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 2016 – February 2017.

50.1           The report of the Head of Corporate Services, circulated at Pages No. 79-119, was the third monitoring report of the financial year and summarised the work undertaken by the Internal Audit team during the period December 2016 to February 2017.  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.

50.2           The Head of Corporate Services advised that full details of the work undertaken in the period were attached at Appendix 1 to the report.  It was generally a very positive report with one ‘limited’ opinion in relation to the cascading of insurance conditions to relevant staff.  A list of audits within the 2016/17 Audit Plan and their progress to date could be found at Appendix 2 to the report.  Approximately 93% of the 2016/17 Internal Audit Plan had been completed and days had been allocated within the 2017/18 Plan for any which needed to be carried forward.  There had been a small degree of slippage due to sickness absence and the Finance Team had provided an additional resource to assist with non-financial audits.  One member of the team had recently gone on maternity leave and a secondment arrangement was in place to cover this.  Members were advised that notification had been received that Tewkesbury Town Council wished to terminate its contract for the provision of Tewkesbury Borough Council’s internal audit function.  A total of 20 days had been allocated for this provision within the 2016/17 plan which would now be available for additional Borough Council work within the 2017/18 Internal Audit Plan.

50.3           With regard to the audit of the Council’s insurance arrangements, there was a good level of control in terms of the information provided to the Council’s insurers to ensure that the cover was appropriate; however, the controls and environment in relation to insurance policies being disseminated to appropriate Officers had been found to be limited.  Whilst the risk of not disseminating insurance conditions to Officers could potentially affect the Council’s ability to defend a claim, this risk was considered to be minimal based on the limited number of claims received that had resulted in a claim being settled in favour of the claimant.  The Finance Team had been working on this and the relevant information would all be available on the intranet by the end of the month.  A Member questioned whether it was possible to take out insurance to protect against lost planning appeals.  The Borough Solicitor advised that it was highly unlikely that it would be possible to obtain insurance for planning decisions made by the Council when the risks were known.  The determination of planning applications was a legal process and there were certain requirements which needed to be observed.  Whilst she recognised that the costs of losing appeals could be significant, this was taken into account in the Council’s financial planning.  It was potentially different if there was a case for negligence but this would only be in very exceptional circumstances.

50.4           It was noted that the Council Tax audit for 2016/17 had looked at the fundamentals of the system and found a good level of control in terms of billing, valuations and liabilities.  The Council Tax audit included in the 2017/18 Internal Audit Plan would go beyond the key controls.  In terms of the Tourist Information Centres (TICs) audit, the collection of income was generally satisfactory.  There was a slight issue at Winchcombe TIC in terms of the method for recording sales in respect of event tickets and a recommendation around improved reconciliation between income and ticket sales had been accepted.  Whilst the stock held by TICs was of relatively low value, improvements could be made by carrying out more frequent stock checks.  Whilst completing the audit, two ancillary issues had been identified in relation to data retention and the rental agreement for the lease of Winchcombe TIC from Winchcombe Town Trust.

50.5           The overall arrangements in respect of recycling had been found to generally be satisfactory and recommendations had been made around formalising the arrangements with the Joint Waste Team and establishing a protocol for operational responsibility which had been accepted by the Head of Service.  Whilst testing had confirmed that the Grundon invoices for May and October 2016 had been accurately stated, it had been found that there was no verification of the invoices prior to payment and it was recommended that verification be completed before payment.  The main accounting audit 2016/17 had been satisfactory but there was a similar recommendation in terms of verification.  There was a good level of control around entries and reconciliation which stood the Council in good stead for the Statement of Accounts.  The creditors’ audit 2016/17 had shown there was an up-to-date signatory list and invoices were correctly authorised and coded.  Tewkesbury Borough Council had become a deemed contractor under the Construction Industry Scheme (CIS) with effect from 6 April 2016 and all payments made for construction operations falling under the scheme were subject to CIS rules.  Audit testing of the monthly return had shown that, of the seven sub-contractors, one had been incorrectly processed and two had related to mixed contracts whereby not all payments due to the sub-contractor had been processed through CIS.  Given these findings, it was recommended that a review of the CIS monthly returns processed to date be carried out in order to ensure that the scheme was being correctly applied.  The Finance Manager advised that, when the CIS had come into effect in April, Officers had undergone training and the scheme had been implemented.  There had been some issues at the start when staff had been learning the system but these had all been addressed.  The system had been reviewed a few weeks earlier and a procedure had been put in place to determine whether CIS applied.

50.6           The 2016/17 audit of the Environmental Health flood grants had found a satisfactory level of assurance in terms of external funding being appropriately spent and monies due being received promptly and for the correct amount.  Notwithstanding this, it was noted that the agreement between Tewkesbury Borough Council and Gloucestershire County Council with regard to grant payments to undertake flood alleviation schemes still needed to be finalised.  In addition, the Borough Council was acting as an accountable body for the Isbourne Catchment Group and currently held funds for that Group; however, there was an issue regarding governance and it was necessary to put a formal agreement in place so that the Council’s responsibilities were clear.  In terms of corporate improvement work, it was noted that the Council had purchased a new vehicle fleet and one of the Internal Audit Team was working with the Head of Community Services on an agreement to ensure that the vehicles were appropriately maintained and managed by Ubico.  A Member questioned the basis on which these vehicles were provided to Ubico and what checks were being undertaken to ensure that the Council’s assets were being looked after.  The Finance Manager clarified that a lease agreement was being put in place with Ubico in terms of how it used the assets and the expectations in terms of maintenance etc.  A final draft had been received from One Legal earlier that day and it was anticipated that it would be signed the following week.  The Head of Finance and Asset Management indicated that there should be a performance indicator within the lease agreement to ensure that the vehicles were used in accordance with the agreed terms.  The Member went on to question whether spot checks were carried out and the Head of Corporate Services confirmed he would expect this to be the case.  A number of days were allocated in the Internal Audit Plan 2017/18 specifically for the vehicle contract.

50.7           Members were informed that Appendix 3 to the report contained a summary of all audit recommendations and their status.  There were 22 follow-up recommendations in the period; 12 had been implemented, three were in progress and seven were yet to be implemented which would be taken up with the relevant Officers.  A Member raised concern that the expected implementation dates for a number of actions had passed some time ago, or were due to very shortly, and there was nothing in the other columns to provide an update as to whether this had been achieved.  The Head of Corporate Services advised that these actions were yet to be followed-up by the Internal Audit Team and he pointed to the ‘Target Follow-Up Date’ column at the end of the table which showed when this would be achieved.  He advised that any outstanding recommendations would be brought to the next Audit Committee meeting.

50.8           Having considered the information provided, and views expressed, it was

RESOLVED          That the Internal Audit Plan Monitoring Report be NOTED.