Agenda item

Report by the Chief Internal Auditor.

32.1     The Chief Internal Auditor introduced report and explained the background to the items covered by recommendation 3 of the report. In particular, the need to carry out an external assessment of the Internal Audit function under the Public Sector Internal Audit Standards (PSIAS), which it is proposed to be carried out by South West Audit Partnership (SWAP). The Committee is also being asked to approve:

·          The updated performance indicators (appendix 3);

·          A revised Internal Audit Charter, which is very similar to the existing Charter but has been updated for use across the Orbis partnership (appendix 4); and

·          An Orbis Internal Audit reporting and escalation policy which formalises existing processes (appendix 5).

32.2     The Committee asked if the South West Audit Partnership (SWAP) were able to provide an independent approach to the external assessment, as they are a local authority organisation. The Chief Internal Auditor explained that the selection process had carefully considered how best to undertake the external assessment and the preferred approach was to carry out a self-assessment with independent validation by SWAP. SWAP has experience of carrying out such assessments and complies with professional standards.

32.3     The Committee discussed the outcomes of the internal audits undertaken during quarter 2 (appendix 1) and made the following comments.

Procurement Cards (P-Cards)

32.4     The Committee commented that the number of cases of inappropriate use appeared quite low and asked whether the Council get better value from this expenditure. The Chief Internal Auditor explained that it was not possible to review all the transactions due to the large volume, but a representative sample was examined. Overall, the scale of potential inappropriate activity was low given the value of transactions. Some of the transactions were referred back to the departments concerned, to check that the transaction or use of the card was reasonable. Departments can then refer any inappropriate transactions back to the Internal Audit team for investigation. 

32.5     The Chief Operating Officer outlined that an analysis of the value for money of expenditure on P-Cards had been undertaken as part of a previous audit, and a procurement analysis of low value ‘tail end’ expenditure had been carried out. The savings and costs avoided are monitored through a procurement annual report to the Corporate Management Team and performance indicator monitoring.

Bankline

32.6     The Committee asked if the business continuity arrangements and improvements in control had been implemented. The Senior Audit Manager responded that at the time of writing a follow up to the audit had not been undertaken, but there were no high risk recommendations that required action. The Chief Internal Auditor outlined that the Internal Audit Team would not usually immediately follow up audits that achieved a ‘substantial’ or ‘reasonable’ assurance opinion (where there are medium of low risk recommendations), but will check to see if the agreed actions arising from the audit have been implemented and report back to Committee.

Follow up of audit recommendations

32.7     The Committee asked for clarification on which audit recommendations will be followed up and reported back to the Committee (e.g. actions recommended for the LCS/Controcc and the Social Care audits).

32.8     The Chief Internal Auditor clarified that any audits below ‘minimal’ assurance will have a follow up audit which is reported back to the Committee. All progress on high risk recommendations is also reported to the Committee. There is some judgement exercised in what other items from audits are reported back to the Committee. This will depend on the risk and profile of the service being audited, as well as how responsive management is to implementing changes.

Internal Audit Performance Indicators

32.9     The Committee noted that Audit Plan performance indicator was rated as amber. The Senior Audit Manager responded that the team had carried out additional audits and investigations which have had an impact on performance against the Internal Audit Plan during the quarter. He was confident that the Internal Audit Team will achieve the target of 90% completion of audits by the end of the year.

32.10   The Committee RESOLVED to:

1) Note the report;

2) Request follow up information on the actions from the Bankline audit; and

3) Approve the:

·          intention to use the South West Audit Partnership (SWAP) to complete an external assessment of Orbis Internal Audit in accordance with the requirements of the Public Sector Internal Audit Standards (PSIAS) – Appendix 2;

·          revised Orbis Internal Audit Key Performance Indicators - Appendix 3;

·          revised Orbis Internal Audit Charter - Appendix 4;

·          Orbis Internal Audit Reporting and Escalation Policy - Appendix 5.