Agenda item

To consider the Internal Audit Plan and the areas for audit review and the availability of internal audit resources.

Members considered the Risk Based Internal Audit Plan 21-22 presented by the Internal Audit Manager, Kathy Woodward.

Members asked questions, made comments and received responses as follows:

·         Councillor Booth stated that he appreciates that last year was a difficult year for certain aspects of audit work to be undertaken due to the other priorities that the Council had to deal with and asked Kathy Woodward whether the audit work that was carried out had raised any concerns and topics of audit work that needed to be carried forward into this year’s plan and whether she was confident that the aspects of audit work had been sufficiently captured in the plan before the committee. Kathy Woodward agreed that last year was very challenging and stated that the areas that were able to be covered last year were topics that were considered to be of particular high risk and an adopted approach was undertaken where emerging risks were looked at and things that were associated with work around the Covid pandemic responses. She added that there were no areas of high risk that were not looked at in 2021 and she is confident that the work that was carried out last year and the additional work that was carried out specifically with regard to consultancy engagements that were not specifically on the Audit Plan have left the Council in a good enough position where she was still able to provide an audit opinion on last year and support the work on the current year’s Audit Plan.

·         Councillor Booth stated there has been much debate with regard to the Local Authority Trading Company and the potential risks that it poses to the Council and he added that the allocation in the plan of 10 days to the audit work associated to that topic, in his opinion, is not enough time, bearing in mind the complex investment strategies that could be pursued, and as it is a new area it may take time to understand the subject matter and, therefore, in his view, the time allocated should be increased. Kathy Woodward stated that with any new item that comes onto the Audit Plan it must be based somewhere and any high-risk topic is allocated 10 to 12 days which are incorporated into the plan. She added that there are contingency days available and the Audit Plan is flexible and more time can be allocated if necessary. She agreed that it is a high risk area due to the fact that it is new topic and the high sums of money involved, but is comfortable that the plan can be reviewed and days reallocated if deemed necessary. Councillor Booth stated that in the past additional capacity for extra work has been discussed and the contingencies have been very tight with regards to timescales in the plan versus the resources available and he added that the plan does need to be flexible so that it can be changed if the situation changes.

·         Councillor Booth stated that another area to note is the Whistleblowing Policy which is an area of change potentially and he asked whether it is an area which is covered under existing audit work or is there the need for a specific piece of work to be added to the plan, particularly around the Bribery Act. Kathy Woodward stated that it is an area which would be covered off, but added that it is not something that would normally be looked at in the year it was adopted, but it is something that the intention is for it to be incorporated into the plan either next year or the year after. Councillor Booth expressed the view that it is often prudent to review such items six months after they have been launched, which gives it time to imbed so that any potential issues can be raised, however it is something that could form part of the flexible plan and Kathy Woodward agreed it could be looked at after nine months.

·         Councillor Booth referred to transformation changes and fit for the future phase 2 of the Council and made the point that whenever there are organisational changes there is the potential to see risks emerging. He added that the Council has changed their website and he wondered whether that is an area which needs to be reviewed to ensure all statutory obligations are being met. Kathy Woodward stated that the transformation work is included within the corporate projects area and a number of days are set aside in the Audit Plan. She added that a lot of the other work with corporate projects is picked up outside of the Audit Plan and is included with the consultancy engagements and she is involved with some of the transformational work and the projects teams. She confirmed that transparency is an area which is incorporated every year into the audit work. Councillor Booth stated that there is the danger of being involved in project work as the independence of the audit function needs to be kept separate from that of the work undertaken by the project team. Kathy Woodward stated that she strives to maintain the independence and objectivity when looking at any project.

·         Councillor Booth made reference to the street lighting contract and stated that, in his opinion, it needs to be reviewed and he cannot see it listed in the Audit Plan. Kathy Woodward stated that procurement is on this year’s Audit Plan and high-level contracts will be looked at when the procurement audit is carried out. She added that street lighting was looked at two years ago, and it would not be due this year, but from a contract perspective it will reviewed under procurement.

·         Councillor Mrs Davis stated that under quality and performance on the Audit Plan, it makes reference to the fact that the Corporate Director & Chief Finance Officer will arrange for an assessment of quality independently of the Internal Audit service and then additionally, an external review of the Internal Audit Service is completed by external assessors every 5 years and she asked for confirmation as to when it is due and will take place. Kathy Woodward stated that it was undertaken in 2018 and did come to the committee and is due shortly.

·         Councillor Booth asked for confirmation that staff will be trained appropriately in order to undertake a review on the Commercial Investment Strategy. Kathy Woodward stated that whilst in her role as the Shared Audit Manager with the Borough of Kings Lynn and West Norfolk Council, she has gained some background knowledge as that authority have a large portfolio of local authority trading companies. She added that she undertakes regular training from the Chartered Institute of Public Finance and Accountancy(CIPFA),as they offer a lot of training on the subjects of Local Authority Trading Companies and investment strategies as it is quite a new emerging area, and the new Internal Auditor is undertaking an internal Audit Apprenticeship with the Institute of Internal Auditors(IIA), so different levels of training are being undertaken. She added that there is also the Cambridgeshire Audit Managers Network, which is an information sharing meeting which she regularly attends.

·         Councillor Yeulett asked whether there is any training proposed for members? Kathy Woodward advised the committee that there will be a virtual training session for all members, which will provide an introduction to the Audit Committee and assist members with gaining a basic understanding of the agenda items that they will see throughout the municipal year.

·         Councillor Yeulett asked whether any issues had been identified during the audits that had been carried out over the last financial year? Kathy Woodward stated that it may be beneficial for members to consider the report that came before the committee in February. She added that an update will be provided at the July meeting concerning the details of last year’s audit and stated that it had been a challenging year when delivering the Audit Plan, particularly with the resource issues that the team had, however, it had still been possible to deliver a sufficient quantity of work to be able to provide an opinion to feed into the Annual Governance Statement to be considered at the July meeting.

·         Councillor Yeulett asked whether there were any concerns identified and Kathy Woodward stated that the only concerns were with regard to business grants as they were such a new and significant area, encompassing a wide range of grants and a vast amount of public funding issued by the Government. She added that there are no immediate concerns, however, it is an ongoing process to address and provide post payment assurance on that grant work.

The Committee agreed to acknowledge the Internal Audit resources and considered and noted the Internal Audit Plan for 2021/22.