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Internal Audit Interim Performance Report 2004 2005

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6 pages
Agenda Item No: ReportNo:Report Title: Internal Audit Interim Performance Report 2004/2005Report To: Audit Committee Date: 31 January 2005Ward(s) Affected: AllReport By: Director of Finance and Community ServicesContact Officer(s): David Heath, Chief Internal AuditorPurpose of Report:To inform Councillors of the Internal Audit work of the Audit andPerformance Division for the first nine months of 2004/2005.Officers Recommendation(s):1 To receive and consider the report.Reasons for Recommendations1 The remit of the Audit Committee includes a duty to agree a three-yearStrategic Audit Plan and an Annual Plan, and keep them under review.Information2 Background2.1 The Internal Audit function at Lewes operates in accordance with theauditing guidelines published as a Code of Practice for Internal Audit bythe Chartered Institute of Public Finance and Accountancy (CIPFA).2.2 The 2003 version of the CIPFA Code includes revised requirements forthe Chief Internal Auditor’s reporting to the Audit Committee. The Codenow requires that, in addition to the report on the work of the InternalAudit Section, the interim reports should address emerging issues inrespect of the whole range of areas to be covered in the formal annualreport.2.3 Members are reminded that any detailed discussion in open session ofthe conduct of audits, or the content of audit reports, may discloseexempt information as defined in the Local Government Act 1972. Anysuch discussions should ...
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Agenda Item No:
Report
No:
Report Title:
Internal Audit Interim Performance Report 2004/2005
Report To:
Audit Committee
Date: 31 January 2005
Ward(s) Affected:
All
Report By:
Director of Finance and Community Services
Contact Officer(s):
David Heath, Chief Internal Auditor
Purpose of Report:
To inform Councillors of the Internal Audit work of the Audit and
Performance Division for the first nine months of 2004/2005.
Officers Recommendation(s):
1
To receive and consider the report.
Reasons for Recommendations
1
The remit of the Audit Committee includes a duty to agree a three-year
Strategic Audit Plan and an Annual Plan, and keep them under review.
Information
2
Background
2.1
The Internal Audit function at Lewes operates in accordance with the
auditing guidelines published as a Code of Practice for Internal Audit by
the Chartered Institute of Public Finance and Accountancy (CIPFA).
2.2
The 2003 version of the CIPFA Code includes revised requirements for
the Chief Internal Auditor’s reporting to the Audit Committee. The Code
now requires that, in addition to the report on the work of the Internal
Audit Section, the interim reports should address emerging issues in
respect of the whole range of areas to be covered in the formal annual
report.
2.3
Members are reminded that any detailed discussion in open session of
the conduct of audits, or the content of audit reports, may disclose
exempt information as defined in the Local Government Act 1972.
Any
such discussions should be dealt with in closed session.
3
Internal Control Environment at Lewes District Council
3.1
The Annual Report on the Council’s Systems of Internal Control for
2003/2004 included the Chief Internal Auditor’s opinion on the standards
of internal control.
In the nine months since the start of this financial year
there has been nothing to cause that opinion to be changed.
Whilst
recommendations have been made to improve management controls in
some areas, there were no instances in which internal control problems
created significant risks for Council activities or services.
3.2
The Council’s work on risk management has identified that there are
some significant risks that are beyond its control, for example a major
incident or disaster, a downturn in the national economy or a major
change in government policy or legislation.
The Council is examining
ways to mitigate the effects of such occurrences by improved planning
and response measures.
3.3
This report mainly focuses on the work of Internal Audit.
At this stage,
the situation in respect of other review processes is as reported in the
Annual Report on the Council’s Systems of Internal Control for
2003/2004 and no further reference to these other reviews is made in
this report.
4
Internal Audit Performance 2004/2005
4.1
This section of the report informs Councillors of the work undertaken by
Internal Audit during the first nine months of the year, compared against
the Annual Plan that was agreed by the Audit Committee.
Use of Internal Audit resources
4.2
Table 1 shows the planned audit days compared to the actual audit days
for the nine month period from April to December 2004.
Table 1 Plan audit days compared to actual audit days for April to December
2004
Audit Area
Plan audit
days for
the year
Plan audit
days to
date
Actual
audit days
to date
Main Systems
110
83
61
Central Systems
60
45
32
Departmental Systems
170
129
144
Performance and Management Scrutiny
105
79
85
Computer Audit
61
46
49
Contract Audit
25
19
5
Environmental Audit
35
27
59
Management Responsibilities/Unplanned
Audits
175
132
115
Total
741
560
550
Note: The ‘Plan audit days to date’ shows a pro rata forecast that provides a
broad guide to the resources required to carry out planned audits in each area.
The actual timing of the individual audits will depend on a variety of factors,
including the workloads and other commitments in the departments to be
audited.
4.3
Table 1 shows that a total of 550 audit days have been undertaken
compared to 560 planned.
The variance of 10 days (1.8%) is explained
by sickness and leave being more than the pro rata forecast for nine
months.
It is anticipated that the present shortfall will be made good by
the end of the financial year.
4.4
Additional work was done on Environmental Audit in the early months of
the year, with Internal Audit reviewing the Council’s annual EMAS
statement for the first time as part of the preparations for the visit of the
Lloyds Register Quality Assurance (LRQA) verifier in April 2004.
Also, it
has been necessary to review the EMAS Strategic Audit Plan in
preparation for the interim visit of the LRQA verifier in September 2004.
These tasks were not forecast when the Annual Plan was compiled, but
it is important that such matters are dealt with thoroughly in order to
safeguard the Council’s EMAS registration.
4.5
A major element of the work under Departmental Systems has been the
completion of the combined audit of Refuse Collection, Recycling and
Street Cleansing that was carried over from 2003/2004, and which was
not forecast when the Annual Plan was compiled.
4.6
The work on the VFM Review of IT Procurement and the further
development of the Council’s Risk management framework in the early
part of the year means that the resources used on Performance and
Management Scrutiny are more than the pro rata forecast for nine
months.
Audit work undertaken
4.7
The paragraphs below summarise the main functional areas reviewed
and the key audits undertaken.
The work has been divided between
completing work and issuing final reports for audits from the 2003/2004
programme, dealing with issues arising from previous audits and making
progress on the programme for the current year. Those audits for which
final issue of reports was covered in the Annual Report for 2003/2004
are not included in this report even though there has been work on these
since April 2004.
4.8
Main Systems
: The final report on the audit of Housing Rents has been
issued.
Audits of Housing Benefits and Capital Accounting are
underway.
4.9
Central Systems
: These are the remaining systems that are administered
centrally that have a significant effect on the Council’s activities: The
audit of Service Charges that was carried over from 2003/2004 has been
completed and a final report issued. The audits of Land Charges, and
Banking Arrangements and Reconciliations are at the draft report stage.
4.10
Departmental Systems
: These audits focus on key areas of activity in
Council departments. Final reports have been issued for the audits of
Seaford Head Golf Course, Tourism and Waste and Recycling Services,
and the audits of Car and Travel Allowances and Team Briefing
Arrangements are at the draft report stage.
Audits of Homelessness,
and the Leisure Management (Outdoors) contract are underway.
4.11
Performance and Management Scrutiny:
Internal Audit has been fully
involved in developing the Council’s Risk Management framework, and
working with CMT to report on the results of the service plan risk
assessments and establish the Councils register of strategic risks.
In
June 2004, a representative of the Audit Commission carried out a
‘Health Check’ on the Council’s risk management arrangements, which
resulted in very positive feedback that included a list of priorities for
further development work.
An audit of departments’ compliance with
aspects of the Risk Management Strategy is at the draft report stage.
A final report has been issued on the audit of the Council’s Asset
Management arrangements, the audit focussing on the Annual Report on
the Non Housing Property Portfolio.
The report for the VFM Review of IT Procurement was presented to the
September 2004 meeting of this Committee, and the recommendations
from the Review are being presented for Cabinet approval on 16
February 2005.
4.12
Computer Audit
: The final reports have been issued on the audits of the
Council’s Internet/Intranet facility and the arrangements for E
Government. An audit of IT Security is underway.
Internal Audit is
represented on the IT Steering Group and the working group assessing
the impact of new FOI legislation to help ensure that control issues are
fully considered in all key developments.
4.13
Contract Audit
: The main focus in this area has been input to both the
Corporate Procurement Working Group’s research into partnership
working and its review of Contract Procedure Rules.
4.14
Environmental Audit
: During April 2004, Internal Audit reviewed the
Council’s annual EMAS statement prior to its submission to the LRQA
verifier. The verifier’s review of the statement and the successful Internal
Audit coverage of EMAS during 2003/2004 helped to confirm the
Council’s EMAS registration for the year 2004/2005.
This year is the final part of the three year EMAS audit cycle 2002 to
2005.
The Council’s EMAS registration will be reviewed in April 2005 for
the new registration period that runs from May 2005 to May 2008. It is
important that this year’s programme of eight audits is completed
satisfactorily. The audits of Water and Energy Usage, Housing Services
and Property Services are at the draft report stage, and final reports
have been issued for the audits of Finance, Transport, and Purchasing
and Office Waste.
The final report has been issued for the audit of
Community Leisure that was begun in 2003/2004.
4.15
Management Responsibilities/Unplanned Audits
: This category provides
resources for special projects or investigations requested by Chief
Officers, Internal Audit advice on internal control and probity, and
requests for unplanned audits.
Internal Audit has provided advice on tendering for several key contracts,
and given guidance on control issues in response to eight other
enquiries. The audit of the Council’s complaint procedures that was
requested by the Chief Executive is at the draft report stage.
A review of
IT applications within the Housing Needs and Strategy Section that was
requested by the Housing Strategy Manager has been completed; the
findings and conclusions have been advised to management and will be
incorporated into the report on the audit of Homelessness.
Internal Audit has joined the Council’s Resilience Planning Group to
provide advice on risk and internal controls to help in the development of
updated business continuity plans for key services.
Follow up of Internal Audit recommendations
4.16
As part of the control procedures detailed in the Internal Audit Manual all
audit recommendations are followed up.
The purpose of this is to check
whether all accepted recommendations have been implemented.
4.17
In the first two months of 2004/2005 the focus for follow up was on
confirming the implementation of the recommendations that had been
agreed during 2003/2004.
These results were reported to the June 2004
meeting of the Committee.
Since then, the follow up procedures have
largely operated satisfactorily although the summer leave period delayed
some responses from managers.
At present, responses are up to date.
Customer Satisfaction Surveys/Performance Indicators (PIs)
4.18
The results of the customer satisfaction surveys and PIs for 2003/2004
were reported to the June 2004 meeting of the Audit Committee.
The
corresponding information for 2004/2005 will be reported to the June
2005 meeting of the Committee.
5
Financial Appraisal
5.1
There are no additional financial implications from this report.
6
Environmental Implications
6.1
I have completed the Environmental Implications Questionnaire and
there are no significant effects as a result of these recommendations.
7
Risk Management
7.1
I have completed the Risk Management questionnaire and this report
does not require a risk assessment because the issues covered by the
recommendations are not significant in terms of risk.
8
Background Papers
1.1
Strategic Audit Plan 2004/2007 presented to the Audit Committee on 1
March 2004.
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