Agenda item

(Chief Internal Auditor) To consider the attached report (AGC-002-2012/13).

The Chief Internal Auditor presented the Internal Audit Annual Report for 2011/12 and the review of the effectiveness of the system of internal audit.

The Chief Internal Auditor stated that this report had been presented in support of the Internal Audit opinion on the adequacy of the Council’s internal control environment. It provided a summary of the work undertaken by the Internal Audit Unit and detailed the overall performance against the Audit Plan for 2011/12. The Accounts and Audit Regulations included a requirement for the Council to carry out an annual review of the effectiveness of its system of internal audit as part of the wider review of the effectiveness of the system of governance. A review had been undertaken by the Corporate Governance Group and was presented to the Committee to assist it with assessing the effectiveness of the system of internal audit on behalf of the Council.

The Chief Internal Auditor reported that the majority of audits planned for 2011/12 had been completed. A small number had been carried forward into 2012/13, but all audits of key financial systems had been completed. The number of audits carried out had seen a slight reduction, due to the ending of the contract with Deloitte. A total of 34 audits had been carried out in 2011/12, 3 had achieved full assurance, 29 substantial assurance, and 2 limited assurance. Within these 34 audit reports, 17 priority 1 (high) actions had been issued, along with 53 priority 2 (medium) and 12 priority 3 (low) actions. Thus, the audits performed during the year had concluded that systems were generally operating satisfactorily and there were no significant weaknesses in the Council’s control environment. It was the opinion of the Chief Internal Auditor that the Council had in place a satisfactory framework of internal control, which provided a reasonable assurance against the risk of error or fraud.

The Chief Internal Auditor summarised the findings of the review of the system of internal audit that had been undertaken by the Corporate Governance Group:

(i)         the Internal Audit Unit had demonstrated a good understanding of the Council’s functions and had identified improvements to its control systems;

(ii)        the performance of the Unit had remained close to its performance targets and all fundamental financial systems had been examined;

(iii)       the Unit had scored 98% in the Chartered Institute of Public Finance & Accountancy (CIPFA) Good Practice Questionnaire;

(iv)       the Council’s External Auditors had been able to place reliance on the work of the Internal Audit Unit when conducting their own review of the 2010/11 accounts for the Council; and

(v)        the Audit & Governance Committee had complied with the key features of an Audit Committee throughout 2011/12, as laid down by CIPFA, and had been invaluable in reinforcing sound governance within the Council.

As a result, the Corporate Governance Group was satisfied that the Council’s system of internal audit had been effective throughout 2011/12.

The Committee noted the review of the Internal Audit Unit undertaken by the Corporate Governance Group, and concurred that the system of internal audit had been effective during 2011/12.

Resolved:

(1)        That the Audit Plan Status Report for 2011/12, as at 31 March 2012, be noted;

(2)        That, in the context of the Council’s Governance Statement, the review of the effectiveness of the system of internal audit for 2011/12, as undertaken by the Corporate Governance Group, be noted; and

(3)        That the satisfaction of the Committee with the effectiveness of the system of internal audit during 2011/12 be confirmed.