Agenda item

Report by the Chief Internal Auditor

6.1       The Committee considered a report by the Chief Internal Auditor, which presented the overall annual opinion of reasonable assurance, and set out a summary of the Internal Audit Team’s work during Quarters 3 and 4 of 2019/20.  The Audit Manager set out the work undertaken with management in respect of the two pension-related audits, and the reporting done to the Pension Board and Pension Committee. Follow up reviews will also be undertaken. The Audit Manager outlined that 90% of the Audit Plan was completed on schedule and the remainder will be worked through during quarter 1 of 2020/21. 

6.2       The Committee asked questions about:

• The Pension Administration audit and the techniques used to produce the assessment, and the risks of over- or under-payment of Fund members
• The reporting of the Pension audits to the Pension Board and Pension Committee
• Atrium, and whether it includes the County’s highways
• Social Value in procurement and its promotion to officers
• Managing Back Office Systems and SAP replacement, and whether it is done in partnership within Orbis
• Business Continuity, and whether it had coped with the pandemic
• Deferred items from 2019/20
• Adult Social Care commissioning and where the Council stands in comparison with other authorities.

6.3       Officers and Members responded:

• The Audit Team historically used an approach approved by the Pensions Regulator, but became aware of additional risks.  A new Internal Audit Strategy for the Pension Fund was agreed last year to reflect the new risks.  The Team also had access to the Pensions administration system which allowed greater interrogation of data.  Greater time was spent on the Pension Fund audit work than in previous years, and will continue with an increased number of audit days allocated to the work.  A follow up audit will be conducted and reported to the Audit Committee.  The Chief Internal Auditor confirmed that the Team’s work was focussed on the systems and processes in place, rather than identifying individual cases of over- or under-payment, but there was no indication that members of the Pension Fund did not get the payments they were entitled to. 
• Councillor Fox, as Chair of the Pension Committee, confirmed that the principal issues of concern were to do with the governance and use of data within the Pensions Administration team.  Some concerns can be addressed with additional software.  Officers will strengthen the controls, with substantial work being done by the Chief Operating Officer and Chief Finance Officer to increase resources for the pension administration function of the Fund..  Councillor Fox also highlighted the work of Data Improvement Project  that had been launched, prior to the audits commencing, which addresses some of these issues.
• Atrium is the Council’s property asset management system, and does not include the highways assets.  However, the Highways Contract re-procurement project is included in the 2020/21 Audit Plan.
• The Council won a national award for its approach to social value in procurement, and is a strong performer in the sector.  A key issue is following up with providers that they have achieved the targets set out in the contract.  A social value platform has been developed, as has greater integration with the voluntary and community sector. 
• The key determinant of success for the Modernising Back Office Systems (MBOS) project will be that the requirements of East Sussex County Council (ESCC) are met.  There needs to be a strong engagement process in how to set the system up to meet ESCC’s needs.  This is not supportive of multiple organisations moving at different paces, although there may be opportunities for integration in the future. The procurement will be a sovereign led issue, to meet the needs and strategic priorities of each authority. Within Orbis consistencies and efficiencies are identified as part of the operating model in areas such as Accounts Payable and Receivable and Recruitment, but these areas are not the driver for having an Orbis-wide system.  The same Procurement and IT teams are supporting both ESCC and Surrey County Council (SCC), so there is a commonality of approach to the procurement.  The key issue is that the system supports the Council’s main service delivery needs and their subsidiary systems.  Should each authority choose to procure the same system then opportunities to streamline the administration will be examined, although efficiencies may be limited given the “software as a service” nature of the procurement. The same Audit teams are supporting the projects in Surrey and East Sussex, to maximise the opportunities to share expertise and common issues identified.
• Business Services has held weekly Business Continuity Group meetings, supporting the transformation to remote working, with the infrastructure in place throughout.  Performance has improved in areas, with automation of some processes, such Accounts Payable processing 95% of payments within 30 days, and an average payment period of 17 days.
• In Quarter 1 2020/21 the suspended audits were started, so the remainder of the work will be completed shortly.
• The relative performance figures on Adult Social Care (ASC) commissioning will be provided to the Committee.

6.4       The Committee RESOLVED to (1) thank the Internal Audit Team for their work during the pandemic;

(2) note the Internal Audit Service’s opinion on the Council’s control environment;

(3) confirm that there are no significant control issues that should be included in the Council’s annual governance statement for 2019/20; and

(4) confirm that the Council’s system for internal audit has proved effective during 2019/20.