To consider the Internal Audit work undertaken and the assurance given on the adequacy of internal controls operating in the systems audited during 2014/15.

11.1           The report of the Corporate Services Group Manager, circulated at Pages No. 49-88, was the final monitoring report of the financial year and summarised the remaining work undertaken by the Internal Audit team during 2014/15.  Members were asked to consider the audit work completed and the assurance given on the adequacy of internal controls operating in the systems audited.

11.2           Members were advised that full details of the work undertaken were attached at Appendix 1 to the report and a list of audits within the 2014/15 Audit Plan and their progress to date could be found at Appendix 2 to the report.  The Corporate Services Group Manager confirmed that all audit work had been completed, with the exception of the audit of Individual Electoral Registration (IER), which translated to a 92.31% completion of the original plan with 24 out of 26 audits completed; it was noted that one audit had been completed after 31 March 2015.  Days had been allocated within the 2015/16 Audit Plan, following the elections, to carry out the work around IER.  Members were advised that two additional internal audits had been undertaken during the year in respect of business flood grants and Repair and Renew grants and that those were in addition to the Tewkesbury Town Council audit. For the period being reported, all audit opinions had been given either a ‘good’ or ‘satisfactory’ level of control with the exception of health and safety (risk assessments), which had a ‘limited’ audit opinion, and ICT asset inventory, which had an ‘unsatisfactory’ audit opinion.  In terms of health and safety, there had previously been no formal reporting mechanism to Council apart from the ‘Keep Healthy, Stay Safe’ Group.  As health and safety was an important part of the governance framework, the Council’s Environmental Safety Officer had been seconded to the Internal Audit team to undertake health and safety audits which would be reported to the Committee.  The first of those audits had been completed in the reporting period and the opinion could be found at Appendix 1 to the report.  The Corporate Services Group Manager was pleased to advise that no incidents of fraud, corruption, theft or whistleblowing had been reported during the period.  As previously reported to the Audit Committee, the Internal Audit team had been commissioned by Tewkesbury Town Council to undertake its internal audit.  An interim audit report had previously been issued and the formal year end audit was due to be taken to the Town Council meeting the following week.

11.3           With regard to the audits which had been completed during the period, Members were advised that a good level of control had been identified within payroll in terms of the accuracy of information and salary adjustment notifications and there was a good reconciliation process and verification of employees.  It had been concluded that the Council had satisfactory risk management arrangements on the basis that there was an approved Risk Management Strategy in place, which was due for renewal during 2015/16; the Corporate Risk Register was presented to the Audit Committee; and risk management was a standard item on the monthly Corporate Leadership Team Agenda and formed part of the Corporate Governance Group Agenda which had Lead Member representation.  It was recognised that further training would be needed following the review of the Risk Management Strategy.  Members were informed that an audit of the Council’s Personal and Professional Development (PPD) employee appraisal scheme had been undertaken.  Following the first year of implementation of the PPD procedure in early 2014, there was satisfactory assurance that the procedure had been rolled out across the organisation with the exception of the Grounds Maintenance team which had now migrated to Ubico.  The PPD forms had been completed well, however, 50% of staff tested had not received training which was something that the Human Resources team was working on for the next round.  With regard to the delivery of the training requested via PPDs, it was found that it had been provided.  One of the main outcomes of the process was the identification of corporate training.  It was a significant task to embed a new appraisal scheme within the organisation and it was considered that it would be further enhanced during the forthcoming year.  A Member queried whether there was a timeframe for PPD training and the Corporate Services Group Manager undertook to seek a response from the Human Resources team and report back following the meeting.  Another Member noted that the Grounds Maintenance team had not received PPDs and, whilst he understood that they had transferred to Ubico, he questioned whether contractors were audited by the Council.  Assurance was provided that a number of days had been set aside in the 2015/16 Audit Plan to look at the Ubico contract and, in addition, the Overview and Scrutiny Committee had requested that an interim report be provided on Ubico at the six month stage.

11.4           Members were informed that an unsatisfactory opinion had been issued in regard to the ICT – Asset Inventory audit as the asset register was not currently fit for purpose.  There were no documented procedures to manage the process from when an item of computer equipment was purchased through to when it was disposed of.  There was a question over the separation of duties within the team; items which had been transferred to different members of staff were often deemed to be ‘lost’ as they had not been recorded correctly over time; and there were no regular checks of hardware.  The Corporate Services Group Manager indicated that he was responsible for IT as part of his new role and he had started a process between Audit and IT in order to put a procedure in place.  A Member felt that this was very worrying and she requested that a progress report be provided.  The Corporate Services Group Manager confirmed that a formal report would be brought to the September meeting of the Audit Committee.

11.5           It was noted that a limited opinion had been issued in respect of the Health and Safety – Risk Assessments audit.  Each service was required to undertake a risk assessment to identify key hazards, however, a number of services had only been prompted to complete a risk assessment by the undertaking of the audit review, rather than it being completed as part of normal business.  A number of areas had been identified as requiring particular attention including Grounds Maintenance, where risk assessments had not been reviewed since 2011; Economic and Community Development, where there were risk gaps in relation to some activities which involved remote locations and lone working; and Asset Management, where there were gaps in the identification of key hazards, in particular asbestos and legionella.  The Environmental Safety Officer explained that the Risk Assessment Policy had been reviewed at the time of the audit, having last been reviewed in 2012.  Risk assessments were not being seen as corporate business and training would be provided in September in order to address that issue.  It was planned to prompt each service to review their risk assessment every six months. 

11.6           In terms of the main areas of concern, the Environmental Safety Officer explained that Grounds Maintenance had transferred to Ubico in April and the Council was working in partnership with them to ensure that the risk assessments were completed.  There had been a lot of progress in respect of Economic and Community Development since the time of the audit and she was pleased to report that all issues had now been addressed and the risk assessments were up to date.   In terms of Asset Management, an asbestos management plan had now been put in place.  There were 26 properties owned by Tewkesbury Borough Council, 10 of which had been found to contain asbestos, although all were relatively low risk.  Arrangements were now in place to inspect the properties and training would be provided for staff carrying out the inspections.  A Member indicated that she had always understood that asbestos must always be dealt with by a specialist company and the Environmental Safety Officer explained that asbestos surveys had already been undertaken and the risks and controls required had been identified.  Whilst asbestos removal had to be carried out by qualified individuals, the Council’s inspectors would be identifying and monitoring asbestos for which full training would be provided.  A Member raised concern that the Grounds Maintenance risk assessments had not been reviewed since 2011 and he sought assurance that a regime would be put in place for them to be regularly updated.  The Environmental and Housing Services Group Manager explained that part of the specification for the Ubico contract was the monitoring of health and safety which would be carried out by the Joint Waste Team, with any issues picked up during their regular meetings.  She advised that the risk assessments were considered by the ‘Keep Safe, Stay Healthy’ Group so Officers would be able to ensure that they were completed as required.  A Member queried who would be accountable if there was an accident and the Environmental and Housing Services Group Manager confirmed that Ubico was ultimately responsible for any accidents which had to be immediately reported to the Council.  The Member sought clarification as to when the Risk Assessment Policy would next be reviewed and the Environmental and Housing Services Group Manager confirmed that she had carried out a review at the time of the audit, earlier in 2015.  The Member went on to question whether there was any Member involvement and was assured that there was ongoing policy review by the ‘Keep Safe, Stay Healthy’ Group which included Councillor Mrs E J MacTiernan as Lead Member for Organisational Development, which covered health and safety.  A Member noted that the ‘Keep Safe, Stay Healthy’ Group reviewed the risk assessments every three months and he questioned whether that should be more frequent.  The Environmental and Housing Services Group Manager advised that there was not enough information to share on a monthly basis so she would not recommend more regular review.  The Environmental Safety Officer went on to explain that the legionella plan had been designed by the Property team and the work would be completed by the end of July; a water company was employed to monitor legionella within the Council-owned premises and there were no major concerns.  In terms of electrical and fire hazards, electrical installation certificates were available for the majority of Council-owned properties and portable appliance testing was also carried out.  This would be properly documented in a plan by the end of July.  The audit had identified a requirement for further training of Group Managers, and staff for them to delegate to, and that had been arranged for 16 September 2015.  When updating assessments, version control needed to be improved so that the previous assessment was not overwritten in order for changes to be identified and consideration was being given to keeping all documents on the public drive.  The Corporate Services Group Manager confirmed that, given the limited audit opinion, a full report would be brought to the next meeting of the Audit Committee.

11.7           In terms of the homelessness audit, a satisfactory level of assurance had been identified.  Applications were determined in the correct manner and rental charges paid by the Council were accurate, however, a recommendation had been made that call-off contracts should be entered into with each bed and breakfast establishment and assurance sought on a regular basis as to the continuous suitability of the accommodation for the homeless applicant.  When items were being stored, the cost was only being paid whilst the homeless application was being assessed and where an unintentional homeless determination had been accepted.  The procurement of storage did need to be reviewed in order to demonstrate best value with consideration to be given to obtaining assurance that items being stored were for personal property only and ensuring that the formula for calculating storage charges was stated. 

11.8           There was a satisfactory level of assurance in the housing benefits audit with information being accurately entered into the Northgate system.  A checking regime had been implemented and any new claims entered were checked by a Team Leader.  The previous checking regime for April-October 2014 was not currently complete as two new claims and three changes of circumstances had not been checked for each day of processing.  This was acknowledged as an issue by the Operational Manger and it was intended to have the appropriate number of claims checked by the end of June 2015.  Grant Thornton had reported on the housing benefit claim at the last meeting of the Committee and had been positive in the accuracy of the claim and there was regular conciliation between benefits and Council Tax. The audit opinion for the recycling audit was also satisfactory and Members were advised that a contract for the disposal of kerbside recycling waste had been established.  Key performance data was provided to the Council in accordance with the terms of the contract and there was reasonable assurance that the waste claimed for recycling was from domestic households and credit tonnages claimed had been fairly stated.  Invoices for tonnages were raised correctly and at the appropriate charge rate.  At the time of the audit there was no evidence to demonstrate that waste at its end destination point was being recycled, however, verbal assurance had been provided that such evidence was to be collected through the Joint Waste Team contract monitoring process.  A Member indicated that she had been made aware that some recyclate was shipped abroad but there were no details about what happened to it beyond that point and no way of knowing if it was actually being recycled.  The Corporate Services Group Manager confirmed that the audit had identified that some recyclate was shipped abroad and the risk was that, without an audit trail to show what had happened once the material had been collected, Gloucestershire County Council could withhold credits.  A Member sought clarification as to what would be accepted by the County Council as evidence and was advised that discussions would need to take place with the Environmental and Housing Services Group Manager and the Joint Waste Committee to establish what could be put in place.  The Performance and Audit Officer explained that part of the problem was what was on the environmental permit issued by Defra.  The issue about where the recyclate went after it had been collected had been acknowledged by the Government and it was something which needed to be identified and included in the permit scheme which was not likely to be a quick fix.  Members would be provided with further information on the way forward as and when it was available.

11.9           Appendix 3 to the report contained a summary of all audit recommendations and their status. Members were informed that all of the recommendations around licensing and changing of information had been implemented.  The recommendations in respect of the arrangements for the storage of personal belongings for individuals identified as homeless had not yet been implemented.  Work had been carried out in relation to the recommendations around tree inspections and the audit opinion would be brought to the Committee in September.  In terms of the limited opinion in respect of safeguarding children, a formal report would be brought to a future meeting of the Committee.  He explained that this had stemmed from the appointment of the Housing Services Manager, whose role included acting as Deputy Safeguarding Officer, and there was quite a lot of ongoing work in respect of those actions.  With regard to the recommendations around Repair and Renew grants, £400,000 of grant payments required formal audit sign-off and would be brought to the September meeting of the Committee.  Members were informed that the Council’s Financial Procedure Rules had been updated, however, approval of the changes could not take place until the review of the Constitution had been completed in March 2016, as identified in the Annual Governance Statement.

11.10         Having considered the information provided, it was

RESOLVED          That the Internal Audit Plan Monitoring Report be NOTED.