Annual Internal Audit Report and Audit Opinion
To inform and update Audit Committee on the Annual Internal Audit Report and Audit Opinion for 2019/20 and to give details on the performance of the Internal Audit Team and final outturn position for 2019/20.
Recommended - That the report be noted for informational purposes.
The Committee considered a report of Mark Beard, Head of Audit and Investigations, on the Annual Internal Audit Report and Audit Opinion for 2019/20. The report also provided details on the performance of the Internal Audit Team and final outturn position for 2019/20. Mr Beard was present at the meeting and provided a summary of the main findings of the report.
The production of an Annual Internal Audit Report and Audit Opinion was a requirement of the Public Sector Internal Audit Standards (PSIAS), which were jointly published by the Chartered Institute of Internal Auditors (CIIA) and the Chartered Institute of Public Finance and Accountancy (CIPFA). The Annual Internal Audit Report and Audit Opinion was also an aid to those charged with governance in their consideration of the Annual Governance Statement in support of the Council’s Financial Statements. The report also enabled those charged with governance to gain an independent viewpoint on the Council’s Control Environment.
The full Annual Internal Audit Report and Audit Opinion 2019/20 was provided with the report and identified the following key issues:-
- The Head of Audit and Investigations was able to issue a positive opinion on the systems of Internal Control based on the work carried out in 2019/20. However, the opinion score had noticeably dropped from 1.50 in 2018/19 to 1.85 in 2019/20.
- Internal Audit had not identified any issues in 2019/20 during the course of their audit work that would have a material effect on the Council’s Financial Statements.
- Internal Audit had achieved audit plan coverage of 93.35% in 2019/20. This was 4.65% below the annual target of 98%. A contributory factor in this was time lost through sickness, purchase of additional leave and both special and compassionate leave being taken within the year. In addition, a total of 107.22 days had also been spent on 12 investigations.
- Production and publication of the substantive report was a requirement of the Public Sector Internal Audit Standards. The report satisfied the requirements for those charged with governance and formed a supplementary piece of evidence to the Annual Governance Statement.
The Audit Opinion for 2019/20 was one of substantial assurance. The work undertaken showed there was a generally sound system of internal control designed to meet the service objectives, and controls were generally being applied consistently. However some weaknesses in the design and / or inconsistent application of controls had put the achievement of particular objectives at risk.
The statement above was intended to provide reasonable assurance. There was an on-going process for identifying, evaluating and managing key risks. Those risks were reflected in the Internal Audit Plan and were subject to their own reporting process during the course of the year which sat outside the Internal Audit role.
Those charged with Governance were reminded that no system of control could provide absolute assurance against material misstatement or loss, nor could Internal Audit give that assurance.
The main report also included detailed information on the following matters:-
- Purpose and boundaries;
- Review of internal control;
- Significant Issues arising in 2019/20;
- Audit Performance; and
- Analysis of Audit activity during 2019/20.
Councillor Michael Miller enquired about the additional high risk areas having been reviewed, but not included in the audit plan, as referred to in paragraph 4.4 of the substantive report, and queried the impact on those planned audits which had needed to be dropped as a consequence, such as debt recovery arrangements. Mr Beard responded that debt collection had been the subject of numerous earlier audit work. Table 6 of the report showed planned day work against actual days work undertaken. The Committee would consider at its March meeting whether any of the delayed/deferred items would roll forward into the following year’s Audit Plan. A number of the delayed items from 2019/20, were currently being worked on in 2020/21 and were identified in the report at Agenda Item 5.
Councillor Tim O’Kane referred to the additional work of 10.4 days regarding Christmas Lights (p.61 of the Agenda) and noted that Cabinet had recently requested the improvement of lights across the whole Borough. Mr Beard responded that that the work recorded in the report was in relation to a request by Management Team and the Facilities Team to look into contract and budgetary processes for the purchase, erection and removal of any lights. The work did not look into the details of the individual displays to be provided.
Resolved - That the Committee notes the content of the Annual Internal Audit Report and Audit Opinion for 2019/20.