Agenda item

Report of Internal Audit Manager.

The Committee considered the report of the Internal Audit Manager regarding a summary of the activities of Internal Audit for the second quarter of the financial year 2014/15.

A list of all final audit reports issued from 1^st April to 30 September 2014 and the level of assurance attained were detailed in the report. The Committee was advised that during this quarter, no reports had been issued with an assurance level of inadequate.

Audit work carried out to date against the audit plan to the end of September 2014 was set out in appendix A. The Internal Audit Manager made reference to the main point from the appendix which was the review of Government Connect, which was originally carried out as four separate reviews but was later collated into one and took longer than anticipated. It was reported that it was highly unlikely that all reviews on the plan would be completed this year. This was due to the IT Auditor leaving the authority and time being undertaken to train a new member of staff and set up the Corporate Fraud team.

The report set out in order of risk, based on a risk assessment undertaken last year, the reviews that had not yet commenced. The Committee agreed that when any time was available, work would be spent on reviews in the order listed in the report. The Committee was assured that any reviews which were not carried out this year would be automatically transferred into next year’s audit plan.

Further information on reports issued in final during the year with an assurance level below excellent was set out in Appendix B, with any issues highlighted in the reviews which informed the assurance level given.

A brief explanation for a number of outstanding high and medium priority recommendations from audits, reasons why they had not been implemented along with the month when the next follow up date was due were set out in appendix C. Key items from the appendix was set out in the report.

The comments made by the Corporate Management Team and officers following consideration of outstanding high risks were set out in appendix D. Appendix D was designated as confidential to reduce the risk of opportunities to commit fraud.

The Committee was advised that one fraud over £10K had been reported in the second quarter of 2014/15 and this was detailed in the report.

The Internal Audit Manager reported that work was ongoing for the transfer of staff from the Benefit Fraud team to the new Corporate Fraud team as of 1 November 2014. Job descriptions and person specifications for the team had been updated and were currently with the Council’s Human Resources department.

The Committee was advised that the Anti-Fraud and Corruption policy had been updated to reflect the new team and these changes were detailed in the report. The full policy document was appended to the report for approval. In addition to this, a Corporate Fraud Policy had been created that explained the culture, objectives and role of the Corporate Fraud team. This policy document, appended to the report would be reviewed annually. It was requested that this policy be adopted as it currently stands as there had yet to be clarification from the Department for Work and Pensions (DWP) over the work on Housing Benefits Pensions and the remit of the single point of contact post. The Committee was advised that once information was received from the DWP, the policy would be fully updated and brought back to the committee for approval.

Progress against the Corporate Fraud Action Plan, included in the report to Audit and Governance Committee in September 2014 was included at Appendix G to the report. The Committee were advised that the Council’s Corporate Fraud Investigations Manager would attend the next meeting of the Committee and form part of the next internal audit report.

The Internal Audit Manager reported that Eastbourne Homes were considering options for the provision of Internal Audit Services as their current contract was due to expire. The Committee were advised that the Internal Audit function had been requested to prepare a business case to propose providing this service. Should the proposal be accepted, it was anticipated that 0.5 full time equivalent would be required to cover the extra audit work. For reporting purposes, audit plans would take into account both areas of work. The Chief Finance Officer added that it was anticipated this proposal would be accepted.

The Committee discussed the internal review of Events that had been awarded an assurance level of adequate. The Committee asked whether the review should be downgraded due to the issues detailed in appendix B potentially being high risk, particularly as temporary staff were hired for these events. The issues noted included no reconciliations of car parking tickets, beer festival tokens and copies of receipts for cash taken from traders at events not being retained. The Internal Audit Manager responded that the temporary staff hired for these events did not carry out reconciliations but a check was undertaken when the income was totalled for each event, although it was acknowledged this check could be improved. Income for each event was largely consistent.

The Committee then discussed the issue of purchase orders not being raised at the time an order is placed which had been featured on several internal audit reviews. The Internal Audit Manager advised that email reminders were consistently circulated across the authority and that invoices were not paid unless purchase orders were raised.

The Committee was advised that a follow up review would be undertaken of Events and it was agreed that should issues continue to arise as detailed in appendix B, the relevant officer for that area would be invited to attend and address a future meeting of the Committee.

It was requested that a review be undertaken of the robustness and resilience of the Council’s IT system as issues had been encountered with the telephone system and Councillor iPads. The Internal Audit Manager responded that this would be added to next year’s audit plan.

RESOLVED: (1) That the report be noted.

(2) That work on outstanding reviews be undertaken in order of risk outlined in the report.

(3) That the changes to the Anti-Fraud and Corruption policy be approved and that the new Corporate Fraud Strategy be adopted.