Agenda item

(Chief Internal Auditor) To consider the attached report (AGC-021-2017/18).

The Senior Internal Auditor presented the Internal Audit Monitoring report for the period February to March 2018.

The Senior Internal Auditor advised the Committee that good progress was being made against the Audit Plan for this year, but that the Committee was requested to approve the deferral of three audits to the Plan for next year:

(i)         Safeguarding – to allow the recent service re-structure to fully bed in;

(ii)        North Weald Airfield: Establishment – due to capacity issues within Internal Audit arsing from sickness/jury service and the Team’s involvement in preparing the Council for the General Data Protection Regulation; and

(iii)       Governance: St John’s Road Development – as per (b) above.

In addition, the Committee was requested to approve the removal of an audit regarding Anti-Social Behaviour from the Plan. The latter audit was simply to ensure that there was a consistent approach to Anti-Social Behaviour across the whole of the Council rather than any internal control concerns, and discussions with Senior Management had confirmed that this was the case. Despite the need to defer / remove these audits from the Audit Plan for this year, it was still expected that sufficient audit work would have been undertaken to enable the Chief Internal Auditor to give their annual opinion.

The Senior Internal Auditor informed the Committee that one report had been issued since the previous meeting, which had been given moderate assurance, on Commercial Property Service Charges. The Audit Recommendation Tracker currently contained four recommendations which had passed their due date: one high priority and one medium priority recommendation concerning Health & Safety at Townmead Depot, and two low priority recommendations regarding External Data Transfers. It was highlighted that Fire Safety Training at Town Mead Depot had been arranged for April 2018.

The Senior Internal Auditor reminded the Committee that staff within the Shared Service were represented on a number of business groups and project teams, in addition to less formal meetings to provide advice and guidance. The main focus of the Team’s non-audit work had been the implementation of the General Data Protection Regulation (GDPR) across the Council, which was considered a key risk area across the whole of the Council.

The Senior Internal Auditor stated that the Internal Audit Service should ensure that it was compliant with the Public Sector Internal Audit Standards (PSIAS) on an annual basis. The Service was confirmed as being fully compliant with the Standards by an external assessor, and this remained the case as there had been no significant changes to the delivery or operation of the Service nor the role of the Chief Internal Auditor.

The Senior Internal Auditor updated the Committee on the current status of the Service’s Performance Indicators, as well as the recent review of the significant issues identified in the 2016/17 Annual Governance Statement.

In respect of the Commercial Property Service Charges audit report, the Chief Internal Auditor reminded the Committee that many of the Council’s commercial properties did not have Service Charges as there were no communal areas within them. The Chairman felt that only collecting the Service Charges from 18 out of 86 properties did not look like a good performance by the Council. However, the Senior Internal Auditor reminded the Committee that Service Charges were being levied on all 86 properties, the Audit was concerned with the additional management fee being levied but only collected at 18 properties. The Audit recognised that the Council collected Service Charges at all 86 properties, but the Audit was specifically examining the management fees levied not the wider lease compliance. The Finance Portfolio Holder added that the average management fee was £12 per property per annum, so it did not involve a large sum of money.

In relation to the audit on Anti-Social Behaviour, which had been proposed for deletion from the Audit Plan, the Chief Internal Auditor informed the Committee that she had spoken to the Assistant Director responsible, who had reassured her that the Council implemented good practice. Therefore, the Chief Internal Auditor had decided to concentrate audit resources on areas with a higher risk profile. However, as the audit had not been performed, the Chief Internal Auditor could not give any assurance about the collaboration work undertaken by the Council with its partners.

The Committee was concerned about the level of deferred audits for the current year – 66 audit days so far. The Chief Internal Auditor stated that she was personally disappointed as she had felt the Audit Plan was achievable. However, the deferred audits, although important, were not of such a high risk and hence they could be deferred until 2018/19. The Internal Audit Team would still have to perform enough audits to inform the Chief Internal Auditor’s annual audit opinion. It was suggested that a target could be set for the acceptable number of audits to be deferred during a municipal year, but the Chief Internal Auditor countered that the Audit Plan needed to be fluid in order to react to events, as work in relation to the General Data Protection Regulation was very important at the current time. The Committee was reassured that most Audit Plans suffered deferred audits, and the Team did more in the background than just audit work.

When it was suggested that the Council could use underspends from this year’s Budget to provide more audit resource, the Chief Internal Auditor responded that she would use more external audit resource if she had the budget but they would have the disadvantage of not understanding the culture at Epping Forest. Plus, there was not the possibility of additional resources being provided at either Harlow District or Broxbourne Borough Councils. The Chief Internal Auditor felt that the shared Team provided a good service and covered the key areas for the Council. The Committee felt that the Audit Plan for next year should be closely monitored and if project work was proving a distraction to the achievement of the Audit Plan then additional audit resource should be purchased. The Monitoring Officer affirmed that the Corporate Governance Group could consider obtaining additional resources for the Internal Audit Team if required.

Resolved:

(1)        That the progress made against the Internal Audit Plan for 2017/18 be noted;

(2)        That the proposal to defer the following three audits from the 2017/18 Audit Plan to 2018/19 be agreed:

            (a)        Safeguarding;

            (b)        North Weald Airfield: Establishment; and

            (c)        Governance: St John’s Road Development;

(3)        That the proposal to remove the audit on Anti-Social Behaviour from the Audit Plan for 2017/18 be agreed;

(4)        That the Corporate Governance Group be requested to consider whether additional resources should be made available for the Internal Audit Team as necessary during 2018/19; and

(5)        That the continued compliance of the Internal Audit Service with the Public Sector Internal Audit Standards be noted.