Audit Committee, Report 8, 19 January 2004

Audit Committee, Report 8, 19 January 2004

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Agenda Item No: Report No:Report Title: Internal Audit Interim Performance Report 2003/2004Report To: Audit Committee Date: 19 January 2004Ward(s) Affected: AllReport By: Director of Finance and Community ServicesContact Officer(s): David Heath, Chief Internal AuditorPurpose of Report:To consider the Internal Audit work of the Audit and Best Value Division for theperiod 1 April 2003 to 31 December 2003.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-year Strategic AuditPlan and an Annual Plan, and keep them under review.Information2 Background2.1 The purpose of this report is to inform members of the work undertaken byInternal Audit in the first nine months of the financial year 2003/2004 comparedto the Annual Plan.2.2 The work of Internal Audit for each year is set out in the Annual Plan. Theaudits for 2003/2004 have been drawn from the three-year Strategic Audit Planfor the period 2003/2004 to 2005/2006.2.3 This Interim Performance Report deals with the activities of the Internal Auditteam that is dedicated to audit work and which is not normally involved in BestValue and Corporate Governance duties.2.4 Members are reminded that any detailed discussion in open session of theconduct of audits, or the content of audit reports, may disclose exemptinformation as defined in the Local Government Act 1972. Any suchdiscussions should be ...

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Agenda Item No:
Report No:
Report Title:
Internal Audit Interim Performance Report 2003/2004
Report To:
Audit Committee
Date: 19 January 2004
Ward(s) Affected:
All
Report By:
Director of Finance and Community Services
Contact Officer(s):
David Heath, Chief Internal Auditor
Purpose of Report:
To consider the Internal Audit work of the Audit and Best Value Division for the
period 1 April 2003 to 31 December 2003.
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 purpose of this report is to inform members of the work undertaken by
Internal Audit in the first nine months of the financial year 2003/2004 compared
to the Annual Plan.
2.2
The work of Internal Audit for each year is set out in the Annual Plan. The
audits for 2003/2004 have been drawn from the three-year Strategic Audit Plan
for the period 2003/2004 to 2005/2006.
2.3
This Interim Performance Report deals with the activities of the Internal Audit
team that is dedicated to audit work and which is not normally involved in Best
Value and Corporate Governance duties.
2.4
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
Planned audit days for 2003/2004 compared to actual audit days for the first nine
months of the financial year
3.1
Table 1 shows the planned audit days compared to the actual audit days for the
seven month period from April to December 2003.
Table 1: Plan audit days compared to actual audit days for April to December 2003
Audit Area
Plan audit
days for the
year
Plan audit
days to date
Actual audit
days to date
Main Systems
115
85
62
Central Systems
60
45
18
Departmental Systems
195
145
79
Best Value & Management Scrutiny/VFM
Reviews
90
67
96
Computer Audit
70
52
75
Contract Audit
40
30
15
Environmental Audit
20
15
77
Management Responsibilities/Unplanned
Audits
168
124
109
Total
758
563
531
Note: The ‘Plan audit days to date’ shows a pro rata analysis that provides a 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 work loads and other commitments in the departments to be
audited.
3.2
Table 1 shows that a total of 531 audit days have been undertaken compared to
563 planned.
The shortfall of 32 days is explained by:
Internal Audit staff have provided 35 days support to urgent corporate tasks.
The Chief Internal Auditor has spent six days less on audit work than was
forecast in the budget.
Training for the audit team has been earlier than originally planned, taking
six days from the time available for audit work.
Savings in management, administration and sick leave, and extra time
worked by the Audit Assistant, have contributed 15 days to audit work.
3.3
The time spent on non audit matters has had some adverse impact on the
progress achieved in some areas.
Further savings in management and
administration are anticipated in the remaining months of the year, but there is
likely to be some shortfall in direct days at the end of the year.
3.4
The work on Environmental Audit is over budget because of the need to assign
extra resources to the audits brought forward from last year’s programme, and to
examine fully the complex issues that have been noted in some of the audits that
have been completed this year.
It is important that such matters are dealt with
thoroughly in order to safeguard the Council’s EMAS registration.
3.5
Computer Audit and Best Value & Management Scrutiny are over budget
because of the work in these areas being more extensive than was originally
forecast, the main audits being a major study of the Council’s preparations for
E-Government and the study of the Performance Indicator procedures ahead of
the CPA inspection.
4
Audit work undertaken
4.1
The paragraphs below summarise the main functional areas reviewed in the six
month period and the key audits undertaken.
Management agreed all the
recommendations in the final reports issued.
Recommendations were made to
enhance procedures and controls and, in some cases, the issues were addressed
by managers before the final report was issued.
4.2
Main Systems
: A final audit report has been issued for the joint audit of National
Non-Domestic Rates (NNDR) and Council Tax.
Preparatory work for the audit
of Housing Benefits included a review of the draft Council’s new Anti-Fraud
and Corruption Strategy, and the main audit is scheduled to begin in late January
2004.
A draft report on the audit of Loans and Investments has been issued, and
the audits of Creditors and Housing Rents are underway.
4.3
Central Systems
: These are the remaining systems that are administered
centrally that have a significant effect on the Council’s activities. Final reports
have been issued for the audits of VAT and Insurance.
4.4
Departmental Systems
: These audits focus on key areas of activity in the
departments.
Final reports for the audits of Housing Strategy, Newhaven Fort,
Cemeteries, Renovation Grants, the Right to Buy scheme and the Lifeline
service have been issued.
The draft report on the audit of the Seaford Head Golf
Club is being considered as part of the Community Leisure review of the future
management of the course, which is not yet complete.
An audit of Coastal
Protection is underway.
4.5
Best Value & Management Scrutiny/VFM Reviews
:
The report of the VFM
Review of the income earning potential of TICs was presented to the last
meeting of the Committee.
The report for the VFM Review of the Council’s use
of temporary staff is presented to this meeting.
The audit brief for the VFM
Review of IT Procurement will be presented to the March 2004 meeting of this
Committee.
Internal Audit has undertaken a major review of Performance Indicator
procedures as part of the preparations for the Council’s Corporate Performance
Assessment (CPA).
The final report has been circulated to the Best Value
Officer and members of CMT.
The Audit Commission used the results of this
work for their external review of Performance Indicators for CPA.
Internal
Audit has examined the ongoing development of the Council’s approach to Risk
Management, providing review comments to help guide the process.
4.6
Computer Audit
: The main work to date has been the review of the Council’s
preparations for E-Government, for which a draft report has been issued.
An
audit of the Council’s Internet/Intranet facilities is underway.
4.7
Contract Audit
: Our main work in this area has been as part of a small team that
has reviewed the tendering documents and specifications for the new contracts
of Office Cleaning, Public Conveniences and Leisure Management (Outdoor).
Internal Audit has also monitored the contract tendering procedures via
attendance at ten contract tender openings, and has provided advice on contract
related issues to a number of departments.
4.8
Environmental Audit
: There has been considerable activity in this area so far this
year.
The EMAS audits of Recycling Services and Council Contracts that were
begun in 2002/2003 have been completed and final reports issued.
Final reports
have been issued for this year’s audits of Management and Coordination of
EMAS and Environmental Health and Services, and draft reports have been
issued for the audits of Community Services and Recycling/LA21.
4.9
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 continues to provide support to the Lewes Flood Appeal
Trust Manager, although the work has reduced substantially.
Internal Audit has completed its review of data supplied from the National Fraud
Initiative (NFI 2002) data matching exercise.
There have been three main investigations.
Two cases examined allegations of
misconduct, but there was no evidence to support the allegations.
One case has
concerned a housing renovation grant, but there was no evidence of impropriety.
5
Follow up of Internal Audit recommendations
5.1
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, and the timing of the follow
up process is dependent on the agreed implementation dates for
recommendations.
Since August 2002, Internal Audit has operated more
frequent follow up routines (normally monthly) to help ensure closer monitoring
of progress, and there is now greater awareness of the importance of follow up
among managers.
As a consequence the emphasis here will be on reporting that
follow up is carried out on regular basis, and on highlighting any key
recommendations that have not been implemented.
5.2
Follow up is operating satisfactorily, and there are no major recommendations
outstanding.
5.3
At the year end stage, we will continue to report the % of recommendations
agreed compared to the number made and the % of recommendations
implemented by the agreed date.
Customer Satisfaction Surveys/Performance Indicators (PIs)
6
The results of the customer satisfaction surveys and PIs for 2003/2004 will be presented
to the Audit Committee meeting in June 2004.
Financial Appraisal
7
There are no additional financial implications from this report.
Environmental Implications
8
I have completed the Environmental Implications Questionnaire and there are no
significant effects as a result of these recommendations.
Background Papers
9
Strategic Audit Plan 2003/2006 presented to the Audit Committee on 3 March 2003.