To consider the Internal Audit Annual Report 2015/16 and the assurance from the work undertaken during the year on the level of internal control within the systems audited during the year.   

10.1           Attention was drawn to the report of the Corporate Services Group Manager, circulated at Pages No. 41-47, which provided Members with a summary of the internal audit work undertaken for 2015/16, together with an opinion on the overall adequacy and effectiveness of the organisation’s control environment.  Members were asked to consider the report and the assurance that, overall, there was a satisfactory level of assurance in relation to the effectiveness of the Council’s framework of governance, risk management and control.

10.2           Members were advised that the Public Sector Internal Audit Standards (PSIAS) required the Council to produce an annual internal audit opinion and report which could be used by the organisation to inform its Annual Governance Statement.  Page No. 43, Paragraph 2.2 of the report, gave an overview of the audits undertaken during the year.  There were two audits outstanding from the 2015/16 Plan in respect of housing benefits and economic development (grants) and days had been allocated within the 2016/17 Plan to carry out that work.  As well as internal work, the team also provided an internal audit service to Tewkesbury Town Council.  This arrangement had commenced part way through 2014/15 and days had been formally allocated within the 2016/17 Plan to accommodate that work on an ongoing basis.  In addition, the Internal Audit team also undertook a variety of corporate improvement work initiatives.  The Audit Plan contained an allocation of days for that type of work and the Corporate Leadership team could request that the Internal Audit team assist with areas of work which needed to be moved forward, for example, during the year the team had assisted with the ICT asset inventory which had been given an unsatisfactory audit opinion; corporate fraud arrangements based on the Chartered Institute of Public Finance and Accountancy (CIPFA) checklist; Environmental Health and Development service reviews; and work on the cost of the Uniform system as part of the Digital Strategy.  The team was also represented on key corporate groups such as the Corporate Governance Group and the ‘Keep Safe, Stay Healthy’ Group.

10.3           Members were advised that 46 audit opinions had been issued during the year, as set out at Page No. 44, Paragraph 3.2.  There were four limited opinions which related to the corporate complaints framework, Cascades stock control and aspects of the trade waste service; and two unsatisfactory opinions, relating to trees inspections and trade waste (performance monitoring).  The Corporate Services Group Manager explained that Officers worked in a complex environment with a number of schemes, policies and procedures which meant that there would always be areas where assurance was limited or unsatisfactory; the important part was recognising those areas and taking action to make improvements.  In relation to the adverse audit opinions given during the year, there was adequate assurance that these had been, or were being, acted upon.  For example, a new complaints framework had been introduced, a new regime had been established for tree inspections which was supported with mobile device technology and the issue in relation to stock control at Cascades had been mitigated with the opening of the new leisure centre. 

10.4           Management of internal audit was overseen by the Corporate Services Group Manager and delivery of the annual Audit Plan was carried out by two full-time employees.  During the course of the year, one employee had been on maternity leave and the position had been covered through a combination of an internal audit contractor and a short term secondment from another service area.  A small restructure of the team had recently taken place but continued to be based on two full-time employees; the team now comprised two part-time employees and one full time employee who had been in post since 1 April 2016.  It was noted that one employee now undertook a Senior Auditor role.

10.5           As defined in the Audit Charter, the Internal Audit team had remained organisationally independent during 2015/16.  The Corporate Services Group Manager reported directly to the Chief Executive and held quarterly briefings with the Chair and Vice-Chair of the Audit Committee to keep them informed of internal audit activity during the year.  It was not uncommon within a small District Council for the Chief Audit Executive, i.e. the Corporate Services Group Manager, to also have operational responsibility for service areas.  Moving forward into 2016/17, the team would be working towards demonstrating compliance with PSIAS in preparation for the external peer review of the Internal Audit team and it was to be borne in mind that the independence of the Chief Audit Executive had the potential to be raised due to his operational responsibilities.

10.6           It was noted that there had been no reported incidents of fraud, theft, corruption or whistleblowing during the financial year.  The Anti-Fraud and Corruption and Whistleblowing Policies were both programmed for review in 2016/17 and would be presented to the Audit Committee.  The performance monitoring information for achievement against the Audit Plan was based on the number of completed audits vs. the number of planned audits and Members were advised that the outturn for the 12 month period was 91%.  Based upon the work undertaken during the year, particularly in terms of the small number of limited/unsatisfactory opinions and the management response, Internal Audit could provide reasonable assurance that, overall, there was generally a satisfactory level of control in relation to the effectiveness of the Council’s governance, risk management and control environment.  The team had now started work on the 2016/17 Audit Plan which had been approved by the Audit Committee in March.  As previously mentioned, the team would also be working towards broad compliance with PSIAS in readiness for the peer review, which it was anticipated would be programmed for the first quarter of 2017/18, and it was noted that a report would be brought to the Committee in due course to approve the format of the review.

10.7           In response to a query regarding the leisure centre, the Finance and Asset Management Group Manager advised that Places for People had its own accounts as the operator of the facility; the only impact on the Council was the management fee which would be paid annually.  Having considered the information provided, it was

RESOLVED          That the internal audit annual report be NOTED.