Agenda item

To consider the Internal Audit Annual Report for 2013/14 and the 2013/14 Worcestershire Internal Audit Shared Services Manager’s annual opinion on the overall adequacy of the Council’s internal control environment.

(Report attached)

The Committee received the Internal Audit Annual Report for 2013/14 and the 2013/14 Worcestershire Internal Audit Shared Services Manager’s (WIASS) annual opinion on the overall adequacy of the Council’s internal control environment.

Officers explained the background to the report and highlighted the significant increase (over the previous year) in the number of high priority recommendations set out under the Key Performance Indicators.  There could be peaks and troughs with these and detailed actions place were in place to address any issues.

For the benefit of the new Members on the Committee it was highlighted that ‘full’ was the highest achievable assurance level for an audit.  Audits attracting an assurance of either moderate or significant were perfectly acceptable as these contained no significant high risk issues.  The majority of completed audits had been allocated an assurance level of either moderate or above, meaning there was generally a sound system of internal control in place, no significant control issues had been encountered and no material losses had been identified during a time of significant transformation and change.

It was noted that no assurance level had been given for ICT and it was queried whether there was any plan to address this.  Officers advised that a report on this would be referred to the next meeting of the Committee.  The scope of the ICT audit had been fairly narrow with business continuity having been highlighted as an issue.

As detailed in the report, whilst Internal Audit could provide reasonable assurances based on the audits performed, no system of control could provide absolute assurance against material; misstatement or loss, nor could Internal Audit give that assurance.  

Based on the audits performed in accordance with the approved plan, it had been concluded that the internal control arrangements during 2013/14 effectively managed the principal risks identified in the audit plan and could reasonably be relied upon to ensure that the Council’s corporate objectives had been met.  However, there was a significant risk emerging which could jeopardise the position in the future.  With the austerity measures and the need to reduce the overall Corporate budget the transformation plan and ‘unspecified’ savings would require greater clarity to ensure better transparency, expectation and accountability in order to ensure the Council could work towards a sound financial footing.  Any significant risks identified would be raised with the Council’s151 Officer which the Committee would in turn monitor moving forward.

A request was made by the Chair that the Council’s procurement policies be looked into, to ascertain how contracts were awarded, how the Council publicised upcoming contracts and how contracts were monitored.  This was with a view to ensuring that the Council was, where possible, assisting new and local businesses and encouraging them to apply for contracts, and that no unnecessary hurdles were being put in their way preventing them from doing so.  In view of the financial cuts from central government Members also wished to ensure that contracts were being awarded in the most effective manner.  The Chair added that this was an area which the newly appointed Lead Fraud Members on the Committee may also wish to become involved in.

Officers stated that a number of procurement and economic development related events had been arranged for local suppliers, which had had proven popular with large numbers in attendance.  Officers were also looking at simplifying the procurement process.  

The WIASS advised that the agreed 2014/15 Internal Audit Plan had identified Procurement, Contract Compliance and Tendering as an area to be looked at.  Days were therefore already available within the agreed Plan for this to happen and Internal Audit was happy to undertake the work and now had a clear scope for this.  Officers would seek to deliver this audit in quarter 2, namely July to September.  Members agreed that Internal Audit should proceed with Procurement audit as planned.    

RESOLVED that

1)            the report be noted; and

2)            the Procurement audit identified within the agreed 2014/15 Internal Audit Plan proceed as planned, this to include the scoping terms detailed in the preamble above.