ITEM AU5
AUDIT COMMITTEE – 22 APRIL 2009
REPORT OF THE AUDIT WORKING GROUP (AWG)
The Audit Working Group met on 9 April 2009.
The meeting was attended by:
Dr. Geoff Jones – Chairman; Cllr. David Wilmshurst; Cllr. Alan Bryden; Cllr. Charles Mathew; Sue Scane, Assistant Chief Executive; Peter Clark, County Solicitor; Ian Dyson, Assistant Head of Finance (Audit); Ian Mills, Corporate Risk & Performance Advisor; Georgina Paton, Principal Finance Manager (AWG0409 only); Sarah Cox, Audit Manager (AWG0509 only); Mike King, ICT Programme Manager (AWG0809 only); Mukhtar Khangura & James Bradley, KPMG (for AWG1109)
1. PRIVATE SESSIONS WITH KPMG LLP (AWG1109)
Mukhtar Khangura, Audit Manager, and James Bradley, Senior Auditor, of KPMG LLP met with Dr. Jones, Cllr. Wilmshurst, Cllr. Mathew, and Cllr Bryden in a private session with no officers in attendance. There were no minutes taken during the private session, but Members who attended wish to record that they found the full and frank discussion very useful.
2. MATTERS REFERRED TO THE GROUP BY THE AUDIT COMMITTEE There were no new items referred at the last meeting of the Audit Committee.
3. AWG WORK PROGRAMME ITEMS
AWG0309 Whistle blowing In January 2008 the Audit Committee asked the AWG to annually review a summary of whistle blowing incidents received by the Council to be satisfied there is an adequate system in place, and to consider whether internal control issues arising are being addressed within the annual assurance framework. The Group received a summary of incidents from April 2007 through to 31 March 2009. The Group noted that you can never be certain when or how many whistle blowing incidents will occur, and what resources will be needed to investigate them; in cases where financial irregularity is alleged, it is a requirement for Internal Audit to be involved in the investigation. In 2008/09 it was stated this unplanned work has been managed within the contingency allowed for by Internal Audit. The Group was also assured that in the future should this work start to impact on the delivery of the annual assurance work completed by Internal Audit it would be brought to the attention of the Audit Committee promptly.
The Group has requested further analysis of whistle blowing cases to be included in the Annual Governance Statement and the Internal Audit Annual report so that the Audit Committee can identify future performance trends.
AWG0409 Early Issues for the Annual Governance Statement There was a discussion about the likely content in the report, and the Group made some general comments. The areas to be considered as material requiring action in the 2008/09 statement have yet to be confirmed, as it is too soon in the process; however early indications are that Partnerships, SAP roles, and IT Security will continue to feature.
AWG0509 Internal Audit Quarterly Report The Group wishes to bring to the attention of the Committee the excellent performance by the Internal Audit Team in delivering the Internal Audit Plan to draft report stage by the end of the year, minimising the amount of days that have to be carried forward. The Group also received comments from the County Solicitor who has undertaken the review of the effectiveness of the system of internal audit, (being reported separately to the Audit Committee) stating that feedback from the annual survey of Directors and Heads of Service has been very good, demonstrating the service is held in very high regard. The overall performance represents a major improvement on previous years and the Group wishes to propose to the Audit Committee that it congratulates the Internal Audit Team on a very successful year.
The report highlighted one area for further improvement, the following up on management actions. It was noted by the Group that performance in this area has improved overall, but there remains some tightening of procedures needed within the team to ensure consistency in the timeliness and accuracy of recording the follow up activity. The Head of Audit confirmed this was an action to be completed in the first quarter of 2009/10.
The Group also received the self assessment completed by the Head of Audit against the standards for Internal Audit defined in the CIPFA Code of Practice 2006. The Group was pleased to note overall compliance, but encouraged the Head of Audit to ensure the Internal Audit Manual is brought up to date.
AWG0609 Accounts Payable - Update In 2007/08 Internal Audit identified a significant risk exposure in the Accounts Payable process; the management action was to mitigate the risk by stronger enforcement of the use of the e-procurement system. The Group has been monitoring regularly the progress being made which as reported previously to the Committee has been limited. The Chief Finance Officer (S151 Officer) set 31 March 2009 as the final date for tolerance in allowing invoices to be processed where e-procurement has not been used. The Group was informed by the Chief Finance Officer and the Head of Audit that they are now satisfied processes are in place to address the unacceptable risk exposure; e-procurement is now the only method services can use for processing invoices, unless an exception has been approved by the County Procurement Team. In such cases there is a compensating control process established within the Accounts Payable Team to confirm proper authorisation of these invoices before they are processed for payment.
AWG0709 Risk Management The Risk Manager informed the Group that a paper was to be presented to CCMT shortly identifying a strategy for supporting Directorates in embedding risk management across their operational teams, including closer working between the Internal Audit and the Performance & Risk Management Teams. The Group has requested further details from the Risk Manager at the next meeting of the AWG; should there be any significant new working arrangements these will be reported directly to the Audit Committee.
AWG0809 SAP Authorisations – Progress Report The Group is monitoring action on this project as a result of a failure to achieve the necessary improvement highlighted in last year’s annual governance statement, and will continue until it is satisfactorily resolved. The Group noted satisfactory progress is now being made.
AWG0909 Update on Schools Support Team S151 Issues The Head of Audit gave an oral update on progress with management actions initially arising from the 2008/09 Internal Audit report. The Schools Support team has been re-organised and a new risk assessment model established to identify those schools that require closer monitoring and challenge by the team. Resources have been allocated accordingly. New protocols have been established internally for dealing with targeted schools (those that are high risk), non targeted schools, and deficit budgets, and new guidance has been prepared for the team on budget checking, in preparation for the 2009/10 budget submissions. Officers were satisfied that good progress has been made in establishing an effective S151 process in this area, whilst confirming there remains further work to done in accordance with the planned timetable.
AWG1009 Review Work Programme The work programme is attached as appendix 1 (download as .doc file) to this report.
The Committee is RECOMMENDED to note the report
SUE SCANE Assistant Chief Executive & Chief Finance Officer Corporate Core
Contact: Officer: Ian Dyson, Assistant Head of Finance (Audit) Tel 01865 323875 10 April 2009
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