Agenda item

Report of the Executive Director of Resources.

The Committee considered a report of the Executive Director of Resources, which summarised the Council’s Internal Audit activity for the period April 2014 to March 2015 against the agreed Audit Plan for 2014-15 and provided the Internal Audit and Risk Manager's opinion on the overall adequacy and effectiveness of Coventry City Council's internal control environment for the financial year 2014-15.

The Audit and Procurement Committee approved the Council's Internal Audit Plan for 2014-15 at its meeting on the 18th August 2014.  The report submitted detailed the performance of the Internal Audit and Risk Service against the Plan for 2014-15, which was presented in order for the Audit and Procurement Committee to discharge its responsibility, as reflected in its term of reference.

The key target for the Internal Audit and Risk Service is to complete 90% of its agreed work plan by the 31st March 2015.  The Committee acknowledged that this performance was against a revised plan that was agreed by them in February 2015. The revisions stemmed from two members of the Internal Audit and Risk Service leaving the Council in November / December 2014 and the decision to manage the impact of this in the short term through amending the 2014-15 audit plan to take account of planned audits being postponed / delayed and where days allocated in the plan were not reflective of need.  In addition the report set out performance against the service’s key performance indicators.

Appendix one of the report submitted detailed the audit reviews that had been carried out in the financial year 2014-15 along with the level of assurance provided.  Of the 85 audits carried out during the year, 6 had received limited or no assurance.  A summary of the findings of key audits that had not already been reported to the Committee during municipal year 2014 were included at Appendix two.  In all cases, the relevant managers had agreed to address the issues raised in line with the timescales stated.  These reviews would be followed up in due course and the outcome reported to the Audit and Procurement Committee.

The Committee noted that the Public Sector Internal Audit Standards highlighted that a key responsibility of Internal Audit was to provide an objective evaluation of, and assurance on, the effectiveness of the organisations risk management, control and governance arrangements.  It required that the annual internal audit opinion provided by the Internal Audit and Risk Manager should form part of the Annual Governance Statement as a key element of the framework of assurance.

The report indicated that, in producing the opinion, it was appropriate that the Council’s approach to internal control was explicitly set out.  In the view of the Internal Audit and Risk Manager, this had evolved over the last few years and was now based upon a more fluid, but risk based approach, which had moved from central oversight and placed emphasis on management, ensuring that activity within services and directorates they were responsible for, comply with Council policies and procedures.

In adopting this approach, it was acknowledged that a greater inherent risk existed in terms of the control environment.  This risk had continued to increase in recent times due to the fact that the financial challenges faced over the last few years had resulted in significant management delayering across the Council.  As a result, there was less management resource available to provide oversight of activity in directorates.  For these reasons, the level of assurance that the Internal Audit and Risk Manager could provide were somewhat restricted.

In considering all the factors highlighted within the report, it was the Internal Audit and Risk Manager's view that the Council's internal control environment had not significantly changed over the last year.  As a result, the Internal Audit and Risk Manager had concluded that moderate assurance could be provided that there was generally a sound system of internal control designed to meet the Council's objectives.

RESOLVED that the Committee note:

1.  The performance of Internal Audit against the Audit Plan for 2014-15.

2.  The summary findings of key audit reviews, attached at appendix two to the report submitted, that have not already been reported to Audit and Procurement Committee during municipal year 2014-15 and which are relevant to the opinion on the overall adequacy and effectiveness of Coventry City Council's internal control environment.

3.  The opinion of the Internal Audit and Risk Manager on the overall adequacy and effectiveness of Coventry City Council's internal control environment.