Agenda item

The Committee Members were requested to view the Internal Audit Annual Report 2018/2019 which noted all the work completed in the year. The report gave an overall opinion on the effectiveness of the Council’s internal controls during 2018/19 which was Reasonable: Adequately controlled although risks identified which may compromise the overall control environment; reasonable level of assurance.

The report also referred to the performance of the team and how well the audit plan had been achieved. 

Main Points to Note:

• The Chief Internal Auditor brought the Committee’s attention to ‘The Overall Audit Opinion’ which was on page 45; paragraph 6 which stated that the level of assurance placed on internal controls was Reasonable.
• The total number of audit opinions increased to 48.  The opinions were based on a balance of strength and weaknesses.
• 10 audit opinions were reported to be Unsatisfactory which had been discussed previously.
• The team also carried out ‘special investigation reviews’ which were confidential and time intensive.
• 27 Reasonable Audit Opinions were issued.
• Across all service areas, 90% of actions agreed by management had been implemented. However insufficient resources within the team to follow up all audit reports issued existed, therefore the Audit Team had to rely on the integrity of managers to provide feedback on any actions implemented.
• National Fraud Initiative (NFI) - The Internal Audit Team was responsible for coordinating the NFI process for the Council. This was a biennial data matching exercise to detect and prevent fraud. A total of over 5,000 matches were returned where overpayments were identified and recovered as previously discussed. 
• The performance of the Audit team was shown in Appendix A where the opinions were listed on the right hand side. Appendix B provided a definition of ‘Opinions Used’. Appendix C showed non opinion audit work 2018/2019 completed. Appendix D showed a graph depicting the Implementation of Agreed Management Actions.
• Appendix E showed that Draft reports were issued within 11 days and finalised within 3 days.

Questions:

A Member asked whether in relation to the NFI there was a possibility of payments being made to a fictitious company and how this was prevented. It was confirmed that matches were done by creditors and payroll where addresses were matched with bank accounts and procurement fraud was identified in this way. 

The Chair commented on paragraphs 43- 46 regarding the sufficiency of internal audit resources and questioned whether there was a sufficient level of staff and whether more prioritisation in the team was needed. The Chief Internal Auditor confirmed that reports required a long time to compile but it was agreed that prioritisation was required but that having more resources etc provided more assurances. This would also be revisited in the next agenda item.

The Chair commented on paragraph 52- 53 regarding how there were no specific options and that paragraph 54 could be deleted.

There was a comment made on Council tax and whether there was a fall off of council tax being collected. The Chief Internal Auditor stated that it was a successful process but that the changes that came in on the 1 April 2019 provided challenges and that Welsh Government were looking at other options on collecting council tax and the options were very interesting and these were being trialled.

The Finance team were commended on their work.

Agreed:

The Internal Audit Annual Report was formally noted and endorsed.