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ITEM BV9

BEST VALUE & AUDIT COMMITTEE –
9 MARCH 2005

REPORT OF THE AUDIT WORKING GROUP

Report by Director for Resources

1. The Group received a briefing on the differing roles and inter-relationship of Internal and External Audit by Keith Bellew, Chief Internal Auditor and Mukhtar Khangura and Tim Pearce, Audit Managers, KPMG LLP.

KPMG 2004/05 Audit

2. KPMG updated the Group on External Audit’s progress and plans for the statutory audit of the 2004/05 accounts and their other work. KPMG’s appointment was from April 2004 and they were responsible for the audit from 2004/05 accounts onwards. The Group considered member involvement and regular briefing by KPMG including any inadequate management responses. The interim audit and review of Internal Audit would take place in late April/early May. Any issues would be reported via a letter or ‘mini report’ and brought to the Group.

Project Management

3. The Group considered a briefing note updating the position on project management as requested at its December 2004 meeting and asked that the briefing note be circulated to the members of Best Value & Audit Committee.

Internal Audit’s 2003/04 Recommendations

4. Members considered the latest update on progress relating to Priority 1 recommendations on Key Financial Systems and other ‘no assurance’ reports.
5. The Strategic Finance Manager, Leisure & Culture outlined the responses to the report and answered questions relating to the recommendations on School Support Finance. He commented that the section been under great pressure but a restructuring in September 2004 was now bringing dividends. He noted that the Internal Audit and Robson Rhodes reports had a common theme – the writing of, and adherence to financial procedures. He outlined the considerable progress made in implementing the Internal Audit recommendations.

Internal Audit 2004/05 - Progress

6. The Group considered the schedule of recommendations in the 2004/05 Internal Audit report together with activity to date in the current financial year.

11 February 2005

External Audit – Reports to the Audit Working Group

7. The Director for Resources attended the meeting to discuss how External Audit should report to the AWG and to discuss the qualification of the Best Value Performance Plan (BVPP) in which there were still six PIs that were not acceptable to KPMG. He was accepted that KPMG were right to qualify the BVPP and Officers took this issue very seriously. Richard Shaw, the former Chief Executive, had insisted on a report on each of the 6 PIs involved. The Chairman asked for the reports to be circulated to himself, Members and Substitute Members. If necessary, some or all of these PIs will be discussed at the next meeting. External Audit reports should come routinely to this Group and/or Best Value & Audit Committee (BV&A) as appropriate. The final drafts of reports should come to the Group once they were broadly agreed between officers and KPMG. A timetable to achieve this is being drafted.

Corporate Financial Procedures

8. The Group received a briefing on progress in producing corporate financial procedures. There is a ‘root and branch’ review from Financial Regulations through to detailed day-to-day procedures in the Directorates. The purpose was that the Council should operate consistently across the different Directorates and local systems and practices would be phased out. Training will be provided.

Risk Identification

9. The Group was also updated on the techniques used to identify risks. Project management remained an area of weakness for the Council and therefore for risk identification. Partnerships are also a problem, as risk identification was patchy and responsibility for risks was often vague. There should be formal procedures to ensure consistency.

Risk Management Progress

10. The Group received a report on progress on risk management arrangements in general. Weaknesses still exist in some services but risk registers are now being updated and should show improvement. It was hoped that more operational issues would be included than previously (e.g. business continuity issues). The Chairman asked that the Group be informed about any registers which seemed to be inadequate or were produced late.

Freedom of Information (FOI) Update

11. There is a presumption that the public have access to any information we hold unless there is a specific exception, but the exceptions are only loosely defined. A judgement must be made on each request. A decision not to release information must be justified in writing so that the position can be defended. The Group was advised that FOI does not need to inhibit discussion within this Group in any way.

Internal Audit Strategic Plan 2005/06 – 2007/08

12. The Group considered an update on the Strategic Audit Plan. It was noted that the long term options for the procurement of internal audit services were under review. The draft Plan used existing risk assessment methodology, prior to the anticipated future use of the risk registers. Members wished to contribute to the audit methodology in order to ensure that the Strategic Plan was properly focused from 2005/06 onwards and were keen for the procurement decision to be made so that the Plan could be finalised. The Working Group was briefed on the procurement options which could be either in-house partnership, external contract or local consortium.

Internal Audit’s 2003/04 Recommendations

13. The Business Manager, Social & Health Care attended to answer questions on the ‘no assurance’ report on Fairer Charging. He noted that, of 19 recommendations, 12 had been implemented but they disagreed with one, number 3.1, as they were moving towards less paperwork. Deadlines had been set for the outstanding recommendations.

Internal Audit Progress 2004/05

14. Members discussed a report on Internal Audit activity to date in the current financial year, together with a schedule of recommendations made in 2004/05 to date.

Matters for Report to the Best Value & Audit Committee

15. The Working Group identified as specific items to report to the Committee:

• the updating of the risk registers; and
• Internal Audit’s possible changes in terms of procurement and the Internal Audit Strategic Plan/methodology.

The next meeting of the Working Group is scheduled for 4 April 2005.

JOHN JACKSON
Director for Resources

Background papers: Nil

Contact Officer: Keith Bellew (Tel: 01865 815265; e-mail: keith.bellew@oxfordshire.gov.uk)

February 2005

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