Agenda item

(Chief Internal Auditor) To consider the attached report (AGC-010-2012/13).

The Chief Internal Auditor presented the Internal Audit Monitoring Report for the second quarter of 2012/13, which provided a summary of the work undertaken by the Internal Audit Unit between July and September 2012. The report detailed the overall performance to date against the Audit Plan for 2012/13 and also allowed the Committee to monitor the progress of Priority 1 recommendations issued in previous audit reports.

The Chief Internal Auditor advised the Committee of the audit reports that had been issued during the period:

(a)        Substantial Assurance:

·                     Environmental Controls & Backup Procedures;

·                     Fleet Operations Income; and

·                     Business Plans.

(b)        Limited Assurance:

·                     Legal Services Debt Recovery.

(c)        At draft report stage:

·                     Recruitment & Selection;

·                     Gifts & Hospitality (Members & Officers);

·                     Corporate Procurement; and

·                     Car Mileage.

The Chief Internal Auditor informed the Committee of the circumstances surrounding the Limited Assurance audit report issued for Legal Services Debt Recovery during the quarter. Two Litigation Officers were responsible for managing approximately 380 debts. However, it was not possible at the current time to quantify the exact value of outstanding debts referred to Legal Services and the value of the debts recovered as there was not a reporting facility in place. The audit had recommended that invoices should be raised on the Council’s debtors system (AIMS) to ensure that court costs were identified and charged to the debtor.

The Committee’s attention was drawn to the Outstanding Priority 1 Actions Status report, all of which would be reviewed in follow-up audits, and the Limited Assurance Audit Follow Up Status report. It was also noted that the Audit Plan for 2012/13 had been appended to allow the Committee to monitor progress against the Plan.

The Chief Internal Auditor reported upon the current status of the Internal Audit Unit’s Local Performance Indicators for 2012/13:

·                     % Planned Audits Completed             Target 90%     Actual 37%;

·                     % Chargeable Staff Time                   Target 72%     Actual 76%;

·                     Average Cost per Audit Day               Target £245     Actual £223; and

·                     % User Satisfaction                            Target 85%     Actual 85%.

The Committee noted that the vacancy within the Internal Audit Unit had now been filled, and that the new member of staff had started on 1 October 2012.

The Assistant Director of Corporate Support Services (Legal Services) reported on the outstanding priority 1 action for Licensing Administration. The problem with reconciliations for Licensing were similar to that being experienced by Development Control reported earlier in the meeting. The reconciliation between the M3 system and the Cash Receipting System was not up to date as the two systems were not compatible and could not be interfaced. It was difficult to check if a payment had been miscoded and the reconciliation was not being carried out due to insufficient resources within the Department. An apprentice had been employed by the section to carry out the reconciliations last year, but they had now left the Council. The Assistant Director stated that the Licensing Section was aware of whether they had received all outstanding monies due, but that it required an additional employee for approximately two days a month to perform the reconciliation, or IT systems that could be interfaced to perform the reconciliations automatically.

The Committee was concerned with the risk to the Council arising from this problem and that a qualified Legal Officer should not be performing these reconciliations. It was clear that this was a corporate problem, as a number of departments were similarly affected, and it was felt that the Council’s Management Board should provide the necessary resources to resolve the problem. The Leader of the Council also undertook to investigate the problem and examine possible solutions. The Committee requested an update report at its next meeting on the solution that would be implemented to resolve the problem within Licensing.

The Committee inquired about the outcome of the National Fraud Initiative run by the Audit Commission. The Chief Internal Auditor commented that the data would be available in January 2013, and that a report would be prepared for the Committee to consider soon after. The Chairman requested a report on the due diligence checks performed on companies that the Council had entered into contracts with. This report should pay particular attention to the Leisure Management contract with Sports & Leisure Management Limited, and the previous arrangements made with the company that had provided the Council with bailiff services before it went into liquidation. The Chief Internal Auditor stated that the Council did perform financial checks on all companies that it entered into contracts with, using Constructionline or Experian where relevant.

Resolved:

(1)        That the following issues arising from the Internal Audit Monitoring Report for the second quarter of 2012/13 be noted:

(a)        the Audit reports issued between July and September 2012 and significant findings therein;

(b)        the Priority 1 Actions Status Report;

(c)        the Limited Assurance Audit Follow-Up Status Report; and

(d)        The 2012/13 Audit Plan Status Report;

(2)        That an update report be provided at the next meeting of the Committee on the solution identified to the reconciliations problems experienced by the Licensing section; and

(3)        That a report be provided on the due diligence checks undertaken by the Council on companies it entered into contracts with, and with particular emphasis on the Leisure Management Contract and the former Bailiffs contract.