Agenda item

The Internal Audit Plan had been approved at the beginning of the 2015/16 financial year.  The Committee gave consideration to a report which set out the Head of Internal Audit’s opinion on the adequacy of the Council’s governance, risk and control environment and the delivery of the Internal Audit Plan for 2015/16.

The purpose of the annual report was to present a summary of the audit work undertaken over the past year. In particular it:-

·      Included an opinion on the overall adequacy and effectiveness of the governance framework and internal control system and the extent to which the Council relied on it;

·      Informed how the plan was discharged and the overall outcomes of the work undertaken;

·      Provided a statement on conformance with PSIAS and the results of the internal audit quality assurance and improvement programme (QAIP)

·         Drew attention to any issues particularly relevant to the Annual Governance Statement (AGS).

Officers presented the report in detail and in doing so, outlined the key messages contained on page 1 of the annual report.  Governance, Risk and Financial Control had all been assessed as Green and performing well, whilst Internal Control had been assessed as Amber, performing adequately.  Direction of travel across the areas remained static or had seen a positive direction of travel.   It was considered this reflected a significant journey for the Authority since its Red rating on Governance in 2013.  It was stressed that an Amber status rating for internal control should not be viewed as a negative position in the current Local Government environment.  It was an ever changing position which required flexibility as opposed to over control and thus Amber was a positive position.

Explanation was offered as to how each rating status had been arrived at and the factors which had been taken into consideration into reaching them.  Potential areas for inclusion in the AGS, were outlined on page 2 of the report.

Page 5 of the report outlined to Members the scope of work undertaken by Internal Audit, the Audit areas covered and any restrictions or changes made to the plan mid-year.  Charts on page 6 outlined to the Committee the comparative position when compared to 2014/15 of both assurance opinions given and the number of internal audit recommendations implemented.  To-date, 82% of recommendations due by 30 April 2016 had been implemented, all outstanding recommendations were outlined to the Committee in Appendix 2.  A list of all audits undertaken was set out at Appendix 1.

Referring to page 7 of the report, Auditors outlined the reasons as to why some of the indicators had not been achieved.   It was noted the way in which work had been scheduled had been changed and this had been of assistance.  It was accepted that further improvements could be achieved and audit would continue to work with Senior Management to help improve the process including: -

·         Engagement and agreement of the audit schedule

·         Clearance of audit reports through CLT

·         Swift escalation of issues affecting progress and delivery eg resources and access to information; and

·         Completion of post audit feedback questionnaires

Finally Members were provided with the Quality Assurance Framework for Audit Lincolnshire together with a detailed action plan to demonstrate a drive for continuous improvement within the service. (Appendices 3 and 4)

Debate ensued and in opening, the Chairman commented on the much more pleasing picture when compared to previous recent years.  Independent Members commented that based on the way Audit Lincolnshire undertook their work they had assurance that the position could be maintained and challenge would continue to be offered.

Referring to Appendix 4, the continuous improvement plan for the Audit Lincolnshire service, Independent Members enquired as to how they as a Committee sought assurance the plan was being delivered.  It was stressed that Audit Lincolnshire was a service provided by the County Council and as such its service improvement plan would be held to account by Managers at the County Council.  However, if the Committee were minded, Officers would request that it be submitted in six months time alongside the internal audit plan progress report.  The Committee welcomed this suggestion.

In responding to Members’ questions, Officers clarified that the implementation of audit actions was tracked by the Committee through the internal audit plan quarterly update reports, in which all implemented and outstanding actions were detailed.  It was further clarified that final assurance opinions issued after a service audit were not necessarily based on the total number of recommendations identified but rather the number of high priority recommendations.

Referring to figure 3 on page 5 of the report, at the request of a Member, Officers expanded on the types of activity which fell into the categories listed.

In concluding, the Director of Resources paid thanks to the Interim Strategic Lead for Transformation for the work he and his team had undertaken over the last few years in ensuring audit recommendations were tracked and implemented, commenting on the very differing picture now when compared to two years ago.  Every audit undertaken was given a thorough review and consideration by CLT and whilst it was acknowledged this could sometimes result in delays, particularly if an audit had been complex, this change in stance was credited as contributing to the significantly improved performance.  It was further noted that where areas received a low assurance opinion, it was now standard practice to invite the Auditors back within a period of six months, demonstrating that issues were tackled quickly.  Green ratings were welcomed but Officers were mindful that processes needed to be cost effective and not limit Officer choice and as such were always under review.

RESOLVED that: -

(a)          the contentsofthe report be received and noted:and

(b)          theAnnualReportbefurther considered whenscrutinising theAnnual Governance Statement.