This report contains information relating to
matters which could prejudice current or
potential future legal proceedings and are not
for publication by virtue of paragraph 7 of Part 1
of Schedule 12A to the Local Government Act 1972.
BRISTOL CITY COUNCIL
Audit Committee
3rd April 2009
Report of: Acting Strategic Director (Resources)
Report Title:
Internal Audit - Report of Internal Audit Activity for the Period
1st December 2008 - 28th February 2009
Ward: Citywide
Officer presenting report:
Richard Powell, Chief Internal Auditor
Contract Telephone Number: 0117 92 22448
RECOMMENDATION
The Audit Committee note the activities carried out by Internal Audit during the
period 1st December 2008 - 28th February 2009.
This report was submitted to the Efficiency and Value for Money Executive Member
at his meeting on 1st April 2009
SUMMARY
This report provides a summary of the audit activity during 2008/09 to date.
The significant issues in the report are:
• Activity and performance (section 2 - 5)
• Follow up activity (section 6)
• Partnerships (Section 7)
Policy
This report is submitted in accordance with the Audit Committee's Terms of
Reference and Internal Audit's Charter and Strategy
Consultation:
Internal:
None necessary
External:
None necessary
1
Introduction
1.
Introduction
1.1
The Accounts and Audit Regulations 2006 require the City Council to review
the effectiveness of the Council's system of internal audit. This responsibility
has been assigned to the Audit Committee who continually review the
effectiveness of Internal Audit itself by consideration of periodic and other
reports by the Chief Internal Auditor. The purpose of this report is to provide
details of Internal Audit activity during the period 1st December 2008 to 28th
February 2009 to assist the Executive Member and the Committee in
discharging this responsibility.
2.
Internal Audit Activity and Performance - Summary
Activity
2.1
During the period 01/04/2008 - 28/02/2009, Internal Audit Productive Activity
was as follows:
Area of Activity
Actual Full Year Pro-rata
Days
Planned Plan Days
Days
Assurance Work (Key and non key including
2543
2871
2632
work brought forward from 2007/08)
Planning and Reporting
128
105
96
Planned Anti-fraud work
131
112
103
Fraud and Irregularity - Responsive work
224
117
107
Unplanned work
396
432
396
Liaison and Advice
204
275
252
Fol ow Up
60
105
96
Risk Management
129
113
104
Audit Standards and Development
271
336
308
HB Fraud Team Management
22
20
18
Total
4108
4486
4112
2.2
The above table demonstrates that assurance work is slightly below that
planned for year to date, this is in part due to the need to complete a number
of assurance audits in the final quarter of the year. The Fraud and Irregularity
budget has been exceeded by 110% of that planned for year to date, see
section 5 for details. Overall, the level of work delivered is stil in line with that
planned for at this point in the year.
2.3
Follow up work has continued following the implementation of the Internal
Audit follow up and escalation procedure. However, due to the requirement
for additional work in areas such as Fraud and Irregularity the level of follow
2
up work is below that planned at this time. Details of follow up work completed
is provided in section 6 of this report.
Performance
2.4
Key performance targets included in Internal Audit's Service Delivery Plan
include percentage completion of planned assurance work. These targets
are calculated and reported quarterly and are provided below together with
updated figures to the end of February 2009 and previous year comparative
data. It should be noted that many assurance assignments included in the
audit plan are not finite in nature and take place throughout the year. As
such, assignments in progress are included as wel as those completed.
Additionally, those items no longer required are included, as Audit
involvement may be dependent on the progress made by others or on other
external factors. Without these caveats, the indicator is of little value.
Actual Performance
Indicator
Target
11
Q3
Q2
11
Q3
Q2
2008/09
months 2008/09 2008/09 months to 2007/08 2007/08
to
29/02/08
28/02/09
% of key audits
95%
87.7%
63.2%
45.6%
89.4%
80.3%
67.2%
completed
% of non key audits
75%
87.3%
73.9%
59.9%
75.9%
66.5%
50.8%
completed
2.5
Performance figures to date highlight that coverage on key audits is only
marginal y below that at this point last year, this is in part due to the need to
delay a number of key audits until the last quarter for strategic reasons and at
the request of External Audit. The coverage of non key audits is up on last
year at this time and as such is also in part responsible for the reduced key
audit coverage. This increased coverage is in part due to the need to
complete a high number of school audits in preparation for FMSiS
assessments which are currently underway.
2.6
Other service delivery plan targets include:
Indicator
Target
Actual
Q3
2008/09
2008/09
11 months
to 28/02/09
Actual
Customer Satisfaction Survey - % Returning
90%
99%
99%
a Satisfactory Response.
Final Reports Issued within 3 weeks of
80%
74%
74%%
completion of field work
% of significant recommendations from key
100%
100%
100%
audit work either implemented or escalated.
(Paragraph 6
below refers)
3
Resource Issues
2.7
Resourcing concerns have been alleviated to some extend with the return of
one member of staff from maternity leave on a part-time basis (0.5 FTE).
However the section remains under resourced against the original 2008/09
Plan, by 2 FTE posts. A limited number of agency staff have continued to be
retained to assist with delivering the Audit Plan, the costs of which can be
contained within the current year's budget.
3.
Planned Work - Reports Issued and Matters Arising
3.1
The Internal Audit Strategy includes the requirement to report any changes to
the plan approved by the Audit Committee. No amendments have been
made to the agreed plan to date.
3.2
Internal Audit Planned work has progressed in line with the approved plan. A
list of work completed or in progress during the period, together with the audit
opinions for any completed work during the period is provided at Appendix A.
Internal Audit provide standard opinions with each audit report within the
range of 'very good' to 'poor' as follows:
Very Good
Al controls were in place and operating effectively. No weaknesses in
control were identified.
Good
Al significant controls were in place and operating effectively. Only minor
weaknesses in control were identified.
Satisfactory Most significant controls were in place and operating effectively. There
were however areas where improvements are required.
Needs
Some significant weaknesses in control have been identified and/or some
Improvement controls were not working effectively. Management can only have limited
assurance that the matters covered by this review are properly managed
and control ed.
Poor
There are no/inadequate controls in place. Management cannot be
assured that the matters covered by this review are properly managed and
control ed.
3.4
Given the nature and breadth of the Council's activities, it is inevitable that
areas for control improvement are identified by Internal Audit work. In some
cases the level of improvements identified means that the existing control
environment is rated as poor or needs improvement. Appendix B provides a
brief summary of work completed during the period, where this was the case.
For each audit, action plans for control improvements have been agreed with
relevant officers and it is anticipated that recommendations wil be
implemented. Progress against these action plans will be monitored in line
with Internal Audit's follow up procedure. Where improvements are not
satisfactory, matters wil be escalated to management and the Audit
Committee notified. The appendix also includes areas of concern where
Internal Audit staff
contribute to pieces of work going on elsewhere in the
4
Council. The following table details the number of audit assignments
completed during 2008/09 to date together with a summary of the opinions
issued:
Period 3
YTD Total
1/12/08 - 28/02/09
Total Audits
Key
Non Key
Key
Non Key
Completed
4
25
13
92
Audit Opinion
Satisfactory or better
2
12
6
44
Needs Improvement
2
10
4
30
Poor
0
1
0
3
No Opinion
0
2
3
15
Necessary
4.
Unplanned Assignments
4.1
Details of unplanned work completed during the period can be seen at
Appendix C. These include assignments completed or continuing from the
previous year where significant continued work was not foreseen when
compiling the audit plan.
4.2
The nature of these assignments is such that it was not possible to foresee
the need for the work at the time of preparing the annual Internal Audit plan.
However upon consideration of the issue, Internal Audit involvement with the
work was considered necessary as the circumstances indicate a breakdown in
the control environment.
4.3
Resources of 432 days are provided in the Audit Plan to accommodate such
work. To date, 396 Days (92% of those planned) have been used .
5.
Fraud and Irregularity
5.1
Internal Audit have responsibility for the investigation of fraud and irregularity.
Again, a contingency provision is made in the annual audit plan each year for
this type of work and this year the provision was 117 days. However, to date
224 days (191% of those planned) have been used in work in this area since
the beginning of the year. As mentioned in the previous report a considerable
amount of that time has been spent on a fraud investigation concerning
irregularities within Parking Services, part of the City Development
Directorate.
5.2
Full details of the fraud responsive work can be seen at appendix D. This
includes investigations continuing from previous periods where they are not
included in the annual plan as wel as new cases during the current period
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which are endorsed in bold in the appendix.
6.
Follow up and Escalation Matters
6.1
In accordance with Internal Audit's Fol ow up and Escalation Procedure, which
was introduced in April 2007. Fol ow up on significant recommendations
made following key audits has been completed. Please see paragraphs 6.2
for details.
Follow Up of Significant Findings From Key Audits
6.2
To date 16 significant recommendations have been made in relation to key
systems. Details of these and an update on significant recommendations
which were outstanding at the close of 2007/08 are set out in Appendix E.
Other Follow Up Work Completed:
6.3
In addition to follow up of significant recommendations, follow up work has
been completed in those areas identified in our previous periodic reports as
attracting a poor or needs improvement opinion, details of action taken is also
set out in Appendix E.
Matters for Escalation
6.4
The follow up and escalation procedure includes the requirement/facility to
inform the Audit Committee of occasions where escalation of control matters
or audit access matters through the City Council's management structure has
not successfully resolved issues. No matters have occurred during the
current period.
7.
Other Issues
7.1
Partnerships
7.1.1 Partnership working is an important part of the Council's core aims and
objectives in order to ensure it maximises the outcomes for the community. It
is a government expectation that Councils will increasingly participate in
partnership working to meet the needs of the community.
7.1.2 The role of Internal Audit within partnership working is to provide an
independent opinion on the governance arrangements within the partnership,
ensuring that these arrangements are in line with the Council's own
governance framework. Audit will also examine financial responsibilities and
accountabilities, and performance information.
7.1.3 A review of the governance arrangements in place for the Children & Young
People's Partnership has recently been completed, and resulted in a
'Satisfactory' Audit opinion. However, there were a number of areas identified
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where improvement is required, the main one being the need to prepare a
Risk Register which identifies the risks specific to the Children's Partnership.
7.1.4 The Risk Register for the Children's Partnership was due to be brought to the
3rd April 2009 Committee meeting, however the Partnership Board decided
that, having reviewed the Register earlier in the year, there were areas where
further work was required and requested that the register be brought back to
them in May. Therefore, the Risk Register wil be presented to the Audit
Committee once that further Partnership Board consideration has taken place.
7.1.5 A review of the governance arrangements within the Bristol Partnership and
Safer Bristol Partnership is currently underway, as is an overal review of
Partnership working within the Bristol Partnership. A review of the West of
England Partnership is also ongoing.
7.2
Business Transformation
7.2.1 Internal Audit are periodical y called upon to either actively participate or
provide input and guidance on particular projects throughout the Council and
as such are currently involved with the following project boards:
● Corporate Online Procurement System (COPS)
● Payroll e-Forms
● Housing and Council Tax Benefits Lean Thinking
● Shared Transactional Services
● Project Management Centre of Excel ence.
7.2.2 It is anticipate that Internal Audit wil continue to provide support and guidance
to all of the proposed changes as a result of the Transforming Bristol Plan and
as such have made corporate Business Transformation provision in the
annual Audit Plans for both 2008/9 and 2009/10.
7.3
External Reports
7.3.1 As well as internal audit work, the Audit Committee is able to draw assurance
from external inspections and the recommendations they make. So far this
year there have not been a considerable number of external inspections,
however the Committee wil wish to be aware that the following external
reports were received:
7
Report Received
Key Outcomes
Ofsted - Annual
Overall effectiveness of Children's Services was
Performance
graded as a 2 (Adequate) with 3/6 of the sub-sections
Assessment letter for scoring a 2 and 2/6 scoring a 3 (Good). Areas for
Children and Young improvement have been identified in all 6 sections.
People in Bristol.
This Performance Assessment is based on a self-
(2008)
assessment submission made by Children, Young
People and Skil s Directorate.
The letter was brought to the attention of the
Executive Member for Children's Services in
December 2008.
CSCI - Annual
There are two key judgements in this assessment,
Performance
Delivering Outcomes and Capacity to Improve. For
Assessment of Adult 2008 the Council rated as 'Good' for Delivering
Social Care Services. Outcomes and 'Promising' for Capacity to Improve,
(2008)
with an overal performance rating of 2 stars. Key
areas for development have been identified and wil
be monitored throughout the year.
Report presented to the Care and Safer Communities
Scrutiny Commission on 6th January 2009
I&DeA - Strategic
This review concentrated on four key themes:
Housing Peer Review
(October 2008)
● Leadership and Corporate Working
● Service User Focus and Resident Engagement
● Achieving Effective and Sustainable Outcomes
● People, Performance and Resource Management
Report presented to the Quality of Life Scrutiny
Commission on 23rd March 2009.
8.
Other Options Considered
8.1 None necessary
9.
Risk Assessment
9.1 There are no risks arising directly from this report, although clearly the work of
Internal Audit minimises the risk of failures in the Council's internal control
environment and governance arrangements, reduces the risk of fraud and other
losses and increases the potential for prevention and detection of such issues.
10. Equalities Impact Assessment
10.1 None necessary for this report
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11. Legal and Resource Implications
11.1
Legal - none sought
11.2
Resources - none arising from this report
Appendices
Appendix A Audit Work Completed and In Progress during the period
01/12/2008 to 28/02/2009
Appendix B Summary of Audit Work Completed During the Period where
Controls are not Adequate
Appendix C Summary of Unplanned Work
Appendix D Summary of Fraud and Irregularity
Appendix E Audit Fol ow Up Activity
LOCAL GOVERNMENT ACCESS TO INFORMATION
Background Papers
Exempt
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