Agenda item

To provide the Committee with details of audit work carried out from 01/03/23 to 31/10/2023 (report of the Internal Audit Team Manager – Assurance Lincolnshire)

Consideration was given to the report of the Internal Audit Team Manager – Assurance Lincolnshire which provided the Governance and Audit Committee with details of audit work carried out from 1 March 2023 to 31 October 2023.

In addition to the published papers within the agenda and agenda supplement, a further updated Internal Audit Progress Report for November 2023 was circulated to members at the meeting (and appended to the minutes).

The Internal Audit Team Manager – Assurance Lincolnshire introduced the Progress Report on Internal Audit Activity report and gave an overview of the following main areas of the report:

• The role of internal audit;
• The purpose of the report; it was noted that there had been a change to the assurance categorisation used since 2022/2023;
• Performance dashboard; delivery of the audit plan was on track and whilst engagement from officers had been forthcoming, auditors were aware that officers across the partnership and PSPS had heavy workloads;
• An update on Internal Audit Activity:
  • Two Limited Assurance ratings had been identified which applied to Housing Compliance; and Control Account Reconciliation (payroll).  Both the Assistant Director – Housing and the Chief Finance Officer (PSPS) were in attendance to respond to the audit assessment and to answer member questions; and
  • Assurance levels had been granted for a further 12 audits which were summarised from page 93 of the agenda supplement.
• Executive summaries of the two Limited Assurance opinions (the full audits were appended to the agenda supplement from page 113); and
• Responses to overdue high priority actions; and overdue medium and low priority actions. The responses had evidenced that Managers had reacted to the findings of audits.

The Assistant Director – Housing was in attendance to present a briefing note to the committee regarding the Limited Assurance audit rating given by TIAA in respect of Housing Compliance. The briefing note had been included within the published agenda supplement and outlined the following information:

• Background/contextual information which included an explanation for the service’s disagreement with the Limited Assurance rating;
• Inspection performance relating to gas safety; electrical safety; fire safety; asbestos management; and water safety; and
• Key considerations and next steps which included action relating to electrical safety and procurement; and governance in respect of policies and procedures, system improvements and compliance reporting.

The Assistant Director – Housing stated that a range of responsibilities endured in respect of electrical safety. SHDC had a legal requirement to:

• Maintain electrical installations ‘in repair’, which was carried out by the Housing Repairs Team; and
• Inspect electrical installations as part of tenancy changes, for example, due to a re-letting or mutual exchange.

These areas were not tested as part of the audit.

The Assistant Director – Housing acknowledged the view of the Department for Levelling Up, Housing and Communities (DLUHC) that a ‘patchwork of legislation’ governed electrical safety, the corollary of which meant that adherence to such legislation was open to interpretation. Whilst it was considered best practice to conduct electrical safety inspections every five years, this was not mandatory and therefore housing providers abided by their respective working models. SHDC’s approach and action was as follows:

• SHDC had always issued an electrical safety annual programme at the start of every financial year;
• At the time of the audit, 700 inspections had been outstanding which represented the work programme for that year;
• The programme had been accelerated with 57 inspections outstanding at the time of the report;
• All of the 57 outstanding cases were being progressed through the ‘no access’ procedure; where standard access to a property was not obtained, a court injunction may be required to achieve forced access in order to complete the work; and
• Electrical safety checks required four hours of access to properties and therefore had a higher ‘no access’ rate than other areas of inspections. SHDC offered weekend appointments where weekday access was not possible. The issue of access was a challenge across the whole housing sector.

In conclusion, the Assistant Director – Housing confirmed that the service did not seek to dispute the audit findings in respect of required improvements to policy systems and statutory compliance controls, however assurance was given to the committee regarding the compliance of operational performance in respect of required inspections. Confidence was expressed that a follow-up audit would ratify this position.

Members considered the update and made the following comments:

• Members appreciated the update from the Assistant Director – Housing and acknowledged the difficulties in the scheduling of work at properties. Members acknowledged that improvements in this area had taken place.

• Members asked for confirmation of the number of safety inspections which would be programmed annually.
  • The Assistant Director – Housing responded that:
    • From a total of 3834 electrical installations, 770 would be programmed for inspection each year;
    • Tenancy changes occurred only after inspections had taken place; an additional 300 inspections were carried out per year due to tenancy changes;
    • Where access injunctions needed to be sought, these were requested as ‘lifetime’ injunctions. Court costs were always included within the injunction application and had been awarded in all cases thus far; and
    • SHDC awaited guidance from central government regarding an implementation timeline for a change to electrical safety legislation. The acceleration of SHDC’s inspection programme ensured that the service was in a strong position and could react to any necessary adjustments in order to meet ongoing legislative requirements.

• Members asked whether Internal Audit reports were seen by individual Portfolio Holders.
  • The Assistant Director - Housing responded in relation to the Housing Compliance audit that the Portfolio Holder had seen the briefing paper which covered the content of the audit report and the required recommended actions. The audit had taken place under the previous administration however the findings had been relayed to the current Portfolio Holder; and
  • The Internal Audit Team Manager would check whether audits undertaken in other service areas had been relayed to relevant Portfolio Holders.

• Members asked for an update regarding PSPS staffing.
  • The Chief Finance Officer (PSPS) responded that:
    • There had been significant recruitment activity during the preceding six-month period; and
    • All establishment posts had been filled with the exception of three junior positions where an entry level / apprenticeship approach to recruitment was being considered. If this avenue was to be followed, a structured plan would be in place to ensure that all critical elements were covered.

Members noted the Limited Assurance for payroll and asked whether reconciliations were carried out on a monthly basis.

• The Chief Finance Officer (PSPS) responded that:
  • Reconciliation was a monthly task which was carried out after the submission of the payroll;
  • The audit report referred to the payroll control account reconciliation which reconciled monies paid with the general ledger; and
  • The issues highlighted in the audit had resulted from capacity issues within the Finance team. Reconciliations had been updated for all four entities (SHDC, BBC, ELDC and PSPS) to the end of August 2023. It was anticipated that these would be brought up to date by the end of November 2023;
• The Internal Audit Team Leader – Assurance Lincolnshire stated that a follow-up audit of recommended actions in this area would be carried out and results presented to the committee in due course.

• Members referred to page 100 within the agenda supplement in connection with Risk Management and suggested that a level of risk could not be established if a risk appetite was not known/completed within the report. In addition, when would the risk system be migrated fully to the Pentana system.
  • The Assistant Director – Governance stated that the risk appetite informed the level of risk that the Council was willing to take for any particular risk. Assessment of the risk would have been undertaken (impact and likelihood) by a scoring mechanism;
  • The Internal Audit Team Manager – Assurance Lincolnshire confirmed that Risk Management Control and Process had been reviewed. Well controlled processes were in place however some improvements had been highlighted. These were not considered high risk and therefore the assurance of this area was unaffected; and
  • The Business Intelligence and Change Manager responded that risk owners updated the status of their respective risks into either a spreadsheet system or the Pentana system. The dual system ensured that information could be reported by all officers and was not deterred by training or access issues during the introductory phase.
• Members requested a glossary of the different systems in use and how they related to each other.

• Members referred to page 100 of the agenda supplement regarding the Leisure and Culture audit and requested clarification on the statement ‘that site issues are promptly addressed’ in relation to the Peele Leisure Centre.
  • The Internal Audit Team Manager – Assurance Lincolnshire responded that the report gave a summary of the findings but a response from management detailing how this would be addressed, which included a timeline, would be coming forward.

• Members queried the level of tolerance for Key Controls Housing Rents as stated at page 102 of the agenda supplement.
  • The Assistant Director – Housing responded that the housing benefit system variances were dealt with in real-time. Rather than a tolerance for a variance to occur, the recommendation related to the noting of corrections of variances and this had been implemented.

AGREED:

That the information detailed within the report be noted.