Agenda item

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

35.1           The report of the Head of Corporate Services, circulated at Pages No. 55-80, was the second monitoring report of the financial year and summarised the work undertaken by the Internal Audit team since the last Audit Committee meeting.  Members were asked to consider the audit work completed and the assurance given on the adequacy of internal controls operating in the systems audited.

35.2           Members were advised that the Public Sector Internal Audit Standards (PSIAS) required an external assessment to be conducted at least every five years.  Elizabeth Humphrey of Tilia Solutions had been appointed to undertake this assessment which had taken place during the week commencing 13 November and included a series of interviews with the Chief Executive, Borough Solicitor, Head of Finance and Asset Management, the Internal Audit team, operational managers, Chair of Audit Committee and the Leader of the Council who was responsible for corporate governance.  No areas of non-compliance had been identified but a number of recommendations had been made to improve the overall audit function and these were outlined at Paragraph 4.4 of the report.  Officers were currently working through the draft report which had recently been received.  Once it had been finalised, it was intended to hold a workshop with the Audit Committee to consider the findings and share ideas on how to improve the effectiveness of the Committee and the internal audit function.  The Chair indicated that it had been a very worthwhile experience for him, given that he was fairly new to the role, and the review had identified some really interesting ways to move forward with the Committee in future.  He felt that Audit Committee and its function was often misunderstood - both by members of the public and Councillors - and he was strongly of the view that the Committee needed to be more flexible and have input into a wider range of areas, particularly governance. 

35.3           During the discussion which ensued, a Member indicated that the Overview and Scrutiny Committee had recently introduced standard templates for reporting on actions to ensure that they could be quickly and easily interpreted and he suggested that standardisation would be beneficial across the board.  He went on to seek clarification as to what was meant by ‘the charter’ in the first recommendation at Paragraph 4.4 of the report ‘textual amendment to the charter to define more clearly parts of the IA activity’.  The Borough Solicitor advised that ‘the charter’ referred to the Internal Audit Charter which had been approved by the Audit Committee on 22 March 2017.  Another Member expressed the view that each of the four recommendations needed further explanation and the Borough Solicitor explained that it was intended the recommendations would be discussed in more detail at the workshop.  Once the workshop had taken place, a formal report would be brought to the Audit Committee; any significant changes affecting the Committee’s Terms of Reference would need to be approved by the Council.  A Member raised concern that it would be difficult to discuss the recommendations, and whether they should be implemented, without a fuller understanding of their meaning and he requested that this be provided in advance of the workshop.  The Head of Finance and Asset Management advised that the Head of Corporate Services had been keen to bring the initial findings of the review to the Committee’s attention at the earliest opportunity; however, it should be borne in mind that the final report had not yet been received and he gave assurance that Members would be provided with all of the information and detail they would need to participate in the workshop.  A Member expressed the view that the Leader of the Council should be invited to attend the workshop on the basis that he was responsible for corporate governance and she felt that it would also be beneficial for other Members who may wish to sit on the Audit Committee in future to participate.  Contrary to an earlier view expressed, she found the internal audit reports easy to understand, after a relatively short amount of time sitting on the Committee, and she did not feel there was a need to change the way audit recommendations were reported to comply with reports to other Committees.  The Borough Solicitor indicated that this was something that could be debated at the workshop and she agreed that all Members should be invited to participate.

35.4           Members were informed that full details of the work undertaken in the period were attached at Appendix 1 to the report and a list of audits within 2017/18, and their progress to date, could be found at Appendix 2 to the report.  Attention was drawn to the audit on cemeteries which had three control objectives: all burial records are accurate with any changes being recorded immediately; fees and charges are applied correctly and recovered in a reasonable timescale; and there is a grave digging contract in place and key elements of the contract are monitored.  A ‘satisfactory’ or ‘good’ level of assurance had been found in respect of each of the objectives but a number of recommendations had been put forward for further improvement.  A ‘satisfactory’ opinion had been issued in respect of both the property leases audit and the Members’ Allowances audit.  Unfortunately, the licensing audit had resulted in a ‘limited’ opinion.  The Senior Auditor explained that, whilst the audit had found that licensing information retained on the public register was satisfactory, there was a ‘limited’ assurance opinion in respect of the licence application process, including inconsistencies in raising annual payments on premises licences; lack of a prime site check for street trading; the need to establish a premises user check for Temporary Event Notices; and limited implementation of safeguarding requirements for private hire and hackney carriage licences.  A number of recommendations had therefore been made, set out at Appendix 3 to the report, and it was noted that there had been a very positive response from the Head of Community Services and the Environmental Health Manager in relation to setting up an action plan to address them.  The Head of Community Services advised that he had discussed the outcome of the audit with the Chair of Licensing Committee and they had worked together on the action plan.  The majority of recommendations were things which Officers were aware of, for example, the need to review the private hire and hackney carriage policy which was already programmed for 2018.  One area of concern was in relation to the approach to enforcement and the inspection of licenced premises; whilst Officers did react to any complaints, there were no programmed inspections.  In order to address this, it was intended to visit all licenced premises within the borough over the course of the year to carry out a risk assessment and to put in place an annual programme of inspections from 2019 over a three to four year period, depending on risk.  Although it had not been a positive audit, the Head of Community Services reiterated that an action plan was in place, the majority of which would be completed by April 2018.

35.5           A Member questioned what the impact would be on the Licensing Committee, particularly in terms of any additional work arising from the programmed visits to licenced premises.  The Head of Community Services gave assurance that the action plan would be taken to the Licensing Committee for consideration and that it would monitor progress going forward.  He explained that the majority of licenced premises were already visited by Environmental Health in respect of food hygiene so Officers were made aware of any risks; however, a formal process would now be introduced where Officers would consider whether the premises complied with the licensing objectives.  He accepted this could potentially impact upon the Licensing Committee if the visits resulted in more reviews being called but this would be addressed as and when it happened.  The Member went on to question why the display of food hygiene ratings was not compulsory and was advised that this was a separate issue outside of the audit but the Food Standards Agency was looking into making it compulsory in England, bringing it in line with Scotland and Wales.  A Member queried whether programmed visits had not been undertaken previously due to staffing issues and, if so, whether it would be possible to bring in temporary staff, potentially from another local authority, in order to carry out the initial visits.  The Head of Community Services explained that the Senior Licensing Officer had left the authority some months ago and staff had been brought in from another authority on a temporary basis, but it was also due to a lack of good processes and procedures within the licensing department; whilst there were a number of knowledgeable Officers within the team, there were some issues around entering information into the IT systems.  He reiterated that this was something which would be rectified by the end of the financial year.  A Member sought more detail regarding the limited implementation of safeguarding requirements for private hire and hackney carriage licences.  In response, the Head of Community Services explained that, when the Licensing Policy had last been reviewed, it had been agreed that all licenced drivers should be required to undertake safeguarding training; however, this had not been actioned.  The Member questioned whether this would be addressed by April 2018 and the Head of Community Services indicated that he hoped that would be the case.

35.6           The Head of Finance and Asset Management indicated that the final part of the report related to the outstanding recommendations that had been followed-up in the period.  Of the 19 recommendations followed-up, 12 had been implemented, four partially implemented and three were yet to be implemented.  The full list of these recommendations and their status could be found at Appendix 4 to the report.  A Member raised concern that there were still three recommendations which had not been implemented.  Taking each of those recommendations in turn, the Head of Finance and Asset Management advised that fraud awareness training had been held for Members in September and staff training was being arranged for the end of January so this recommendation would be implemented by the revised date of March 2018 and would be followed-up during the first quarter of 2018/19; the published information in respect of land ownership, required as part of the local transparency agenda, had not been updated due to staff resource issues but an additional resource would be available during April and May 2018 so this had been given a revised implementation date of June 2018; and, the Head of Corporate Services was in the process of sourcing a provider for the risk management refresher training for staff and Members and it was intended to deliver this by the end of March 2018. 

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

RESOLVED          That the Internal Audit Plan Monitoring Report be NOTED.