Agenda item

Report of the Deputy Chief Executive (Place)

The Audit and Procurement Committee considered a report of the Deputy Chief Executive (Place) that provided an update on progress made in implementing internal audit recommendations since the last update in April 2017.

The Public Sector Internal Audit Standards required that the Chief Audit Executive must establish a follow up process to monitor and ensure that management actions had been effectively implemented or that senior management had accepted the risk of not taking action. 

As reflected within its terms of reference, the Audit and Procurement Committee was required to receive reports on Internal Audit’s follow up process and this report provided an update on progress in respect of the agreed management actions which had been followed up during the period April 2017 to February 2018.

Given the number of audits that the Internal Audit Service completed every year, it was critical that it had a robust procedure in place for ensuring that it obtained appropriate assurance that audit recommendations had been implemented, but did so in a way that allowed the Service to respond to new risks facing the Council.

Currently, there were three key considerations that determined the follow up procedure adopted:

1)  Whether the area audited was of such significance that it was subject to an annual review.

Annual Audits were generally included in the Audit Plan on an annual basis because of the nature of the systems, and the fact they were corporate wide and had been identified as key in delivering the Council's objectives (e.g. financial systems, corporate risks).

2)  The level of assurance provided in the audit report.

Any audit that received 'no' or 'limited' assurance was subject to a follow up review to assess improvements based on a timing agreed between Internal Audit and relevant management. In either of these circumstances, a formal follow up review would take place which involved Internal Audit assessing progress through audit testing to ensure that agreed actions had been implemented and were working effectively.

3)  A self-assessment process for those reviews where neither of the points above applied, but a follow up review was necessary.

For all other audits, a process existed which was based on a self-assessment by relevant managers. This involved Internal Audit asking managers for an update on the action taken to implement audit recommendations.The response provided by managers was not subject to any independent validation by Internal Audit.

Overall, it was believed that the procedure achieved the right balance between ensuring action was taken in response to risks identified by Internal Audit and allowing the Service to focus on identification of new risks. This was particularly important given the reductions in the size of the audit team over the last few years.

The report and appendices set out the results from the latest follow up exercise indicating that of the 141 actions followed up, 72% had been implemented based on both the formal and self-assessment follow up method. When analysed by follow up method, the results were that formal follow up method had a 57% implementation rate and self-assessment follow up method had a 98% implementation rate.

After the follow up had been completed, the results were collated within Internal Audit. If progress was not consistent with expectations, audit management would determine the next course of action based on the reasons for the lack of progress. The report identified the courses of action available and the appendices to the report highlighted the proposed actions for audits where recommendations remained outstanding.

The Committee expressed concern regarding the issues identified in annual internal audits carried out in schools that resulted in High/Medium Risk Actions being required year on year. Members requested that officers gain a better understanding of these issues and investigate whether a resolution could be found to eliminate this repetition, they also requested that details of high risk actions be included in the next Tracking Report.

RESOLVED that the Audit and Procurement Committee notes the progress made in implementing audit recommendations and confirms its satisfaction with the proposed action by the Acting Chief Internal Auditor for audits where actions remain outstanding.