Agenda item

The Chief Internal Auditor presented the report to the Committee and explained that this was a report that was a regular item on the agenda intended to provide the appropriate level of assurance. In September 2020, Committee Members approved the revised audit plan for the remaining 6 months of the financial year starting in October.

The Chief Internal Auditor stated that he wanted to make Members aware of the work that the Internal Audit team had been involved with in the first 6 months of the year due to the impact of Covid 19, as it was not possible to complete much of the audit work on the original audit plan for 2020/21, due to many service areas having more pressing priorities. The team was involved with extensive counter fraud work in relation to the business grants issued by Welsh Government along with supporting business grants administration and Track Trace & Prevent (TTP).  Some audit opinion related work was undertaken where possible and this was shown in the Appendix.

The Chief Internal Auditor referred the Committee to Appendix A which contained information on the proportion of the original audit plan that had been achieved.

Key Points:

·       Based on the original plan 24% of planned audits had been completed.

·       There was a quarter-by-quarter comparison and a year on year comparison. Progress as at Quarter 2 had been affected significantly by Covid 19 in 2020/2021.

·       Appendix B identified the individual Audit jobs undertaken and the corresponding opinions issued as a result of the audit work: the table showed 1 Good Opinion, 3 Reasonable, 1 Unsatisfactory and no Unsound opinions during the first 6 months of the year.

·       The non-opinion work, which included providing financial advice to all service areas of the organisation, completion of the Annual Governance Statement and extensive counter fraud work as a result of Covid 19 business grants.

Questions:

·       Councillor Whitcutt referred to paragraphs 9 and 10 on page 48 of the report, which referred to the pandemic and the audit team being unable to complete all planned work and had to change the way they operated. They referred to paragraph 14, which dealt with the knock on effect and paragraph 27 where it stated Heads of Service and service managers were responsible for addressing any weaknesses identified and demonstrated this by incorporating their agreed actions into the audit reports. Councillor Whitcutt questioned as to whether there was an effect on the Committee’s monitoring function and does it affect the ability of service managers to review operational issues with reference to Audit.

The Chief Internal Auditor stated that this would have an impact on the Audit Committee as Internal Audit could only complete a certain number of audits in a year, given the resources, which had been reported in the plan. The Chief Internal Auditor stated that it was his role to also provide assurance to the Committee in terms of control environment, risk management and governance across the whole organisation. A revised plan was created on that basis to give as much coverage as possible.

The Chief Internal Auditor also reiterated that there were 75 opinion related jobs in the original plan and in the revised plan, there were 50 audit opinions related jobs. It was explained that there were no site visits allowed at present so no school audits could be undertaken. It was also difficult at present to get information from service areas who had paper related records.

Discussions have been on going with service managers regarding draft audit reports and the finalisation of audit reports. Most have these have subsequently been agreed with managers agreeing to be implement the agreed management actions within the audit reports

The Chief Internal Auditor also commented that the issue might be timeliness as there might be a lag where service managers found it difficult to implement the action plan. The action plan always contains who was responsible for implementing the action plan and the timescale. If there was an unfavourable audit opinion, the audit team could go back and revisit that in 6-12 months. If the opinion was favourable, then the audit team would generally not go back for 5-6 years to revisit the audit area for a number of years.

·       Councillor Hourahine commented on Newport City Dogs Home and the unsatisfactory opinion and questioned as to when they would be reaudited.

The Chief Internal Auditor confirmed that the report was being finalised and then the audit team would re-visit that area within 6-12 months in order to complete the follow up audit. That particular report was being finalised and the follow up review would be in the audit plan for 2021/22 to give management ample time to implement the action plan.

·       Councillor Hourahine asked how an audit was carried out and whether there was sensitivity ratings.

The Chief Internal Auditor explained that in relation to the opinions, which were Good, Reasonable, Unsatisfactory, Unsound. There was a colour code for the categorisation of weaknesses identified so if there was a critical / significant weakness the audit team could then prioritise the issues identified. Within the action plan in the individual report there were red, amber and yellow weaknesses. There was no particular sensitivity used.

·       Councillor Thomas commented on point 12 of the report where the Audit Team took on extra work and commended the Audit team on their hard work. Councillor Thomas also questioned how many special investigations had been carried out. 

The Chief Internal Auditor confirmed that there had been a handful of these, mainly completing ones that had been ongoing pre March 2020.  Issues identified through the counter fraud work on the business grants would be classed as one job; there had been less special investigations carried out than in previous years. 

·       Councillor White commented on paragraph 11 where a lot of the Audit team had been seconded and enquired on whether there was a now a full team back out working.

The Chief Internal Auditor confirmed that the secondments had ended and that the team was engaging with an external provider to assist in catching up on the backlog. 

Agreed:

That the report be noted and approved by the Council’s Audit Committee.