Agenda item

Committee received the report of the Internal Audit Manager to inform the Committee of the extent and outcome of Internal Audit work during the 2010/11 financial year and to present an annual Statement of Assurance regarding the Council’s Internal Control Framework.

It was reported that the terms of reference of the Audit Committee included receiving the annual Internal Audit Report and Controls Assurance Statement.  The Code of Practice for Internal Audit specified that the Head of Internal Audit was to provide a written report to those charged with governance timed to support the Statement on Internal Control.  Both made a significant contribution to the Council’s statutory duty to undertake an annual review of the Internal Control framework and publish a Statement on Internal Control.  It was further noted that Internal Audit operated to standards set out in the CIPFA Code of Practice for Internal Audit and in accordance with an approved Audit Charter.

Members were advised that Internal Audit plans and assignments were developed on a risk-based approach.  The Internal Audit Plan for 2010/11, which Committee had approved in June 2010, was based on the provision of 845 days of Internal Audit work divided evenly between assurance work (445 days) and other audit activity (400 days).  Variations to this plan, which had taken into account staffing reductions in internal audit, had been approved by the Committee at its meeting in January 2011, resulting in a revised plan to provide 690 days.

The detailed outturn position as at 31^st March 2011 was attached at Appendix A to the report and a summary of the final position for the year was set out in the report, showing that the total number of available days (830) in the revised plan had been met exactly.   The number of chargeable days delivered was 7 less than planned due to the additional time devoted to reviewing working practices and team building following staffing changes in 2010. 

It was reported that changes in demand for Internal Audit work had been managed in chargeable work areas to ensure that an acceptable level of assurance work was delivered.  Overall, 12 additional days of assurance work had been delivered, and a great proportion of this work had been devoted to core financial systems and management arrangements, and fewer days work had been done in the risk based assurance’ category.           

It was noted that a planned Value for Money study into the Council’s use of mobile phones and other technology would be picked up during 2011/12.  The reduction in time devoted to audit management mainly reflected the cancellation of Audit Committee meetings in April and November 2010 and April 2011.  It was further noted that the level of resources required on investigative work remained manageable.

Members were advised that the Accounts and Audit Regulations 2011 required the Council to conduct an annual review of the effectiveness of Internal Audit and for a committee of the Council to consider the findings.  Details of the review would be included within the Annual Review of Governance report to the next meeting of Committee.

It was reported that the completed assurance audits had resulted in the production of a report and action plan, which had been agreed by managers and submitted for consideration by the Audit Committee using four levels of opinion, these being Maximum, Substantial, Limited and Minimal.  The assurance opinions issued from audits and follow-up reviews completed since 31^st March 2010, and any subsequent changes in assurance level, were set out in Appendix B to the report. 

The assurance opinions were summarised in the report, showing a Maximum assurance level had been given to 4 audits, including NNDR and Council Tax audits, and Treasury Management arrangements, with 13  scoring Substantial, 12 Limited and 0 Minimal.   Members noted that the Audit Committee would continue to receive updates on progress with those audits that had not reached at least the Substantial assurance level, which presently consisted of the 12 audits whose assurance ratings stood as Limited.  No significant control weaknesses had been identified in relation to the Council’s key financial systems.

It was reported that the main messages arising from risk management audits would be incorporated in the governance review and Annual Governance Statement.  No control weaknesses in Internal Audit activity had been identified by the assurance work that would warrant disclosure in the Statement.

Following presentation of the Internal Audit Annual Report and Assurance Statement 2010/11, Members raised questions on their content, which were suitably answered by the Internal Audit Manager.

It was proposed by Councillor Williamson and seconded by Councillor Newman-Thompson:

“(1)      That the report be noted.

(2)        That the Internal Audit Manager’s Controls Assurance Statement contained in paragraphs 2.12 to 2.23 of the report, and specifically paragraph 2.16 (namely “In the Internal Audit Manager’s view, the internal audit work undertaken has not identified any issues of sufficient significance to warrant specific mention in the annual governance statement,”) be accepted as a contribution to the annual governance review and drafting of the Annual Governance Statement.”

Upon being put to the vote, Members voted unanimously in favour of the proposition, whereupon the Chairman declared the proposal to be clearly carried.

Resolved:

(1)        That the report be noted.

(2)        That the Internal Audit Manager’s Controls Assurance Statement contained in paragraphs 2.12 to 2.23 of the report, and specifically paragraph 2.16 (namely “In the Internal Audit Manager’s view, the internal audit work undertaken has not identified any issues of sufficient significance to warrant specific mention in the annual governance statement,”) be accepted as a contribution to the annual governance review and drafting of the Annual Governance Statement.