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 that summarised the Council’s Internal Audit activity for the period April 2023 to March 2024 against the agreed Audit Plan for that year and the Public Sector Internal Audit Standards. It provided the Chief Internal Auditor’s opinion on overall adequacy and effectiveness of the Council's risk management, internal control, and governance arrangements for the financial year 2023-24, as set out in section 2.4 of the report. Appendices to the report provided details of the audits completed in 2023-24 and a summary of findings from key audit reports.

The key target for the Internal Audit Service was to complete 90% of its agreed work plan by 31st March 2024. Whilst the plan was originally developed on the basis of an estimate of 480 available audit days, this was subsequently amended to 400 days following long term unplanned absence in the Service. The change was reported to the Audit and Procurement Committee in March 2024 (minute 56/23 referred) and the performance of the Service assessed against the revised audit plan of 400 days. The Service delivered 82% of the plan which was slightly below target, but not viewed that it materially impacted on the ability to provide an annual audit opinion. Of the nine audits which formed part of the 2023-24 audit plan, and which were not completed by the end of March 2024, two had now been finalised, one was at draft report stage and the remaining six were ongoing / had been rescheduled. 

The Service had a number of other key performance indicators (KPIs) which underpinned its delivery and were aimed at ensuring that the audit process was completed on a timely basis. The report detailed the performance of Internal Audit for 2023-24 compared with 2022-23, indicating that there were three areas where performance was below expectations for which there were a number of reasons, for example the audit area was more complex than originally envisaged and had taken longer to complete than the original time estimated. Ongoing monitoring of internal audit work and identifying opportunities for improvement remained a key focus for management, in line with the Public Sector Internal Audit Standards which were based on the Global Internal Audit Standards. Following a review of the Global Standards by the Institute of Internal Auditors, a new set of standards would come into force in January 2025. The Internal Audit Service would be looking developing a revised set of performance indicators aligned to the new standards and work was currently ongoing to assess what measures would be required with further updates on this provided to the Audit and Procurement Committee.

The Public Sector Internal Audit Standards required that the Internal Audit Service developed and maintained a quality assurance and improvement programme that covered all aspects of internal audit activity, details of activities included in the Programme for 2023-24 were set out in the report together with details of the specific improvement actions which had been delivered against the improvement plan. In considering the results of the quality assurance and improvement programme, it had been concluded that the Internal Audit Service conformed with the Public Sector Internal Audit Standards, with no key areas of non-compliance. Where improvements had been identified, it was not considered that this materially impacted on the overall scope or operation of the internal audit activity. The report detailed the current improvement plan for Internal Audit and indicated that progress against the actions would be included in the next annual report to the Audit and Procurement Committee.

An Appendix to the report provided details of the audit reviews that had been carried out in the financial year 2023-24 along with the level of assurance provided, with the definitions to support the level of assurance applied to audit reviews carried out by the Service, set out in the report.

A summary of the findings of key audits that had not already been reported to the Committee during municipal year 2023-24 were included in a further Appendix to the report. In all cases, relevant managers would address the issues raised in line with the timescale stated with the reviews followed up and the outcome reported to the Audit and Procurement Committee.

In the Chief Internal Auditor’s view, sufficient assurance had been obtained to form a reasonable conclusion on the adequacy and effectiveness of Coventry City Council’s risk management, internal control, and governance arrangements. This took account of the internal audit work performed during 2023-24 and other sources of assurance, specifically: the work of the Corporate Governance Steering Board of which the Chief Internal Auditor was a member; the Corporate Risk Register; and the findings of the Local Government Association’s Corporate Peer Challenge, undertaken in January 2024.

It was the Chief Internal Auditor’s opinion that reasonable assurance could be provided that there was generally an effective and adequate framework of governance, risk management and internal control in place designed to meet the Council's objectives. This meant that there was generally an appropriate level of control for managing the majority of the significant inherent risks to the Council’s objectives to a reasonable level. Through Internal Audit work, actions were agreed to improve the governance, risk management and the internal control environment and assist the Council in achieving its objectives. A defined process existed within the Service to gain assurance that all actions agreed had been implemented on a timely basis. In giving this opinion, assurance could never be absolute and could not eliminate all risk and provide absolute assurance of effectiveness.

In undertaking the assessment of the Council's arrangements, the Chief Internal Auditor had reviewed whether, in her opinion, there were any areas that needed to be considered when the Council produced its Annual Governance Statement for 2023-24. Whilst any audit where ‘limited’ or ‘no’ assurance was provided required attention, an assessment was also made as to whether the review had a significant corporate impact and consequently needed to be considered in the producing the Annual Governance Statement, or whether the review was limited to specific working practices in service areas which did not have a wider bearing on the Council’s control environment. Issues that had been identified for consideration in preparation of the Annual Governance Statement for 2023-24 were detailed in the report.

The Committee requested that the half year monitoring report, scheduled on the Work Programme to be submitted to the Committee in November 2024, included an update on progress against the Internal Audit Improvement Plan, and also that improvement action 7 be updated to include reference to the resourcing issue.

RESOLVED that Audit and Procurement Committee notes:

1)  The performance of Internal Audit against the Audit Plan for 2023-24.

2)  The results of the Quality Assurance and Improvement Programme and the Chief Internal Auditor’s statement on conformance with the Public Sector Internal Audit Standards.

3)  The summary findings of key audit reviews (attached at Appendix two to the report) that have not already been reported to Audit and Procurement Committee during municipal year 2023-24 and which are relevant to the opinion on the overall adequacy and effectiveness of Coventry City Council's internal control environment.

4)  The opinion of the Chief Internal Auditor on the overall adequacy and effectiveness of Coventry City Council's risk management, internal control, and governance arrangements.