrepancy referred to the way numbers were budgeted for.  During the Future Guildford process, the piece of work undertaken to identify the savings and to reshape services took 2019-20 as the base budget, and working from that going forward, savings were identified and indicative budgets for services were established. At that point, there was a “broad-brush” approach to budgeting, rather than budgets being costed at individual member of staff level. In the meantime, the payroll itself increased in line with agreed pay increments, and cost of living pay awards.  The payroll discrepancy was first  ...  view the full minutes text for item 64

The Committee considered a report on progress made by the Council’s internal audit manager (KPMG) on their internal audit plan for 2022-23 for the period April 2022 to January 2023, which included a summary of the work that they had concluded since the previous report to Committee and what they had planned to do ahead of the next. 

The report also reviewed the design and effectiveness of the processes and controls over corporate programmes at the Council for which KPMG had provided a ‘partial assurance with improvements required’ (amber-red rating).

In debating this item, the members of the Committee raised the following points:

·       Whilst the report had set out the agreed management actions in respect of the red (high risk) findings, there were no similar actions set out in respect of the amber (medium risk), or green (low risk) findings.   In response, Mr Crouch of KPMG indicated that they had not previously set out agreed actions in respect of amber or green findings in their executive summary reports.  However, he would be happy to share the detail of the agreed actions in respect of this audit report with Councillors.

·       It was noted that KPMG were due to submit their internal audit report on Regeneration to the next meeting of the Committee, and in that regard, it was assumed that, as Weyside Urban Village was a key regeneration project, further information on that project would come forward as part of that report.

·       Further information was requested in relation to the comment in the audit report that KPMG had agreed with management to undertake an additional review looking at the payroll budget discrepancy identified in 2022.  In particular, whether this discrepancy related to the payroll error referred to in the draft budget. The Lead Councillor for Finance and Planning Policy stated that this error had been first mentioned to the Committee at its meeting in September last year, and to the Executive following that meeting.  This had been the third year where there had been an issue with incremental pay rises to employees, amounting to approximately £600,000 per year.  Whilst employees had been paid the correct amount, it had not been accounted for correctly in the budget.  It was anticipated that this would be corrected in the forthcoming budget.  As it was a significant issue, it was considered appropriate to commission an audit report.

·       In response to a request for an update on the recruitment of a Programme Manager and the issue raised regarding the integration between Verto and Business World, the Executive Head of Regeneration and Planning Policy reported that it was anticipated that the target date for the recruitment of the Programme Manager was 30 April 2023.  In relation to the integration between Verto and Business World, it was noted that considerable effort had been made to ensure that there was alignment between the two systems in terms of the detail that was included on both.  However, the fiscal integration of the two different types of software, had not  ...  view the full minutes text for item 52

The Committee considered a report on progress made by the Council’s internal audit manager (KPMG) on their internal audit plan for 2022-23 for the period April to November 2022, which included a summary of the work that they had concluded since the previous report to Committee and what they had planned to do ahead of the next. 

The report also reviewed:

(a)   the design and effectiveness of the corporate risk management processes and controls at the Council.  KPMG reported that there had been a significant improvement in this area of the Council’s work since it was last reviewed two years ago.  This was reflected in the ‘significant assurance with minor improvement opportunities’ (amber/green rating) that KPMG had provided in that regard; and

(b)   processes and controls relating to IT infrastructure for remote working for which KPMG had also provided a ‘significant assurance with minor improvement opportunities’ (amber/green rating) in that regard.

In debating this item, the members of the Committee raised the following points:

·       In response to a request for clarity, it was explained that the corporate-level business continuity plan referred to in recommendation 2.2 (IT infrastructure for remote working) would be drafted by amalgamating existing service level business continuity plans.

·       In response to ongoing concerns over the associated risks of investing in other local authorities, in particular the £10 million invested in Thurrock Council, the Joint Section 151 Officer gave assurance that such loans were underwritten by the Public Works Loan Board.  In any event, the term of that particular loan was fixed until 30 March 2023. It was also explained that the investment strategy formed part of the overall Treasury Management Strategy which would be subject to formal approval as part of the budget process.

The Committee

RESOLVED: That the Internal Audit Progress Report (April to November 2022), attached as Appendix 1 to the report submitted to the Committee, together with the key findings from the reviews undertaken since the last report to the Committee, be noted.

Reason:

To ensure good governance arrangements and internal control by undertaking an adequate level of audit coverage.

The Committee considered a report on progress made by the Council’s internal audit manager (KPMG) on their internal audit plan for 2022-23 for the period April to October 2022, which included a summary of the work that they had concluded since the previous report to Committee and what they had planned to do ahead of the next. 

The report also reviewed:

(a)   the design and effectiveness of the complaints handling processes and controls.  KPMG had provided ‘partial assurance with improvements required’ (amber/red rating) in that regard; and

(b)   processes and controls around payroll and had provided ‘significant assurance with minor improvement opportunities’ (amber/green rating) in that regard.

In debating this item, the Committee raised the following points:

·       In response to a question as to whether complainants in respect of unresolved outstanding complaints were kept up to date with progress at regular intervals, the Strategic Director: Transformation and Governance confirmed that they were, especially where it was anticipated that there would be a delay in responding.

·       Concerns over one complaint being outstanding for over a year, and the poor performance for meeting the target for initial acknowledgement of complaints. It was suggested that a considerably shorter target timescale than March 2023 should be set to improve complaints handling.  It was acknowledged that the customer service team had gone through a major transformation and would become more resilient over time, and ultimately provide a better service.  It was also accepted that some of these complaints were particularly complex often requiring input from several departments, or external bodies. It was anticipated that improvements would be in place before the end of March 2023.

·       The Joint Chief Executive confirmed that the whole approach around customer service and customer engagement would be a top priority for the new Joint Management Team, which was now in place.

·       The Chairman requested that a more detailed breakdown of the action to be taken within the management action plan to improve complaint handing be circulated to the Committee.

·       The auditor’s rating for Financial Controls: Payroll of ‘significant assurance with minor improvement opportunities’ was queried given the impact on the overall budget of the salary budget discrepancy that had recently come to light following Future Guildford.  The internal auditors commented that the scope of their financial controls review on payroll was around looking at processes and controls and did not extend to looking at the budget variance mentioned.  It would, however, be in scope for the forthcoming budgetary controls review.

·       In response to a question as to whether the 25 sampled complaints were representative of the overall number and type of complaints received, the internal auditor confirmed that they were; and also, whether, within the 25 sampled complaints, there was any trend showing a greater number of complaints regarding particular services, the Committee was informed that there was no such trend.  The Chairman requested that details of the 25 sampled complaints be circulated to the Committee.

·       The Joint Chief Executive suggested that rather than focusing on  ...  view the full minutes text for item 32

The Committee considered a report on progress made by the Council’s internal audit manager (KPMG) on their internal audit plan for 2022-23 for the period April to July 2022, which included a summary of the work that they had concluded since the previous report to Committee and what they had planned to do ahead of the next.  The report also reviewed the design and effectiveness of performance monitoring arrangements through review of three environment-themed key performance indicators (KPIs) from the most recent performance report, ‘Corporate Performance Reporting’ considered by the Committee on 21 April 2022.  These KPIs were as follows:

·       ENV2 - Household Waste Recycled and Composted

·       ENV3 - Number of fly tips:

·       ENV4 - Number of outstanding statutory nuisance investigations

Overall, KPMG had provided a ‘significant assurance with minor improvement’ green-amber rating in this regard.

In debating this item, the Committee raised the following points:

·       In response to a question as to how KPMG selected the three KPIs from the Council’s large suite of KPIs and why were the three all from the Environment portfolio, KPMG noted that the this was the third year consecutively of looking at performance monitoring as part of the head of internal audit opinion.  One of the four key areas covered was data quality and it was felt that this was a sufficient way to do that.  A different set of performance indicators was reviewed on each occasion. The scope of internal audit review involved a ‘deep dive’ into these performance indicators and undertaking a full and substantive audit testing around them.  KPMG reviewed all the source data available to ensure that the reported performance figures were accurate, and they felt that having three KPIs in-scope was sufficient for that purpose.

·       In response to a question as to what recommendations KPMG had made to the Council in respect on ENV4 to address the inability to provide the underlying data to support the most recently reported KPI figure, and also whether KPMG were able to find data for the number of statutory nuisance investigations considered as opposed to those that were actually outstanding, KPMG indicated that the amber coloured finding around the formal review of KPI data within the summary of key findings had recommended that the officers responsible for the outstanding nuisance investigations reviewed with IT the apparent system limitation which prevented them from providing the data. KPMG also confirmed that the purpose of ENV4 was specifically to report the number of outstanding statutory nuisance investigations not the number of completed investigations.

·       Although not directly relevant to the ENV3 KPI, which only recorded the number of incidents of fly-tipping, it was suggested that there should be a report to councillors on the cost to the Council of clearing up fly-tips together with initiatives to prevent fly-tipping

The Committee

RESOLVED: That the Internal Audit Progress Report (April to July 2022), attached as Appendix 1 to the report submitted to the Committee, together with the key findings from the reviews undertaken since the last report to  ...  view the full minutes text for item 15

The Committee considered a report on progress made by the Council’s internal audit manager (KPMG) on their internal audit plan for 2021-22, which included a summary of the work that they had concluded since the previous report to Committee, together with details of the final three internal audit reports for 2021-22 as follows:

·       Follow-up reviews from all five amber/red rated reports made in 2020-21.

·       CIPFA financial management compliance (assessed as amber/green)

·       Effectiveness of this Committee as an audit committee (assessed as amber/green)

In relation to the follow-up reviews, KPMG reported that 13 of their recommendations had not yet been fully implemented, and management had proposed revised due dates for all 13 of those management actions, which would be followed by KPMG during 2022-23.

Following completion of all the programmed activities in the internal audit plan for 2021-22, KPMG had also produced their Head of Internal Audit Opinion for 2021-22, for which partial assurance had been given based on the activities of the year and which reflected the ongoing challenging environment against which the Council was operating.  Whilst KPMG had identified good examples of strong controls during the year, COVID and accommodation of the Business World implementation were still presenting issues that were impacting on the overall system of internal control.

KPMG had also presented their proposed Internal Audit Plan for 2022-23 for the Committee’s approval.   

In debating this item, the Committee raised the following points:

·       In response to a concern regarding the need for a flexible approach to the audit plan for 2022-23, bearing in mind the structural changes that the Council was going through and the financial consequences of those changes, KPMG confirmed that the audit plan would be kept under review on a quarterly basis to ensure that forthcoming audit reviews were relevant.  Any proposed changes to the plan would be referred to the Committee for approval.

·       In relation to the overdue recommendation on timely completion of bank reconciliations and in response to a request for further information regarding the issues with Business World, the Director of Resources confirmed that the automated bank reconciliation module had been implemented in July 2021, implementation of Income Manager had commenced, with other modules scheduled for implementation in the near future. Bank reconciliations were being brought up to date and were currently two months behind with that work.

·       A request for an interim report from management on progress with implementation of audit recommendations, particularly in relation to the audit review on Safeguarding which had been reported to the Committee in November 2021. 

·       It was noted that KPMG’s review of the effectiveness of the Committee had concluded with a significant assurance with minor improvements required. In terms of taking the recommendations forward, it was proposed that, in addition to the formal minutes, a decision and action tracker would be included on every Committee agenda in future.

·       In response to a request for guidance on reporting annually to the Council on the work and effectiveness of the Committee, KPMG advised that Committee  ...  view the full minutes text for item 58

The Committee considered a report on progress made by the Council’s internal audit manager (KPMG) on their internal audit plan for 2021-22 for the period April 2021 to January 2022, which included a summary of the work that they had concluded since the previous report to Committee and what they had planned to do ahead of the next.  The report also provided an executive summary of four internal audit reports which examined Financial Controls in respect of: Capital Management, income and accounts receivable compliance, expenditure and accounts payable compliance, and Procurement. 

In debating this item, the Committee raised the following points:

·       In response to concerns raised in relation to a report on an internal audit review already completed this year in respect of HRA Right to Buy receipts, KPMG reassured the Committee that it would be following up progress with their recommendations in respect of that report in the next financial year as part of their next Internal Audit Plan.  The Director of Resources also commented that the enhanced reporting included within the Financial

Monitoring Report elsewhere on the agenda for this meeting provided a good oversight of the current situation in respect of spending Right to Buy receipts.  In addition, a proposed Right to Buy policy, which was one of the core recommendations from the review, would be considered by the Executive on 24 February 2022.

·       In relation to overdue debts in the context of the Income and Accounts Receivable Compliance report, assurance was sought regarding whether:

(a)   the software was now fully functioning

(b)   action had been taken in respect of existing debts where the system had not been able to send out debt recovery letters, and

(c)   the Committee should have a role in monitoring overdue debts

In response, the Director of Resources informed the Committee that the automated reminder letter functionality went live at the end of November 2021, and that this had included reminder letters in respect of those debts that had not previously been the subject of recovery letters. During the process although reminder letters were not being sent statements were being issued setting out details of amounts owed to the Council. With regard to monitoring, the Director reminded the Committee that there was a performance indicator in the Corporate Performance Monitoring Report which showed the number days a debt has been outstanding.  The Director suggested that the levels of overdue debt could also be included into future Financial Monitoring Reports. The Director also reminded the Committee that during the Covid pandemic, the Council made a conscious decision not to pursue debts, partly in recognition of the additional pressure on people's finances but also because it would not have been possible to take action through the Courts as we could not get Court dates.  Furthermore, the Government had decided that no evictions of tenants could take place during the pandemic.

·       In response to a question as to when the Council was aware that it could not track debtors, the Director of Resources  ...  view the full minutes text for item 49