Agenda item

2:10

This report (AG8) presents the Internal Audit progress report for 2015/16.

RECOMMENDATION

The committee is RECOMMENDED to approve the Q3 Internal Audit Plan.

The Committee had before them a report (AG8) which provided an update on the Internal Audit Service including; resources, completed and planned audits, and an update on counter-fraud activity.

Ian Dyson, Chief Internal Auditor, in introducing the report, explained that the proposed restructuring of the current resources of the Internal Audit Service had been completed and that consequently three distinct teams had been created with the following responsibilities; to protect the role and independence of the Internal Audit function; to provide a strategy and resource for the management of Counter-Fraud; and to create capacity to manage the corporate responsibility for Risk-Management and a new Business Assurance function.

Mr Dyson explained that a recruitment process was still underway within the team and that the team has also commissioned Zurich, the Council’s insurers, to provide 100 days of assurance assistance.

Mr Dyson also told the Committee that conversations with Oxford City Council were at an advanced stage in respect of counter-fraud support within the Customer Service Centre and with regards to Blue Badges.

With reference to Paragraph 13 on Page 51, Councillor Bartholomew queried the severity of the case of counter-fraud that had been passed to the Police and questioned at what stage the investigation was at. In response, Mr Dyson explained that the case had been discussed at the meeting of the Audit Working Group and that, while the financial element of the case was below £10,000, there were other significant implications. Mr Dyson added that he was hesitant to go into detail about the case as it was a current open investigation. Councillor Bartholomew stated that he was satisfied that the Audit Working Group was looking into the case.

Mr Dyson explained that the Audit of the disposal of ICT equipment was highlighted as ‘Red’ due to concerns over possible losses of data. He told the Committee that a Senior Manager had been requested to attend the next meeting of the Audit Working Group in order to address these concerns.

Mr Dyson added that a number of counter-fraud investigations were on-going and that details of these investigations would be reported to the October meeting of the Audit Working Group.

With regards to the National Fraud Initiative (NFI), Mr Dyson explained that the matches of the 2014/15 exercise had been released and that a process to allocate reviews of over 6000 ‘priority one’ matches was under way. He added that this was not an unusual amount of matches to be returned.

Looking forward, Mr Dyson explained that he anticipated that matters arising from the recent implementation of IBC processes, specifically relating to the file upload system for payments, will need to be examined by the Internal Auditors. He added that flexibility had been left within the team’s workload to look at such matters.

Councillor Smith stated that her concern regarding the issue of payments through the IBC was that the Council did not have a policy in place to address and rectify the problems that late payments on the part of the Council could cause to smaller organisations.

Mr Dyson stated that he believed the problems to be ‘teething problems’ as opposed to complete failures, but acknowledged that teething problems could have significant impacts and reiterated the need of assurance on action being taken.

Dr Jones queried whether, given the current work load of the Internal Auditors, Internal Audit work was still at a level that the Committee was happy with and that that function was not diminishing.

Mr Dyson responded that he understood the concern that true Internal Audit work could be seen as being diluted. He added that he believed that the team had become a ‘go-to unit’ due to its good work and that too much of the team’s work involved offering advice and support. Mr Dyson was concerned about the need to protect the independence of Internal Audit. He added that a move towards systems-based compliance checking was separate to Internal Audit work.

Councillor Bartholomew queried whether the audit review of the Highways Contract with Skanska (P.57) had started. Mr Dyson replied that it had started but that it was at a very early stage. Mr Dyson added that terms of reference had been agreed and that the target was to update the Committee on that audit at the January meeting.

Councillor Hallchurch questioned who carried out the audits relating to ICT, to which Mr Dyson answered that a qualified ICT Auditor was contracted to undertake that work.

Councillor Constance enquired as to why the E&E Planning Audit had been rescheduled and when it was due to start. Mr Dyson explained that the Audit had to be rescheduled due to staffing matters and that, while he was unable to say in which Quarter the audit work would be carried out, it would be done this year.

Councillor Hannaby stated that she now felt that Officers were doing excellent work with regards to Planning and that she would be happy for other audits to be given a higher priority. Mr Dyson responded that, while information from Officers provided a degree of assurance, this did not provide real assurance that control systems were in place.

RESOLVED:  to approve the Q3 Internal Audit Plan.