Issue - meetings

The Committee considered the Annual Internal Audit Report & Opinion which provided a summary of audit work that had been undertaken during 2023-24 in order to obtain all information and explanations considered necessary to provide sufficient assurance that the control environment was both reasonable and effective.  The Committee noted that whilst no assurance could ever be absolute, on the basis of the audit work completed, it was the Chief Internal Auditor’s opinion that the Council’s framework of governance, risk management and control was ‘limited’.

It was acknowledged that the Council had faced significant challenges over the past year and the recent improvements put in place following receipt of the two SOLACE reports would help to strengthen the Council's governance, risk and control arrangements.

The Committee noted the pie chart in the report showing outcomes from internal audit reviews that had been reported to the Committee throughout the year and summarising the assurance opinions as being 45% ‘reasonable’ and 55% ‘limited’.  The Chief Internal Auditor had indicated that in relation to the ‘limited’ assurance reviews on the key financial systems, discussions had been held with the Strategic Director of Finance with regard to some detailed follow up work as part of the Quarter 4 plan on the implementation of the management actions arising from those audits.

The Strategic Director of Finance commented that the ‘limited’ assurance finding had been expected, but the most important aspect was the progress being made in respect of addressing the issues around the Council’s governance and internal controls and indicated that he expected some really significant improvements going forwards.

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

·      Welcomed the detailed and meaningful audits carried out over the past year by Southern Internal Audit Partnership.

·      Noted that the underlying systems used for financial monitoring were still not where we would like them to be.  The Strategic Director of Finance was asked to comment on corrective actions being taken to address the IT and technical systems supporting financial monitoring and the timeframes around them.  In response the Director confirmed that the Council was receiving support from Unit 4 in respect of the review of the accounting side of Business World with a report due in the next month, which would enable an action plan to be drawn up to move things forward.  It was noted that an update on this would be reported back to members of this Committee.

·      There had been insufficient discussion around the control environment given that the internal audit work during the year had found that there had been a limited control environment in place across the majority of review areas, particularly around financial controls. Concern was expressed regarding control account reconciliation and management. The risk CR11 (recruitment and retention of staff) highlighted in the previous report was relevant in the context of the finance team. In response to a request for an update on the recruitment position and to highlight specific areas where good progress was being made, the Strategic Director of  ...  view the full minutes text for item 32

The Committee considered an update report from the Southern Internal Audit Partnership which set out a clear and transparent articulation of internal audit activity, performance, and outcomes during the six-month period up to 30 September 2023.

The report had included the status of ‘live’ internal audit reports; an update on progress against the annual audit plan; a summary of internal audit performance, planning and resourcing issues; and a summary of significant issues that would impact on the Chief Internal Auditor’s annual opinion.

In relation to the analysis of the ‘Live’ audit reviews, the Committee noted on the Supplementary Information sheet the responses received to the management actions arising from the internal audit reviews undertaken in 2022-23 by KPMG in respect of Performance Monitoring and Risk Management.

During the debate, the following points were raised by the Committee:

·      Request for better presentation of the graph showing “Stakeholder Satisfaction Survey Results” in the Performance Dashboard.

·      In response to a concern as to whether the revised due dates in respect of the Overdue ‘High Priority’ Management Actions in relation to budgetary controls and payroll budget discrepancy, would be achieved, the internal auditor confirmed that these would be followed up in December and January and reported back to the Committee as appropriate.  Explanations would be provided where implementation of any actions had not been achieved by the revised target dates.

·      It was also noted that there had been significant delays in responding to Overdue ‘Low & Medium Priority’ Management Actions arising from earlier audit reviews.  The internal auditor would seek clarification of the reason for the delays from the responsible officers and inform the Committee. It was suggested that explanation of delays should only be given where a due date had slipped for a second time.

·      Clarification was requested for future reports of “Audit sponsors”.

Having considered the report, the Committee

RESOLVED: That the progress made against the internal audit plan for 2023-24, as detailed in the report submitted to the Committee, together with the update provided on the Supplementary Information Sheet, 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 the proposed Internal Audit Plan for 2023-24 submitted by Southern Internal Audit Partnership, the aim of which was to provide independent and objective assurance to management, in relation to the business activities; systems or processes under review that:

·       the framework of internal control, risk management and governance is appropriate and operating effectively; and

·       risks to the achievement of the Council’s objectives are identified, assessed and managed to a defined acceptable level.

The Internal Audit Plan provided the mechanism through which the Chief Internal Auditor could ensure most appropriate use of internal audit resources to provide a clear statement of assurance on risk management, internal control and governance arrangements.

It was noted that internal audit focus should remain proportionate and appropriately aligned to key areas of organisational risk.

All auditable areas of review remained within the audit ‘universe’ and were subject to ongoing assessment. The audit plan would remain fluid to ensure that internal audit was able to react to the changing needs of the Council.

Other reviews, based on criteria other than risk, could also be built into the work plan. These might include ‘mandatory’ audits or reviews requested or commissioned by management. Any commissioned review must be able to clearly demonstrate a contribution to the audit opinion on risk management, control and governance.

A copy of the draft Internal Audit Plan 2023-24 was appended to the report for review and comment by the Committee.

During the debate, the Committee made the following comments:

·       Assurance was requested, and given, that the new internal auditors pick up the areas that KPMG had flagged us as having partial assurance with improvements required, and that there would be a handover process with KPMG. 

·       Assurance was requested, and given, that the Audit Plan would include financial controls on major projects. 

The Committee

RESOLVED: That the Internal Audit Plan for 2023-24, attached as Appendix 1 to the report submitted to the Committee, be approved.

Reason:

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