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 January – March 2013.

9.1             The report of the Performance and Audit Manager, circulated at Pages No. 26-51, summarised the work undertaken in relation to the 2012/13 Internal Audit Plan for the period January to March 2013.  Members were asked to consider the audit work completed and the assurance given on the adequacy of internal controls operating in the systems audited.

9.2             Members were advised that this was the final monitoring report for the year 2012/13 and the work which had been completed was summarised at Appendix A to the report.  92% of the Audit Plan had been achieved and there were two outstanding audits as at 31 March 2013: Equalities and ICT.  The Equalities audit had now been completed and the Performance and Audit Manager was in discussion with Grant Thornton in relation to carrying out a formal risk assessment of the ICT environment.  This had never been done in the past and he felt that it would be beneficial to understand where the risks were in relation to ICT to ensure that resources could be directed appropriately, particularly given how quickly this was advancing.  In addition to the work around key financial systems and service related audits, which included Housing Benefit, Council Tax and Sundry Debtors, corporate improvement work had also been carried out in respect of Playground Inspections and Business Continuity, which was included as a separate item later on the Agenda.  Essential recommendations that remained outstanding as a result of follow-up audits were detailed at Appendix B to the report.  In relation to the procurement of small building works which was part of a previous Creditors audit, Members were informed that tenders had been evaluated and a select list drawn up for each category of works which would be operational from 1 July 2013.  In addition, the audit on the implementation of the property services database confirmed that maintenance files were now being retained and could be linked to each asset on the database, therefore the recommendation was considered to be implemented.

9.3             Limited assurance opinions had been given in relation to the audits of Creditors and Playground Inspections.  In terms of Creditors, there had been found to be non-compliance with the Financial Procedure Rules as, from a selection of higher value invoices, five invoices had been found to have no purchase order raised and there were a number which had been authorised by Officers where the value had exceeded their approved signatory limit.  These invoices had been retrospectively reviewed and authorised by the Director of Resources.  In addition to the procedural issues identified, two of the sampled invoices had been found to be non-compliant with the Contract Procedure Rules: the corporate printing of Committee papers and the provision of bed and breakfast accommodation to homeless persons.  In these cases the expenditure had been above the low value procurement threshold.  In terms of Playground Inspections, the audit confirmed that the playgrounds currently being investigated were owned by the Council.  Prior to the commencement of the audit it had been identified that there were three playgrounds within the Wheatpieces area that were being inspected and maintained by the Council but which had not been formally adopted.  Officers had agreed a recommendation to investigate the ownership of playgrounds detailed within the previous Play Strategy, which included non-Council owned playgrounds, to help give assurance that there were no playgrounds which the Council should be inspecting.  A review of the inspection regime had identified a number of areas for improvement and had resulted in a limited assurance opinion being given for a number of reasons: the Royal Society for the Prevention of Accidents (RoSPA) set out that it was good practice for all playgrounds to be risk assessed, however, there was no evidence that risk assessments had been recorded; no historical documentation had been retained in relation to warranties, manufacturer equipment specifications and their associated maintenance requirements; annual inspections were carried out on behalf of the Council’s insurers and a review of these inspection records compared to the internal inspections carried out at the same time identified defects that had not been picked up through the internal inspections; there was no clear audit trail to confirm that the defects identified by either the internal or external inspections had been resolved; the last training records for inspecting Officers were dated 2000; only informal inspections had been undertaken at The Finches, Winchcombe and no inspections had been documented; and The Finches and the Rollerblade Park, Link Road had not been included on the Council’s engineering insurance policy, therefore they had never been subject to an annual independent inspection by the Council’s insurers.  The Performance and Audit Manager provided an assurance that, as part of the organisational review, responsibility for the management of the playgrounds would transfer to the Finance and Asset Management Team, supported by the Environmental Health Team which would physically inspect the playgrounds.  The new Asset Manager had already carried out some improvements, prior to taking up his new post, and a management response to the issues identified would be circulated to the Committee following the meeting.  Limited assurance statements for each of these two audits, providing more detail on the matters identified, were attached at Appendices C and D to the report.

9.4             A Member raised concern with regard to the numerous issues which had been identified during the audit of Playground Inspections.  He considered that it was unacceptable that training had not been provided since 2000 and he questioned why the issues had not been picked up during previous audits.  He felt that the Council had not been taking its responsibility seriously enough and, although he accepted that this would be addressed as a result of the management changes under the new organisational structure, he felt that it should be kept under review and brought back before the Committee as soon as possible.  The Director of Resources explained that, if the Performance and Audit Manager carried out a follow-up audit there would not be time to implement the changes prior to the next Audit Committee meeting, however, he reiterated that the new Asset Manager had already done a lot of work in this area and it would be more effective for him to provide an update presentation at the Audit Committee meeting on 25 September 2013.  The Performance and Audit Manager confirmed that a follow-up audit would then be undertaken in 6-12 months time.

9.5             In response to a Member query, clarification was provided that there had been no written procedures in place for inspecting the playgrounds and this had never been picked up in the risk assessments.  The Performance and Audit Manager explained that, prior to consideration by the Overview and Scrutiny Committee, the summary service plans which formed part of the quarterly performance management reports, were considered by the Corporate Management Team.  It was during this process that it had come to light that there was an issue with the inspection regime and it had subsequently been referred to the internal auditors.  This demonstrated the advantage of combining the performance and audit functions into one team.  The Chairman indicated that, over the last three to four years, the Council had aimed to transfer the Tewkesbury Borough Council-owned playgrounds to Town and Parish Councils where possible; however, they had been reluctant to take them on in their existing condition.  The Performance and Audit Manager explained that part of the management response to the audit was that all playgrounds would now be subject to RoSPA inspections to help to facilitate the transfer of The Finches, Winchcombe and Zinnia Close, Churchdown to their respective Parish Councils.  A Member indicated that, in his experience, the concerns were more to do with long term funding and he felt that there was an opportunity for the Finance Team to provide advice to Parish Councils about how to use the initial pot of money and to make allowances for the future within their own precepts.  

9.6             A Member sought a further explanation as to why consideration was being given to appointing Grant Thornton to undertake an audit of ICT.  The Performance and Audit Manager advised that he was currently in discussion with another company in addition to Grant Thornton; if the total cost of the audit was more than £5,000 he would need to obtain three quotes in accordance with the Council’s Contract Procedure Rules.  He explained that a lot of small District Councils did not have the necessary ICT expertise in-house given that it was such a technical area.  He did not have the knowledge to carry out the work and the CIPFA Code of Practice for Internal Audit in Local Government in the United Kingdom 2006 set out that any gaps should be bridged. 

9.7             Having considered the information provided it was

RESOLVED          1.  That the Internal Audit Plan Monitoring Report be NOTED.

2.  That a management response in relation to the issues identified as a result of the audit of playground inspections be circulated to the Committee following the meeting.