Agenda item

This spotlight report provides the Orbis Joint Committee with an overview of the activities and achievements by the Orbis Internal Audit and Counter Fraud Service (Orbis IA)

Witnesses:

Russell Banks - Orbis Chief Internal Auditor

Key points raised in the discussion:

1.    The Orbis Chief Internal Auditorintroduced the report andsummarised that:

a)    The Internal Audit (IA) service was an integrated Orbis Partnership function led by a single Chief Internal Auditor appointed in April 2017, with a new integrated structure in effect from April 2018.

b)    IA was a statutory service in the context of the Accounts and Audit Regulations 2015, which must comply with the Public Sector Internal Audit Standards (PSIAS).

c)    At the time of establishing IA, the service was restructured which saved 25% of the then net budget. Part of rationale for integration was to keep locally based services in each of the sovereign authorities but to also maximise the opportunity to utilise shared knowledge. Three smaller sovereign based teams were created along with two specialist teams in the areas of ICT Audit and Counter Fraud which operated across the Partnership.

d)    Streamlining was undertaken during the integration, with a new electronic audit management system implemented as well as a range of efficiencies as staff across the Partnership operated in a standardised way using same systems, report templates and format of audit opinions.

e)    There were a range of external clients such as Horsham District Council since 2018, which involved a TUPE transfer of a small number of staff -reducing resource risk - and external client work made a contribution to overall service overheads.

f)     Historically, recruiting experienced IA staff was a challenge, so there was a recent shift to recruit entry level staff, invest heavily in professional training and reduce spending on agency staff. As a result, for the first time since the creation of the Partnership, the number of audit days across the three sovereign authorities would be increased without a budget increase for 2021/22.

g)    As part of the approach to core service delivery, there was regular reporting throughout the year on the delivery of work and performance of IA service through the respective senior leadership teams and audit committees. Those reports were on a quarterly basis and tracked the performance indicators, with an annual report and IA opinion, as well as self-assessments and a full independent external assessment of the service at least once every five years - the last was commissioned in 2018 in the first year and received the highest level of performance against those standards; noting confidence though self-assessments that level of professional compliance was maintained.

h)    IA reacted quickly to Covid-19, such as by suspending audit activity in frontline service delivery, as well as providing advice to services in recognising that normal systems and processes needed to be delivered in a different way.

i)      Despite the change of activity, the service remained confident that it would deliver sufficient coverage across all three sovereign authorities in order to give the annual opinion for 2021, with plans underway for 21/22 with built-in flexibility.

2.    A Joint Committee membernoted concern with the 90% target for Productivity and Process Efficiency as part of the Orbis IA performance indicators; as well as concern with the 80% target for Our Staff as part of the Orbis IA performance indicators - which was of particular concern due to the earlier comment that Orbis was in the market looking for customers, as the services were unique to a particular unit and staff would be stretched beyond the three sovereign authorities to other external clients.

a)    In response, the Orbis Chief Internal Auditor explained that the target was to deliver 90% of those audits that were detailed in the audit plan to draft report stage by 31 March - the target was not 100% as there was no absolute cut-off, some audits that were still in progress at the end of the year would spill over.

b)    In response, the Orbis Chief Internal Auditor explained that the current level of achievement for qualified staff was slightly greater than the target, at 85%. The reason that it was not 100% was due to the shift in the recruitment approach, as detailed earlier. There were also a number of staff training for the professional qualification and so were not included in that 80% target. High quality staffing and adequate provision across the three sovereign authorities was vital.

c)    The Joint Committee member emphasised his concernabout taking on new clients with unknown liabilities and without due diligence, as it strayed beyond the remit of the internal functionswithin the three sovereign authorities; noting that the Joint Committee should give it serious concern going forward.

3.    A Joint Committee member queried whether the 90% satisfied target for Quality as part of the Orbis IA performance indicators, was the internal satisfaction of the audit investigated or of the client’s response to the service provided.

a)    In response, the Orbis Chief Internal Auditor explained that the target for satisfaction related to the level reported by the client of the service that they have received from Orbis IA. A questionnaire seeking client feedback was issued for each assignment.

b)    In response to the Joint Committee member’s further comment on the correlation between the audit opinion and the level of satisfaction, the Orbis Chief Internal Auditor noted that possible relationship.

4.      A Joint Committee memberagreed with the earlier comment on the need for due diligence when taking on new clients. 

a)    In response, the Chairman recognised those reservations concerning new clients, noting caution over not stretching beyond the Partnership’s capabilities with the need to assess the viability of service provision and ensuring due diligence.

b)    A Joint Committee member noted that it was only a serious concern if due diligence was not exercised.

c)    The Chairman noted that due diligence should be demonstrated and that there should be a full impact assessment on the impact across the Partnership, as well as a need for a business case when taking on new clients.

d)    In response, the Orbis Chief Internal Auditor reassured the Joint Committee that a comprehensive due diligence exercise was undertaken for the last client taken on board, Horsham District Council. A comprehensive business case was also undertaken which set out the justification for the arrangements and financial implications, which was signed off by finance colleagues. He added that unique to IA, was that each individual in the team accounted for their time spent on each activity so that could be accurately monitored.

5.      The Chairman sought clarification on the current degree of the impact of Covid-19 in relation to the suspension of some audit activities and on resources and their prioritisation.

a)    In response, the Orbis Chief Internal Auditor clarified that Covid-19 continued to impact the IA service across a number of ways: such as access to timely information, the suspension of audit activities in Adult Social Care, other external services took longer to respond to IA enquiries due to the pandemic and staff in IA were redeployed to other services to support their delivery.

b)    The Orbis Chief Internal Auditor added that areas of priority such as the key financial systems of the sovereign authorities were being focussed on and the annual audit opinion was planned to be delivered on time. Suspended areas of work were not lost sight of and were considered in the plans for next year.

c)    In response to the Chairman’s further query on whether detailed risk assessments were carried out when looking at the priority areas, the Orbis Chief Internal Auditor confirmed that was the case and that he was working closely with the heads of audit across the country, looking at whether the priorities were consistent with others’.

RESOLVED:

The Orbis Joint Committee noted the achievements and on-going service developments for the partnership service.

Actions/further information to be provided:

The Joint Committee will monitor the issue of ensuring due diligence when taking on new clients, including full impact assessments and business cases