Agenda item

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 eleven-month period up to 29 February 2024.

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.

Neil Pitman of the Southern Internal Audit Partnership presented the report and drew the Committee’s attention to the summaries of two internal audit reviews that had been finalised since the last progress report was presented to the Committee, which had concluded in limited assurance opinions.

These reviews related to Homes for Ukraine and Accounts receivable and Debt Management.   It was noted that all the management actions raised to mitigate the issues highlighted in the Homes to Ukraine report had since been fully implemented.  There were eight management actions in place to address the issues raised in respect of the Accounts Receivable and Debt Management review, although these had not yet reached their implementation date.

As requested by the Committee at an earlier meeting, further update information had been provided in the report in respect of the overdue management actions.

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

• Concerns in respect of:

(a)  the overdue high priority management action relation to the Budgetary Control review; in that regard the interim Joint Strategic Director of Finance confirmed that progress was being made on this and that he would circulate a written update to the Committee;

(b)  the lack of any update in respect of the management actions associated with the S106 Contributions review, particularly with regard to updating policies and procedure documents.  The relevant officers would be asked to provide a written response to this concern to the Committee.

(c)   lack of progress with the review of the Corporate Business Continuity Plan and query as to whether this ought to be of a significantly higher priority.

(d)  Eleven-month slippage in finalising the job evaluation process in respect of the Programme Manager post which has prevented recruitment to that role (Redevelopment Projects review), and query as to whether, in light of the delay, the post was actually needed.

• Concerns over the lack of information in respect of the nature of the management actions arising from the Accounts Receivable and Debt Management review.  In response, the interim Joint Strategic Director of Finance agreed to circulate to the Committee a written update on progress with implementation of these actions.
• In relation to the Accounts Receivable and Debt Management review, concerns that:

(a)  32 out of 55 debts being tested were not being actively recovered, and that the impact of overdue debt at the end of the financial year would give rise to a bad debt calculation that would impact on the General Fund revenue account. In response, the interim Joint Strategic Director of Finance confirmed that bad debts had been actively managed over the last few months, with details of outstanding debt now included in the financial monitoring reports. It was also noted that debts had reduced considerably over the last few months, which meant that bad debt provision could be reduced;

(b)  the review had found that the Council’s Debt Management Policy was “devoid of key elements conducive to an effective debt recovery process”, and that there were suppressed debts in excess of £2 million.

·      Concern in relation to the observation by the internal auditor in respect of Core Financial Controls – Journals, where it was stated that the Council’s SFIs did not set out approval limits based on the sign off required for journals of significant monetary value. It was queried whether the action to update workflows by 28 February 2024 had been actioned.  In response, officers reassured the Committee by confirming that journals and virements had been picked up some months ago and the Finance team had written specific instructions that they would not take action without express sign-off from the Deputy S151 Officer. In addition, the team were rewriting policies and procedures in that regard.

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 be noted.

Reason:

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