Agenda item

The Newport City Council Internal Audit was an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helped an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

This report was prepared in accordance with the Public Sector Internal Audit Standards. It gave an overall opinion on the adequacy and effectiveness of the City Council’s internal controls during 2022/23, which was Reasonable - Adequately controlled although risks were identified which may compromise the overall control environment; improvements required; reasonable level of assurance.

For 2022/23 the overall opinion was based on the approved Revised Internal Audit plan 2022/23 (July 2022). The full year plan was based on delivering 1073 audit days. Reliance on previous years’ audit work was also taken into consideration in arriving at this year’s opinion in that there have been no significant systems or staff changes.

The second part of the report related to the performance of the Internal Audit Section and how well its key targets in the year were met. 77% of the approved audit plan was completed for the year against a target of 80%.

Committee Member Comments:

§  Dr Barry mentioned that it was a good report with good overall performance considering staff stretched on resources.  The Acting Chief Internal Auditor advised that any issues would be escalated to the Head of Service if necessary as well as the operational managers. Audit ensure that their Terms of Reference were circulated in advance to get everyone on board. Sometimes there were difficulties but there were mechanisms in place to overcome this if necessary.  The Strategic Director for Transformation and Corporate agreed with Dr Barry’s further comments that this was a concern and would hinder audit carrying out their work.  The Chair suggested that if there were issues with escalating audits that it should be referred to the following committee meeting.

Dr Barry was concerned that audit were not able to access a certain level staff and documentation, 9% of the reports actions were not implemented and that due to resource issues, there was no assurance that actions were carried out. This was noted by the Head of Finance.

Dr Barry did not recall the any information on the National Fraud Initiative (NFI) coming to this committee and wondered whether it should. The Acting Chief Internal Auditor advised that audit had not provided any detailed report regarding the NFI.  The Head of Finance confirmed this however would be brought to committee following the next exercise; this ran every two years.  The Chair added that Audit Wales were undertaking a review of the authority and the NFI and a report would be available within the next six to eight weeks.

§  D Reed asked was there any reason why committee should not be calling in an unsound report.  The Acting Chief Internal Auditor advised that the report had been finalised, with a comprehensive action plan in place.  Audit had dealings with the Strategic Director and service managers who had taken this seriously and it was raised at the Executive Board.  In the past it was standard practice to call in the second unfavourable audit opinion but this was committees decision. 

D Reed also referred to page 70, paragraph 25, were 146 delegates received training during the year and that HR were going to get involved in training.  Was there any context in the numbers, ie how many people overall should take the training and what would be put in place to ensure training was completed.  The Strategic Director for Transformation and Corporate explained that HR was going through process of redefining mandatory training for staff.  There was a new system in place called Meta Compliance to push training out to staff, this would hold a record of completed training which would provide detailed information for future reports.  Training that was considered mandatory changed, particularly over last few years with pandemic.  Training was carried out through the NHS portal, but this was unreliable.  Training was not undertaken by HR but HR’s element was understanding who undertook the training.

§  The Chair asked the Strategic Director who knew how many individuals had to do undertaken mandatory training and who did not complete the training and what was the sanction.  The Strategic Director advised that it was complex and there was approximately 5,700 staff, of which 3.5K worked and they had their own set of mandatory training. There was approximately 700 people working in Social Services who also had their own set of mandatory training and recorded through WCCAS.  Corporately, there was a series of mandatory training modules which would now be pushed out via Meta Compliance. The complex part was understanding of the job roles and the mandatory training associated with the job roles.  Job roles and descriptions were also being reviewed, as there were 850 different job descriptions.  Therefore, it was quite complex but there was a solution being put in place.

D Reed referred to South West Audit Partnership were supporting audit with their work and asked what was the premium paid for that service over and above the expected job scale rate.  The Acting Chief Internal Auditor advised that the external resources costed around 50% more in a substantive role.

D Reed appreciated that audit was under resourced, and aske were alternative arrangements being considered.  The Head of Finance agreed that resources were an issue as well as in other areas across the council, which was similar to other councils in Wales.  There were resilience issues and different operational models were being looked into such as the regional service and had made initial informal contact and should receive communication towards the end of summer. The filling of the more junior vacancies were being looked into in the meantime.

§  Chair referred to Appendix C where jobs were not completed by year end, there were three high risks.  Why were they not dealt with ahead of medium risk matters and how many on the list had been carried over from the previous years.  The Acting Chief Internal Auditor advised that the three high risks, the corporate governance follow up at year end was delayed.  Car Parks were in progress at year end but did not get to drafting report stage but this report would be in draft shortly.  Regarding Housing Needs, audit was asked to delay because of the new Head of Service, which started in October, but it was down to resources in the team.  It was therefore started but was last minute and was currently a work in progress.  There was three medium risk schools planned but the audit team was refused entry as it was during the teacher’s strike.  This was relayed back to the Head of Service.  There were reviews currently in progress on the audit plan. 

Chair remarked that if there were issues within the schools, it was important contact Head Teachers to visit schools to undertake the audit. The Chair asked the Strategic Director was there a statutory basis to enter schools.  The Strategic Director advised that if the Chair wanted to add this as an action, he and The Acting Chief Internal Auditor would contact the Chief Education Officer to discuss this to see what could be done, this was however an ongoing issue.

§   D Reed asked as a committee, if there was an unsound report regarding Safeguarding – Children’s Money, should they be called in.  The Chair understood that a final report was issued and agreed that they should be called.  This was the first unsound report received by the Committee but they were unsatisfactory in the past. Therefore the Chair considered that they should be called in to committee.

§  D Barry agreed with the Chair’s comments and asked was there any reason why the committee could not see the full report for context. Chair suggested that this should be dealt with in a private session. The Strategic Director advised that it was one way forward but it would need to be discussed with the Monitoring Officer as a Part 2 report.  The Committee may wish to discuss the themes around the report.

§  The Chair remarked that there were capacity issues and asked the Head of Finance that if the council was failing in discharging duties, would it be worthwhile providing a short report to this committee to get reassurance that losing staff would not have an impact, for the next budget round. The Chair did declare an interest as a member of the regional consortium. If staff were used in the consortium, would this be the way forward.  The Head of Services advised that it was the vacancies that were a problem and that was where the potential collaboration would have benefits and would bring resilience, experience and skillset.  The Head of Finance advised that the consortium had been approached and would hear by the end of summer as previously mentioned.  Generally however, it was around the level of assurance but was not an absolute thing.  The Regional Body would also help.

Resolved:

§  The Governance and Audit Committee noted and endorsed the Annual Internal Audit Report 2022/23 and overall Audit Opinion. 

§  The Strategic Director for Social Services be Called in regarding the Unsound Audit Opinion for Children Services Safeguarding Children Money

The Monitoring Officer be contacted to see if this should be discussed as Part 2 item.

§  Report taken to GAC regarding staffing / auditing resources and capacity in the Audit Team in relation to the regional consortium at a future meeting.