The report of the Audit Service Manager is attached marked 10. 

Contact:  Ceri Pilawski (01743) 257739

14.1The Committee received the report of the Audit Service Manager - copy attached to the signed Minutes - which provided Members with details of the work undertaken by Internal Audit for the year ended 31 March 2016.  It also reported on delivery against the approved Annual Audit Plan and included the Audit Service Manager’s opinion on the Council’s internal controls as required by the Public Sector Internal Audit Standards (PSIAS).

14.2The Audit Service Manager reported that the revised plan had been delivered in excess of the 90% delivery target.  2,050 days had been provided in the original plan, this figure had been revised to 1,932 days to reflect changing risks and resources.  In total, 103 final reports were issued in 2015/16.  Fifty one good or reasonable assurances were made (49%), which was a reduction of 15% on the previous year.  This was offset by a 15% increase in limited (43) and unsatisfactory (9) opinions which accounted for 51% in total compared to 36% last year.

14.3The Audit Service Manager explained that lower level assurances had been awarded in mainly two areas, Children’s Services (mainly schools) and Chief Executives (ICT infrastructure).  The lower levels of assurance within the ICT Infrastructure were still a cause for concern as there had been little or no change, which had resulted in the Audit Service Manager qualifying her overall opinion.  The Chairman requested a report to the next meeting of the Audit Committee to ensure the Direction of Travel was more focused and driven and that management were prioritising implementation plans to address the matters raised.  The Section 151 Officer agreed to raise Members ‘concerns at a future Directors meeting.

14.4The Audit Service Manager drew attention to the assurance levels given for the eleven Fundamental Systems set out at Appendix A, Table 3.  All fundamental systems showed a static or improved direction of travel with all areas providing reasonable or good assurance, except for Sales Ledger which was showing a lower level of assurance, mainly due to issues around debt collection rates.  A further paper was requested in relation to the lower level of assurance given for the Sales Ledger. 

14.51,568 recommendations had been made in the 103 final audit reports issued with the fundamental recommendations falling from six to four.  Forty nine recommendations (3.2%) had been rejected by management (36 by one School). Where the reasons for rejection were not accepted and it was considered that the identified risks were not being managed or mitigated, this had been highlighted to the managers concerned.  No fundamental recommendations had been rejected.

14.6Turning to the Direction of Travel in relation to the control environment, the Audit Service Manager reported a weakening control environment over the last four years with over a quarter of the lower level assurances relating to IT systems/processes which further supported qualification of the Audit Service Managers’ opinion.

14.7 RESOLVED: 

A.      That performanceagainst the AuditPlan for the year ended 31 March 2016 be noted.

B.      To note that Internal Audit had evaluated the effectiveness of the Council’s risk management, control and governance processes, taking into account public sector internal auditing standards or guidance, the results of which could be used when considering the internal control environment and theAnnual GovernanceStatementfor2015/16.

C.      To note theAudit Service Manager’squalified year end opiniononthe Council’s internal control environmentfor2015/16on the basisofthe work undertakenand managementresponses received.