Agenda item

(Chief Internal Auditor) To consider the attached report (AGC-002-2014/15).

The Chief Internal Auditor presented the Internal Audit Monitoring report for the fourth quarter of 2013/14, which provided a summary of the work undertaken by the Internal Audit Unit between January and March 2014. The report detailed the overall performance to date against the Audit Plan for 2013/14 and also enabled the Committee to monitor the progress of Priority 1 actions issued in previous reports.

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

(a)        Full Assurance:

·                      None;

(b)        Substantial Assurance:

·                      Sundry Debtors;

·                      Treasury Management;

·                      Council Tax;

·                      Cash Receipting and Income Control;

·                      Housing Repairs Service;

·                      Waste Management & Recycling;

·                      Payroll; and

·                      Car Mileage Claims;

(c)        Limited Assurance:

·                      Car Parking Contract; and

(d)        No Assurance:

·                      None.

The Chief Internal Auditor also highlighted that there were a further five reports in draft: Creditors; Housing Benefits; Housing Rent Collection & Arrears; Overtime and Committee Allowances; and Travelling and Subsistence Claims. 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 2013/14 had been appended to allow the Committee to monitor progress against the Plan.

In respect of the Limited Assurance audit report issued for the Car Parking Contract, the Chief Internal Auditor stated that the system of key controls in place at the Council, designed to achieve the objectives for off street car parking income, had been implemented and were considered sound. However, the required data was not being made available by the North Essex Parking Partnership (NEPP), although this was in the process of being resolved. There would be a report undertaken in the third quarter of the municipal year concerning the governance arrangements of other organisations that the Council was in partnership with, and discussions were being had with the Chief Auditors of other Councils as to the best way to undertake this audit. The Committee was very concerned about this issue and requested that an interim report be submitted to the next scheduled meeting in September, with a full report to follow at the meeting after that in November.

The Chief Internal Auditor reported upon the current status of the Internal Audit Unit’s Local Performance Indicators for 2013/14:

·                     % Planned Audits Completed             Target 90%     Actual 77%;

·                     % Chargeable Staff Time                   Target 72%     Actual 68%;

·                     Average Cost per Audit Day               Target £245     Actual £247; and

·                     % User Satisfaction                            Target 90%     Actual N/A.

The Chief Internal Auditor informed the Committee that a member of the Internal Audit team had returned to work on a phased basis at the beginning of February 2014 following a further period of sick leave. This had required the reallocation of outstanding work to ensure that the fundamental financial systems were reviewed by the end of the financial year; and had contributed to the % Planned Audits Completed indicator failing to meet its target.

The Chief Internal Auditor added that it was still proving difficult to get Officers to fill in and return their completed User Satisfaction Surveys after an audit had been completed, and other methods were being examined in consultation with Audit Officers at other Councils. There were regular meetings with Directors and Assistant Directors, and the Chief Internal Auditor was convinced that any serious problems would have been reported. The idea that the Auditors work through the basic questions during the post-audit review with the Officers concerned was welcomed and would be given due consideration. It was difficult to detect whether the results from the surveys that had been received were related to the actual result of the Audit report; i.e. good audit report, good survey result.

There were two Outstanding Priority 1 Actions listed as at 31 March 2014, which were reviewed by the Management Board on a monthly basis. The first concerned the Recruitment & Selection process and an update had been given by the Assistant Director of Resources (Human Resources) highlighting the lack of resources to undertake this work at the current time. However, the Chairman was not satisfied with this response and felt that the Assistant Director had not understood the importance of the induction process for new employees. It was felt that this needed to be followed up as the first two target dates had not been met. The Vice-Chairman proposed that the Assistant Director should document and plan the Recruitment and Selection process, including the completion and recording of all Employee Inductions, before presenting it to the Committee at its next meeting; the Committee concurred.

The second concerned the inaccuracy of data stored on the Council’s computer system in respect of the Commercial Property Portfolio. The Director of Governance reported that a compromise agreement had been signed with the supplier of the Asset Management system as the system that was tendered for had not been delivered. No further monies had been spent by the Council with the current supplier, and the life of the old system had been extended by a further year whilst the Council performed a re-tendering process to acquire a system that would be suitable for the Council’s needs.

The Committee was concerned that this was the second software system procured by the Council which had not matched up to its description, following previous problems with the implementation of the Benefits system, and that there might be an issue with the tender process for software systems. The Chief Internal Auditor acknowledged that some audit time needed to be allocated to Information Technology procurement; in the past, the Council had visited other local authority sites running the software to ascertain its reliability and this should be repeated in the future. The Committee requested that a report be submitted to a future meeting regarding the pre-tendering process currently employed when procuring software systems from third party suppliers.

Resolved:

(1)        That the following issues arising from the Internal Audit Monitoring Report for the second quarter of 2013/14 be noted:

(a)        the Audit reports issued between January and March 2014 and significant findings therein;

(b)        the Priority 1 Actions Status Report;

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

(d)        the 2013/14 Audit Plan Status Report;

(2)        That an interim report concerning the issues identified with the limited assurance audit report for the Car Parking Contract be submitted to the next scheduled meeting of the Committee in September 2014, with a full report submitted to the following meeting in November 2014;

(3)        That the Assistant Director (Human Resources) be required to submit a report to the next meeting of the Committee outlining the Recruitment and Selection process currently followed by the Council, including the completion and recording of all Employee Inductions; and

(4)        That a report be submitted to a future meeting of the Committee regarding the pre-tendering process currently employed when procuring software systems from third party suppliers.