Agenda item

To deliver an annual internal audit opinion. This is timed to inform review of the Annual Governance Statement (AGS).

Sally Hendrick, Head of Audit and Risk Management presented the Internal Audit Annual Assurance report which was to note.

The report included an opinion for the year of partial assurance, based on work undertaken by internal auditors across 53 audits conducted throughout the year. The opinion was based on some areas of weakness which had been drawn out through audits conducted during the year. However, it was noted that the number of partial assurance opinions had declined in number compared to the previous year. Sally commented that the partial assurance was based on the number of recommendations which had not been carried out or put in place.

It was noted that a number of partial assurance opinions in this year’s report related to schools, which were autonomous bodies separate to the Council for this purpose.

To keep track of recommendations, a recommendation tracker had been implemented to assist management in keeping track of progress on recommendations. It was hoped that this would improve the rate of implementation and action following internal audits.

The Council was required to conduct a self-assessment every year under the Public Sector Internal Audit Standards, and to hold an external review of its internal audit service every 5 years. The last external audit had been conducted in March 2022, with very few points for improvement drawn out. One point arising from this external review had been a suggestion to take on apprentices in a ‘grown your own’ approach to address recruitment difficulties. Two apprentices had been in place in the team for 6 months and were progressing well, however it was noted that it would take some time for these officers to be fully trained.

Sally drew attention to work around counter-fraud and benefits abuse. Internal audit officers had worked together with the Department for Work and Pensions on benefits cases this year and had also done proactive work on Blue Badge claimants.

In response to questions, the following points were noted:

·        It was speculated that recommendations had not been followed up or implemented due to staffing pressures and turnovers across the Council. Auditors were keen to inform departments not to sign up to actions which could not be delivered.

·        Members requested an additional column on the recommendation tracker to take account of the recommendations which were outstanding or not yet started. Any critical recommendations would have a formal follow up separately to the recommendation tracker. 

·        The external assessment had advised officers to make better use of data analytics to evaluate risks and weaknesses. There had been a delay to this work due to the vacant Principal Auditor post, which was about to go out to advert. Once the post was filled, all audit staff would be trained in data analytics and data interrogation.

·        The recruitment market for auditors was challenging, and applicants were often at the end of their careers. Post-COVID, there had been a high turnover of auditor posts both internally and externally.

·        The internal audit team used contractors to cover some posts, but it was noted that contract workers were also often at the end of their careers and the churn made the auditing process more difficult.

·        While artificial intelligence would be a useful resource for audit processing, it would require a high degree of data maturity in order to be successful.

·        The strategic risk register would be presented to the September 2023 Committee meeting.

·        Members requested that a report be put together on the assurances not met in 2022, which could be shared with Departmental Management Teams and Corporate Management Team to track those issues which caused concern.

RESOLVED that the Governance and Audit Committee note the Head of Audit and Risk Management’s Annual Report setting out the Head of Internal Audit’s Opinion for 2022/23.