Members were presented with the Internal Audit Annual Report for 2016/17, the 2016/17 Worcestershire Internal Audit Shared Services (WIASS) Manager’s annual opinion on the overall adequacy of the Council’s internal control environment, and the Internal Audit Charter.
The WIASS Manager highlighted the key elements of the report and responded to Members' questions. The Audit Opinion Analysis for audits completed during the financial year 2016/17 and the resulting Assurance Levels, both as detailed in the report, were noted. Whilst some areas had returned an assurance level of ‘limited’ the majority of reviews had resulted in assurance levels of ‘moderate’ and above, with clear management action plans having been formulated to address risks in those areas where ‘limited’ assurances had been identified. Further work was required to embed risk management throughout the organisation, with outcomes now being monitored by the Executive Director – Finance and Resource.
Members noted from the report that WIASS had concluded that no system of control could provide absolute assurance against material misstatement or loss, nor could internal audit give that assurance. However, the Audit Opinion statement was intended to provide reasonable assurance based on the audits performed. Based on those audits the Head of WIASS had concluded that the internal control arrangements during 2016/17 effectively managed the principal risks in a number of areas, but not all, and could reasonably be relied upon to ensure that the Council’s corporate objectives had mainly been met. Significant risk remained however in relation to the Housing Capital Programme and Risk Management.
Close monitoring of deployed measures were set to continue, however the need to reduce the overall risk and work towards a better approach beyond 2016/17 would be critical to create better transparency, expectation and accountability. This was necessary to ensure the Council could deliver a satisfactory housing capital programme, manage its risk management effectively and ensure other areas which attracted a ‘limited’ assurance developed and deployed a sound control environment.
As discussed at the previous meeting, Members reiterated the need for timely actions by Officers on actions identified by internal audit as part of audit reviews. The WIASS Manager stated that he was working closely with the S151 Officer to ensure that there was a clear and quick escalation of any matters of concern. He added that it was within the gift of the Committee to invite relevant Officers to provide further information/explanation in relation to any ongoing areas of concern, and that internal audit would automatically monitor progress with the implementation of agreed actions plans as part of their follow up work.
Mr Percival stated that, as highlighted by the Chair earlier in the meeting, given that the Committee had a corporate responsibility for risk management, and given that at the next meeting there would be a follow up on the risk management audit which had received a limited assurance, the Committee could decide if they wanted any Officers to attend for that item. It was also noted that a Corporate Governance and Risk report was due to be considered later in the meeting at Agenda Item 9.
1) the report be noted; and
2) the Internal Audit Charter be approved.