Agenda item

To consider the Internal Audit work undertaken and the assurance given on the adequacy of internal controls operating in the systems audited for the period December 2015 to February 2016.

45.1           The report of the Corporate Services Group Manager, circulated at Pages No. 71-102, was the third monitoring report of the financial year and summarised the work undertaken by the Internal Audit team during the period December 2015 to February 2016.  Members were asked to consider the audit work completed and the assurance given on the adequacy of the internal controls operating in the systems audited.

45.2           The Corporate Services Group Manager reminded Members that the Internal Audit team consisted of two full-time equivalent posts.  As previously reported to the Committee, one of the postholders had been on maternity leave which had been covered through a combination of a secondment arrangement and an external contractor.  This Officer had now returned on a part-time basis and shared a post with the other member of staff leaving one vacancy in the team.  This post had been advertised and an appointment had been made with the new member of staff starting the role on 11 April.  It was noted that no incidents of fraud had been reported during the period and no work had been commissioned for Tewkesbury Town Council.

45.3           Full details of the work undertaken in the period was attached at Appendix 1 to the report and a list of audits within the 2015/16 Audit Plan and their progress to date could be found at Appendix 2 to the report.  It was noted that all audit opinions issued had been either ‘good’ or ‘satisfactory’.  A good level of control had been found in respect of the audit of the main accounting system and the local authority had strong financial control which was a view shared by the external auditors.  An audit of ‘cash and bank’, a key financial system, had identified a good level of control over the Council’s cash payments and bank reconciliation.  Payroll was another fundamental financial system with reputational risks.  This audit had found that key parameters had been correctly input into the system and were applied correctly during the payroll process; salary adjustment notifications were entered correctly into the payroll system; reconciliation and assurance checks were undertaken during the processing of the payroll, supported by a monthly reconciliation to the main accounting system; and the payment of employees was verified on an annual basis.

45.4           With regard to the garden waste audit, which had been discussed under an earlier Agenda item, a satisfactory level of control had been found overall and a comprehensive record of nearly 15,000 residents who subscribed to the garden waste service was held through the Achieve system which allowed renewal administration.  In terms of renewals, there were prescribed stages built into the system with a number of reminders sent out.  Any non-renewals were added to the ‘do not collect’ list which was provided to Ubico on a daily basis, however, there could not be full assurance that the unpaid bins were not collected as the system was reliant on the Ubico operatives using the list and trying to empty the bins at the same time.  Since April 2015, Ubico had not been instructed to physically pick up the unpaid bins which meant that there were over 400 unpaid bins which could potentially be presented for collection.  An audit of Cascades had found a good level of control around the collection of income, however, there was limited assurance around stock control.  Whilst stock control systems were in place and stock checks could be demonstrated for all resale items, there were variances in minor items such as vending machine stock and ice creams.  Sample testing had indicated that four out of eight items tested did not balance and the Asset Manager had been invited to attend the meeting to answer any questions Members may have.  It was noted that the inventory of equipment had been found to accurately list the assets on site.  A high level programme for decommissioning the Cascades facility had been produced and more detail would be provided as this formally commenced.

45.5           Appendix 3 to the report contained a summary of all audit recommendations and their status.  The Corporate Services Group Manager advised that tree inspections had been discussed at length at previous meetings and a transformational project had been launched to attempt to resolve the problems identified which involved replacing the paper system currently in operation with mobile devices to plot trees.  A number of days would be allocated within the 2016/17 audit plan to audit the new system.  Members were also advised that the recommendations arising from the garden waste audit would be part of a wider review of the garden waste system and the new Revenues and Benefits Write-Off Policy which had been identified as being in need of amendment, would be taken to the Executive Committee on 6 April 2016.  Pages No. 93-95 of the report related to the local transparency agenda audit and demonstrated that the recommendations had been implemented and there had now been a vast improvement in the way assets were recorded and managed following the audit of the ICT Asset Inventory.

45.6           With regard to the decommissioning of Cascades, a Member queried how it was intended to ensure that the building was kept safe and would remain empty.  The Asset Manager advised that the new leisure facility would be opening on 30 May 2016, which was during the school half-term holiday when the majority of the decommissioning of Cascades would be done.  All valuables would be removed from the site and the pool would be emptied with a barrier system operating to ensure that if anyone did break in they would not have access to the tanks.  He would shortly be going out to tender with the specification for demolition to commence in mid-June.  A Member queried whether anything was being done to address the issues identified with the stock at Cascades and was advised that, whilst there were controls in place, they were not strictly in line with the financial procedure rules.  Stocktakes were undertaken quarterly and where any discrepancies were found they tended to be among the high volume, low value items such as teabags and sugar.  The resale goods and vending machines generated a profitability level of 58% which far exceeded the Swimming Bath Trust target of 30%.  The Asset Manager stressed that no items had actually gone missing and the high end stock such as swimming costumes and googles was extremely well monitored.  The site manager was able to sign-off £25 of discrepancies for resale items worth over £45,000, anything more was referred to the Section 151 Officer to sign-off and no such requests had been made over the last 18-24 months.  One issue which had been identified was how to identify the amount of stock at year end and how this would be disposed of.  A statutory stocktake was undertaken on 31 March each year with an audit carried out at the same time by an external auditor on behalf of the Swimming Bath Trust.  This year it would be carried out on 31 March for auditing purposes and again on 29 May, immediately prior to closure.  The operators of the new facility, Places for People, had agreed to take some of the stock and the rest would need to be disposed of and written-off in accordance with Council policy.  It was a very difficult time as stock levels needed to be run down but also maintained at an appropriate level whilst Cascades remained operational.

45.7           In terms of the garden waste audit, a Member noted that there were around 400 unpaid bins which equated to approximately £17,500 of unpaid fees and he questioned whether the Ubico operatives could be tasked to physically go and collect those bins.  The Corporate Services Group Manager stressed that these bins were not necessarily all being presented for collection. A letter had been sent to everyone on the unpaid bins list and 50 people had subsequently come back and paid with a further 30 having cancelled their subscription so that number had been reduced by 80.  Nevertheless, there was a recommendation that a system be put in place to collect bins on the unpaid list and discussions were taking place with Officers about the best way to do this.

45.8           Having considered the information provided, it was

RESOLVED          That the Internal Audit Monitoring Report be NOTED.