The Committee received the Internal Audit Progress Report from the Head of Worcestershire Internal Audit Shared Service. The report before the Committee summarised progress made against the delivery of the Internal Audit Plan 2022/23 as of 31st August 2022 and provided copies of finalised audit reports completed since the previous progress report presented to the Committee. It was noted that one such report had been finalised and included as an appendix: Critical Review – GIS and Gazetteer (Land Charge Project) 2022/23.
The Head of Worcestershire Internal Audit Shared Service reported that data sets continued to be uploaded to the central database as part of the National Fraud Initiative (NFI) matching exercise. The next major upload of data sets was scheduled for October and November 2022. There were no exceptions to report in terms of fraud risk at this Committee.
It was reported that Q3 2022 would be devoted to auditing Core Financial Systems. Within this a priority was assigned to the rectification work on the Borough Council’s finance IT system, debtors and budget monitoring, as these areas received limited assurance in 2021/22.
The Interim Director of Finance reported that since the Committee met in July, Q1 budget monitoring had been completed. Disappointment was expressed, however, that the Council had not closed its 2020/21 Annual Accounts yet. It was hoped these Accounts would be finalised by the end of November. The team were hoping to implement the final part of the cash receipting rectification in the next few days in liaison with the suppliers of the Enterprise Resource Planning (ERP) back-office system, TechnologyOne.
The Interim Director of Finance highlighted that an additional meeting was now scheduled for the first part of November to consider the External Auditors’ Annual Report.
The Head of Finance provided the possible timescales for completion of both the 2020/21 and 2021/22 Statements of Accounts, reporting that the aim was to produce the Audited Statement of Accounts for 2021/22 by the end of this financial year.
During the consideration of the report, the following responses had been provided in relation to Members’ feedback and questions:
· Officers commented that cash receipting function was a major weakness of the TechnologyOne finance system, mainly due to the fact that the Council were the only Local Government implementer to date. In other areas the system was more intuitive than those offered by competitors.
· It was reported that nationally there remained a number of authorities which had not had their 2020/21 Accounts finalised. Officers stressed that audit delays were due to the capacity issues in both the external audit market and among the internal finance officers in local authorities. The Interim Director of Finance indicated that 142 councils remained without their draft 2020/21 Accounts externally audited as at the end of June.
· It was clarified that ten days were assigned for internal audit of Rubicon Leisure for 2022/23 as it was an arms-length company, and these audit days were currently scheduled for Q4 of 2022/23.
· Members queried why there was no risk register reference against Rubicon Leisure, and Officers responded that this would be investigated. It was added that for Rubicon Leisure the 2021/22 Accounts were being finalised and as an arms-length company it had to comply with Companies House accounting deadlines, which differed from those for public bodies (which meant no extension was provided for in the legislation as was the case for local authorities).
· Members queried the meaning of the following statement found in paragraph 3.1 of the Final Internal Audit Report on GIS and Gazetteer (Land Charge Project) 2022/23: ‘As this is a critical review there is no level of assurance given.’ The Head of Worcestershire Internal Audit Shared Service clarified that this statement did not mean there was no assurance given in this area but rather that, as a critical friend review, no audit opinion level of assurance was assigned against the report. The Officer undertook to provide appropriate clarification on this statement in future reports.
· The Interim Director of Finance reported that a separate meeting of the Committee would be set up in December to consider the finalised draft of 2020/21 Statement of Accounts, as these needed to be finalised by the end of November. Members expressed their concerns about the consequences of not delivering by the end of November.
· Members expressed frustration at the delays and lack of progress in finalising the accounts. The Interim Director of Finance apologised for this state of affairs and explained that Officers were equally frustrated. It was not possible to accelerate the work on cash receipting by replacing the current finance system as all transactions were recorded on this system, which added to the rectification work required as the finance team needed to manually check and ensure every transaction on the system was filed correctly.
the report be noted.