The Director of Finance will submit Document “J” which informs the Committee about the service Internal Audit has provided to the Council during the financial year 2015/16.

In particular Members are advised of the following:-

·        Internal Audit completed 92% of the 2015/16 audit plan which, is above the target of 90%.

·        Internal Audit’s Client satisfaction identified that 100% of the respondents said that the “recommendations were useful and realistic” and believed that the audit was “of benefit to management.”

·        100% of all high priority recommendations made from the work undertaken were accepted by management.  

Recommended-

That the Committee recognises and supports the work carried out by Internal Audit during 2015/16.

                                                (Mark St Romaine – 01274 432888)

The Director of Finance submitted Document “J” which informed the Committee about the service Internal Audit had provided to the Council during the financial year 2015/16.

In particular Members were advised of the following:-

·        Internal Audit completed 92% of the 2015/16 audit plan which, was above the target of 90%.

·        Internal Audit’s Client satisfaction identified that 100% of the respondents said that the “recommendations were useful and realistic” and believed that the audit was “of benefit to management.”

·        100% of all high priority recommendations made from the work undertaken were accepted by management.  

From the work undertaken by Internal Audit throughout the year and after taking into consideration the work undertaken by Mazars, the overall internal control environment throughout the Council appeared to be adequate.  There were two individual areas of concern. These were the debt management controls surrounding  the  Payroll Services provided to full budget share schools and external providers and the progress on Continuing  Health Care.  Both these areas would continue to be monitored in 2016/17.

In 2016/17, Internal Audit planned to perform further audit work to follow up on the level of implementation of agreed recommendations as it appeared departments were finding it difficult to resource improvements where control weaknesses were identified. 

It was reported that whilst the overall opinion was adequate the number of reports produced by Internal Audit in 2015/16 had significantly reduced from the total in 2014/15.  This limited the quantity of evidence which the Head of Internal Audit could rely on, to support the assurance statements concerning the governance of the Authority. The Service now had capacity issues and could find it difficult to respond to specific management concerns when internal audit contributions would be advisable.

In response to Members’ questions it was reported that Internal Audit were revising its follow up processes in 2016/17 to support management in implementing  agreed recommendations and that further updates on this issue would be reported to this Committee. It was also reported that in certain cases there was a lack of resources  to implement the changes required.

Members raised concerns that not all schools were completing the Schools Financial Value Standards (SFVS) self assessment forms.  It was reported that the Audit Team contacted schools that were not compliant with the SFVS so that they become fully compliant.

A Member queried who would audit academies when all schools became academies.

Members raised concerns on schools who became academies that had a deficit and the importance of such schools being audited and their budgets being monitored.

It was reported that in terms of payroll services to schools - the audit highlighted concerns regarding the timeliness and accuracy of the invoicing to full budget share schools and external bodies for the recovery of payroll costs incurred by the Council on their behalf.  Also highlighted were legacy balances on the SAP ledger, some dating back to 2006-7 that management needed to resolve, which potentially could lead to the non-recovery of payroll costs.  At the time of the audit it was not possible to quantify the full amount of the legacy balances, but  it was indicated that it was likely to be more than £250k. At the 2015/16 year end it had been decided to establish an exceptional £1m provision relating to school based staff pay bill balances. Effective dialogue had been taking place between payroll and schools as well as monthly monitoring which would prevent the situation accumulating.

Resolved-

That the Committee recognises and supports the work carried out by Internal Audit during 2015/16.

Action:          Director of Finance