Agenda item

Report of the Director of Finance and Resources

The Audit and Procurement Committee considered a report of the Director of Finance and Resources, the purpose of which was to provide the Audit Committee with an update on the progress made in implementing internal audit recommendations since January 2023.

The Public Sector Internal Audit Standards requires that “the Chief Audit Executive (i.e. Chief Internal Auditor) must establish a follow up process to monitor and ensure that management actions have been effectively implemented or that senior management have 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.  This report provides an update as to progress in respect of the agreed management actions which had been followed up during the period January 2023 to January 2024.

Given the number of audits that the Internal Audit Service completed every year, it was critical that it has a robust procedure in place for ensuring that it obtained appropriate assurance that audit recommendations had been implemented but did so in an efficient and proportionate way.  Where appropriate, Internal Audit defined within its audit reports the follow up process to those responsible for the system / area under review and a date was agreed of when this would take place.

Currently, there were three key considerations that would determine the follow up procedure adopted, namely:

1)  Whether the area audited was subject to an annual review.

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

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

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.

Of the 222 actions followed up, 64% had been implemented based on both the formal and self-assessment follow up method. When this was analysed by follow up method the results were:

·  Formal follow up method – 48% implementation rate.

·  Self-assessment follow up method – 76% implementation rate.

In terms of the specific results, the following points should be considered:

·  Formal follow up – The implementation rate of 48% was slightly higher when compared with the results achieved last year, where the implementation rate was 45%.  However, when compared to the results achieved prior to the Covid-19 pandemic, it was clear that implementation rates have reduced over time.

·  Self- assessment – As the rate of implementation is considerably higher than the formal follow up method, it does suggest that action needs to be taken to ensure the current process can be relied upon. 

As such, it was intended that the Chief Internal Auditor would attend Leadership Board in the near future to raise the issues highlighted above with a view to (a) underlining the importance of implementing agreed audit recommendations (b) consider how the self-assessment process can be improved to ensure its veracity can be relied upon.

  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 following courses of action were available:

·  Revised implementation dates are agreed for outstanding actions.

·  Concerns raised through the management structure to ensure senior managers are aware of both the lack of progress made and the risks still facing a service.

·  As a last resort, to ask the Audit and Procurement Committee to intervene and seek prompt action from the relevant manager.

Members asked questions and received assurances at the meeting from officers on matters that included the reliability and monitoring of self-assessment.

Members requested information on previous school taxi audits.

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