Report by the Chief Internal Auditor.
42.1 The Audit Manager introduced the report. The Internal Audit Strategy and Annual Plan outlines the audit work which is planned to take place across organisation and is required for the Chief Internal Auditor to be able to give an end of year opinion. The Plan outlines the consultations that have taken place in formulating the plan, which includes work with the Audit Committee. It also gives details of the number of audit days to deliver the Plan, which is similar but slightly reduced in comparison to last year. The details of the audits planned for the forthcoming financial year are contained in annex A of appendix 1 of the report.
42.2 The Committee asked whether 1,400 audit days is sufficient, how this figure is derived, and for an explanation of the slight reduction in audit days. The Chief Internal Auditor responded that 1,400 audit days is considered sufficient to deliver the Audit Plan and be able to give an opinion at the end of the year. The calculation of the number of days needed is based on professional judgement and an assessment of risk, based on the Council’s risk profile.
42.3 The reduction in audit days last year was a result of the savings made by the Orbis Partnership, which has been partly offset by greater efficiencies and increased resilience. Although the service has been reduced, it does not affect the Chief Internal Auditor’s ability to give an opinion and he will request more resource if he considers it is needed.
42.4 The Committee enquired whether it would be possible to make additional savings if the number of local authorities the Internal Audit Service covers is increased. The Chief Internal Auditor outlined that the Internal Audit Strategy and Plan represents the East Sussex County Council (ESCC) portion of service. The Orbis Internal Audit Service has taken on internal audit work for Horsham District Council, which has enabled the Service to reduce overheads and return more audit days. The Service is keen to grow the number of clients, but this has to be done carefully to ensure it can still meet the needs of the three Orbis Partners.
42.5 The Committee discussed the risk based approach, which focusses internal audit work on risks to the Council. The Chief Internal Auditor explained the risk based approach takes into account where internal audit resources can contribute value to the management of the Council. Audit work also takes into account other sources of assurance available to the organisation (e.g. Ofsted inspections) and where Internal Audit has done previous work in the organisation. All audits have regard to management’s arrangements for:
• Achievement of the organisation’s objectives;
• Reliability and integrity of financial and operational information;
• Effectiveness and efficiency of operations and programmes;
• Safeguarding of assets; and
• Compliance with laws, regulations, policies, procedures and contracts.
42.6 There is flexibility in the Audit Plan to allow for areas of risk and audit work to be added during the delivery of the Plan. The Chief Internal Auditor outlined that the Team recognise that new risks will emerge during the year and have set aside audit days for these new risks as they arise. The identification of new and emerging risks is undertaken through the Corporate Management Team and the Audit Committee.
42.7 The Committee discussed the list of planned audits and asked if the audit of the Declarations of Interest system is a result of the audits carried out during the current year. The Audit Manager responded that the reason for the inclusion of this audit in the Plan is as a result of the investigations that have been carried out during the year, and the cultural compliance audit that was undertaken. In addition, the system has not been reviewed since the new automated process was introduced.
42.8 Councillor Barnes commented that he considered design and build contracts should be included in the planned work, as there has been some problems especially with the design element and monitoring of the projects. The Audit Manager responded that planned audit work will examine the budget management and delivery of projects.
42.9 The Committee RESOLVED to endorse the Internal Audit Strategy and Annual Plan 2019/20.