Agenda item

Report attached.

Mark Beard, Head of Audit & Investigations provided a report to inform and update the Committee on the Annual Internal Audit Report and Audit Opinion for 2021/22 and to give details on the performance of the Internal Audit Team and final outturn position for 2021/22.

The production of an Annual Internal Audit Report & 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 & 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 Annual Internal Audit Report & Audit Opinion was a supporting piece of evidence and did not replace or prevent the Council’s requirement to produce the Annual Governance Statement.

A copy of the Annual Internal Audit Report & Audit Opinion 2021/22 was provided as an appendix to the report and included the following sections:

• Executive Summary;
• Audit Opinion;
• Purpose and Boundaries;
• Review of Internal Control;
• Significant Issues Arising;
• Audit Performance; and
• Analysis of Audit Time – 2021/22.

The key information arising from the report was as follows:

• The Head of Audit & Investigations was able to issue a positive opinion on the systems of Internal Control based on the work carried out in 2021/22.  The opinion score had very slightly dropped from 1.36 in 2020/21 to 1.40 in 2021/22.  The number of recommendations had increased from 8 in 2020/21 to 13 in 2021/22.

• Internal Audit had not identified any issues in 2021/22 during the course of their audit work that would have had a material effect on the Council’s Financial Statements.

• Internal Audit had achieved audit plan coverage of 97.21% in 2021/22.  This was 0.79% below the annual target of 98%.

• Production and publication of the 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.

Mr Beard highlighted trends from the information contained within the Tables set out in the report.

The Chair asked about Project Management in Table 6 (Block 2 on p.20) and whether this was expected to overrun further.  Mr Beard indicated that the work had been paused because key individuals were not available.  Some areas had had to be covered again with new staff and in some areas the remit had been extended.

The Chair asked about the 8 audit engagements that had not been completed mentioned at a Paragraph 4.4 and when these would be ready.  Mr Beard reported that detail should start to come through at the next meeting and that Project Management was, in fact, already mentioned in the Appendix 1 of the report at Agenda Item 5.  There were some 16 engagements currently being progressed.

Councillor Dawson asked about staff numbers within the internal audit team.  Mr Beard responded that there were 2 staff plus himself.  He also reported that a significant proportion of his time was spent on wider Council responsibilities, not audit, including anti-money laundering, safety, anti-fraud & corruption and data protection roles.

Councillor Carole Haythornthwaite enquired about the Ad Hoc Work and Investigations in Table 6 (Block 3 on p.20), particularly with regard to Discretionary Business Support Grants and Financial Controls work.  Mr Beard commented that both of these engagements had been deferred.  The latter was a niche piece of work requested by the Deputy Chief Executive which had been deferred due to a change of personnel, namely the Head of Accountancy.  Regarding Discretionary Business Support Grants, a significant amount of time had been spent by the Audit Team discussing this with the Revenues Manager, but the nature of the engagement had been to dip in and out and to provide on-going monitoring.  Therefore, the time spent had been recorded elsewhere under Audit Advice.

The Chair commented that he was pleased to see that 97.21% of the Audit Plan work had been achieved, against a target of 98%.  Mr Beard added that Hyndburn was one of only a small number of Lancashire authorities to get close to its target.  However, it was understood that some of the larger authorities, unitary authorities and county council had seconded staff to Track and Trace during the pandemic.

Resolved                                    -    That the Committee notes the content of this report for informational purposes