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 Internal Audit Plan for 2025-26, which included a summary of the performance of Internal Audit and the Chief Internal Auditor’s conclusion on the overall adequacy and effectiveness of Coventry City Council’s risk management, internal control, and governance arrangements for the financial year 2025-26.

The Committee approved the Council’s Internal Audit Plan for 2025/26, attached at Appendix 1, at its meeting on 23^rd June 2025.  During the last financial year, the Committee received progress reports summarising completed audit activity in February and March 2026.  Reports are submitted to the Committee to discharge its responsibility, as reflected in the terms of reference, “to consider the Head of Internal Audit’s Annual Report and Opinion, and a summary of internal audit activities (actual and proposed) and the level of assurance given within the Annual Governance Statement incorporated in the Annual Accounts”. 

It was noted that the work of the Internal Audit Service is governed by the Global Internal Audit Standards in the UK Public Sector, which sets the standards for the professional practice of Internal Audit and serve as a basis for evaluating and elevating the quality of the internal audit function.  The standards came into effect on 1^st April 2025 and replaced the Public Sector Internal Audit Standards which previously applied.

The key target for the Internal Audit Service was to complete 90% of its agreed work plan by 31st March 2026. Whilst the plan was originally developed on the basis of an estimate of 650 available audit days, this was subsequently amended to 550 days as a result of unplanned absence within the Service and the time taken to implement the agreed service redesign. The change was reported to the Audit and Procurement Committee in February 2026 (minute 49/25 referred).  Consequently, the performance of the Service was assessed against the revised audit plan of 550 days. The Service delivered 84% of the plan and whilst it was recognised that performance was below target, it was not viewed that it materially impacted on the ability to provide an annual audit conclusion. Of the nine audits which formed part of the 2025-26 audit plan which were not completed by the end of March 2026, one has now been finalised, one is at draft report stage and the remaining seven are ongoing / have been rescheduled.  In addition to the delivery of the Plan, the Service has a number of other performance indicators which underpinned its delivery.  A table in the report detailed the performance of Internal Audit for 2025-26.

The Global Internal Audit Standards in the UK required that the Internal Audit Service developed and maintained a quality assurance and improvement programme that covered all aspects of the internal audit activity. Details of the matters included in the 2025-26 Programme were set out in the report.  Actions to work towards conformance with the new Standards had progressed.  However, there had not been an opportunity to undertake a full baseline assessment against the new Standards in 2025-26. As such, it was the Chief Internal Auditor’s conclusion that the Internal Audit Service partially conformed with Global Internal Audit Standards in the UK Public Sector. It was not viewed that any non-conformance would affect the overall scope or operation of internal audit activity.  It was noted that the Service did conform with the previous standards which were in force, which was confirmed though external quality assessment.

The Global Internal Audit Standards in the UK Public Sector highlights that a key responsibility of Internal Audit was to provide an annual internal audit conclusion and report that could be used to inform the Annual Governance Statement. The conclusion must cover the overall adequacy and effectiveness of the organisation’s framework of governance, risk management and internal control.  In providing the conclusion, the Chief Internal Auditor confirmed that the Internal Audit Service was organisationally independent. The Service reported functionally to the Audit and Procurement Committee and had an approved Internal Audit Charter which set out the purpose, authority, responsibility and position of the Internal Audit Service within the Council.

The table at 4.2 of the Appendix detailed the audit reviews that had been carried out in the financial year 2025-26, along with the level of assurance provided. 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 into account the internal audit work performed during 2025-26 and other sources of assurance

It was the Chief Internal Auditor’s conclusion 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 means 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 assisted 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.  It was noted that, in reaching this conclusion, assurance can never be absolute; cannot eliminate all risk and cannot provide absolute assurance of effectiveness.

The Committee asked a number of questions, particularly in relation to AI and information security / accuracy and risk management.  It was agreed that the most up to date reports on Cyber Security and Risk Management would be circulated to Committee members.

RESOLVED that Audit and Procurement Committee:

1.  Notes the Internal Audit Annual Report 2025-26 (attached at appendix one).

2.  Notes the summary findings of key audit reviews (attached at appendix two) that have not already been reported to Audit and Procurement Committee during the municipal year 2025-26 and which are relevant to the Internal Audit conclusion.

3.  Approves the performance objectives for the Internal Audit Service for 2026-27.

4.  Approves the Internal Audit Charter as included in the Annual report.