Agenda item

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 members should be surveyed to answer a series of questions around how well, or otherwise, the Committee had performed throughout the year and the survey results carried through to the annual report to provide an overall view of the Committee's performance.  The annual report should provide a review of the past year’s activities in terms of the extent to which the Committee had discharged its responsibilities as set out in its terms of reference.  Arising from such a review, it should then be possible to identify a forward work plan for the year ahead.

·       In terms of the recommendation relating to the knowledge and skills framework against which Committee members should be assessed, KPMG had advised that CIPFA had publicly available guidance setting out the core skills of an Audit Committee member. This would be taken up with the Councillor Development Steering Group, which provided the oversight of training and development for councillors, to arrange a skills assessment for Committee members, and arrange appropriate training to address skills and knowledge gaps arising from the assessment.

·       It was suggested that if the Committee’s performance was to be assessed against how well it discharged its responsibilities set out in its terms of reference and given KPMG’s recommendations in respect of two additions to the terms of reference in respect of accountability to the full Council and provision of a statement of purpose, the opportunity could be taken to review the terms of reference as a whole.  To that end, the Committee agreed that the Corporate Governance Task Group should review the terms of reference and report back to the Committee.

·       In relation to the Internal Audit Plan for 2022-23, the inclusion of reviews of S.106 Contributions and Regeneration were welcomed

The Committee

RESOLVED:

(1)        That the Internal Audit Progress Report to March 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, subject to the comments referred to above and the following further actions:

(2)        That the Head of Internal Audit Opinion, attached as Appendix D to the Internal Audit Progress Report, be noted.

(3)        That the Internal Audit Plan for 2022-23, attached as Appendix E to the Internal Audit Progress Report, be approved.

Reason:

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