Agenda item

Internal Audit Plan - Progress (Quarter 3)

Minutes:

The Chief Internal Auditor highlighted the attached report, which identified that the Internal Audit Section was making progress against the 2022/23 audit plan and internal performance indicators.

 

The Internal Audit Plan was based on 1073 audit days. The team currently operated with an establishment of 7.5 Full Time Equivalent (FTE)  audit staff. At the start of the year there were 5.5 audit staff in the team; additional support was being provided by an external internal audit provider.  As a result of significant budget pressures facing the Council, a budget saving proposal was put forward to help to meet the anticipated gap. This would reduce the audit team establishment by 1 FTE, which would have an impact on the number of audits being completed next year. The Head of Finance included a section on this as part of the report.

The context to the saving was the financial position anticipated by the Council, and to mitigate this, all parts of the council had to make a significant level of savings. The Council was balancing an increasing number risks across council this would impact on front line services, including Social Care and school provision;  therefore Finance had to consider a range of savings and prioritise those which would have the least impact on frontline provision.

 

Further to the update on resource, two Unsatisfactory audit opinions were being reported:

i) Purchasing Cards (Transactions) and;

ii) Passenger Transport Unit (PTU) Taxi Contracts follow up.

 

Comments of committee:

 

In relation to the reduction in staff, Dr Barry felt that it was a false economy to reduce the Audit team by one Full Time Equivalent and asked how this would impact on the Audit team. The Chair and Mr Reed also echoed the comment made by  Dr Barry. The Chair also felt that a staff cut should be made in another service area instead.  The Chair queried whether any savings could be made on the outsourced provision instead.

 

The Head of Finance confirmed that there is no base budget for external resources, it is funded from any gaps in vacancies in the core audit budget..

 

The Chair therefore asked that this proposal be reconsidered by Cabinet, as a reduction in the audit team would be counter productive and he felt there would be serious issues as a result of giving up the post. 

 

The Strategic Director, Corporate and Transformation added that an extract of the Minutes form this Committee could be fed back to Cabinet, however Cabinet could not make a decision on this as it was the Head of Finance, under delegated authority made this decision. 

 

The Strategic Director for Transformation and Corporate reminded the committee that whilst their comments could be put forward to Cabinet, this savings proposal is a delegated decision to the Head of Service under the Council’s Constitution. The Strategic Director wished to put this saving into context of the total £27M worth of savings being considered at the time of the meeting, the majority of which affected front line services.

 

In addition, the Chief Auditor gave further context, advising that a standard auditor would provide 180 operational audit days per annum and in terms of loss of an audit manager that would reduce this capacity by 60 management days and 120 operational days, which was close to10 audit opinions.  This would result in completion of fewer audits overall.

 

The Chair requested that the views of the committee be fed back to Cabinet, and that the Head of Service reconsider his decision under their delegated powers

 

Councillor Cocks did not support the Committee’s view that deletion of the 1 FTE post should be reconsidered; Cllr Cocks went on to state that whilst the role of audit officers is an essential function, if this saving was not made then the equivalent amount would have to be found in other areas within the council already affected by cut backs and in frontline services this would have a more direct impact on residents.

 

D Reed requested that the responsible officer be called in to Committee in relation to the Unsatisfactory Audit Opinion for Purchasing Cards (Transactions). The Chair and Councillor Horton also supported this request.

 

The Strategic Director, Transformation and Corporate and the Head of Finance agreed that they should attend the next committee to discuss the Purchasing Cards; they also  advised that there was an ongoing investigation, which would potentially lead to disciplinary action.

 

The Chair requested that the Chief Executive also attend the Committee, and the Strategic Director, Transformation and Corporate advised that the point of escalation would be to invite the relevant Head of Service or Director to the next meeting, to provide assurance that this matter was being addressed appropriately.

 

Resolved:

1.     That the report regarding progress on delivering the 2022/23 audit plan, be noted by the Council’s Governance and Audit Committee

2.     Feedback and comments from the Committee regarding the loss of the 1 FTE audit post are shared with the Head of Finance and Cabinet.

3.     Purchasing Cards: that the Strategic Director, Transformation and Corporate and the Head of Finance be invited to the next meeting. 

 

Supporting documents: