To provide the Committee with the Head of Audit’s Annual Internal Audit Report (report of the Audit and Risk Manager (Audit Lincolnshire) and the Finance Manager (SHDC) enclosed)
Consideration was given to the joint report of the Audit and Risk Manager (Audit Lincolnshire) and the Finance Manager, which sought consideration of the Internal Audit Annual Report 2014/15. A copy of the Audit Report was attached at Appendix 1.
Members noted that the purpose of the Internal Audit Annual Report was to provide a summary of Internal Audit work undertaken during 2014/15, timed to support the Annual Governance Statement by providing an opinion of the organisations’ governance, risk management and internal control environment.
For the twelve months ending 31 March 2015, based on work undertaken and information from other sources of governance, the Auditor’s opinion on the adequacy and effectiveness of South Holland’s arrangements for governance, risk management and control showed a mixture of green and amber assurance, which indicated performing adequately with some improvements required. The Council had continued to maintain its momentum in strengthening its governance, risk and control framework. Good assurance arrangements were in place and working well.
Risk and Internal Control
Some areas were identified where the Auditor’s assurance opinion on the activity identified some concerns on service delivery arrangements, management of risks, and operation of controls. These were: Housing Revenue Account; Housing Benefits (Draft Report); Accounts Payable (draft report); Information Governance (follow up audit); and ICT Mobile Devices (draft report). It was suggested that Housing Benefit be considered for inclusion within the Annual Governance Statement as a potential significant governance issue/high risk that was being addressed. Overall, internal control environment was assessed as amber (performing adequately).
Risk Management was assessed as green (performing well).
The Council had good financial management processes in place, that generally worked well. Audit’s work did identify some areas of improvement around internal control, in particular housing benefits and accounts payable. Financial control was assessed as amber (performing adequately). This was a lower assurance level than last year as it reflected the significant impact of the error rate in the Housing Benefit Payment on the Council. The Council had included this issue/risk in the Annual Governance Statement.
There were no areas of inadequate assurance during 2014/15.
With regard to delivery of the internal audit plan 2014/15, Internal Audit had delivered 95% of the revised plan by the end of the year. Internal Audit’s performance was measured against a range of indictors, and there had been a good level of achievement against targets, with the exception of one area of improvement around contemporary report (timescales). Actions had been put in place to address this through Audit’s planning process. There had been some improvement but this had been varied. The Auditors advised that a more formal protocol should be put into place with the Authority and that more rigour in the performance process would be helpful. Councillors asked how confident Auditors were that improvements could be made. They were advised that a new performance management system had been set up which would provide managers with a direct link to actions that they were required to undertake.
The Committee was advised that Internal Audit Induction Training was available. It was agreed that the Director of Place and the Finance Manager would consider arranging a training workshop for Committee members.
a) That the Annual Internal Audit Plan be noted; and
b) That the Director of Place and the Finance Manager consider arranging a training workshop and that Internal Audit be liaised with in order to provide this.