Agenda item

This report informs Members of the Audit & Counter Fraud work completed during 2019-20 and presents the opinion of the Head of Audit and Counter Fraud Shared Service, as Chief Audit Executive, on the Council’s internal control environment. 

Discussion

The Committee considered the Audit and Counter Fraud Annual Report.This outlined the performance of the service against the annual work plan for 2019/20 and brought together information presented in previous updates during the year. The opinion of the Chief Audit Executive was that they were satisfied that adequate and effective audit controls were in place and that where weaknesses had been identified, recommendations for improvement had been accepted by management with there being a commitment to implement the recommendations.

The resources available to the service stated in the report were based upon a projection at the start of 2019/20. There were a projected 1249 days available for audit and counter fraud work with the number of available days having been impacted by unexpected in year vacancies and Covid-19. 1216 days of audit work had been delivered by 31 March 2020, with 1046 days having been spent on productive audit and counter fraud work. Additional days had been spent on work for other service areas, with audit having been identified as a non-essential function during Medway’s emergency response to Covid. This had resulted in staff being redeployed to other Council services, with the audit function having been effectively shut down between late March and late April.

A number of audit reviews were incomplete as of 31 March 202 due to the cessation of the service. Upon recommencement of audit activity, resources were targeted to completion of outstanding actions from 2019/20 that had already been 75% or more complete. The Quality Assurance and Improvement Programme monitored performance against 24 indicators. Indicator A&CF1 showed that the total cost of the shared service was £570,652, with Medway’s share being £377,440. Meanwhile, the value of recoverable losses and savings identified by the service was £345,118. As of 31 March, 77% of recommended audit actions had been implemented.

In relation to delays of six months or more in implementing audit recommendations, it was suggested that should there be a re-occurrence in future years, relevant officers should be asked to attend the Committee to explain the issues and that the relevant Portfolio Holder should also be held to account. It was asked whether there had been a reduction in outstanding recommendations since 31 March.

The Head of Audit and Counter Fraud Shared Service said that there was a good working relationship with Gravesham Council. Audit recommendations that were over six months old were raised with the relevant service on a monthly basis in order to track progress. An update report had been compiled in June in and followed up during July. It was anticipated that some of the outstanding actions relating to Medway Commercial Group accounting and governance would no longer be required. An updated policy in relation to performance data quality was due to come into effect on 31 July 2020. The Corporate Management Team received audit reports on a quarterly basis and so were aware of progress. Directors were then responsible for holding Assistant Directors and Service Managers to account. These arrangements had been in place for a year and were considered to have made a difference with the number of outstanding audit actions at the end of June 2020 being less than at the end of June 2019.

Concern was raised that an audit recommendation in relation to the General Data Protection Regulation (GDPR) had not been implemented. Concern was also raised that only 3 of 13 recommendations relating to the Children and Adults Imprest account had been implemented. The Head of Audit advised that issues relating to Children’s Imprest were monitored by the Corporate Management Team with the Assistant Director within the Children’s and Adults Directorate having re-drafted a policy in relation to section 17 of the Children Act. This was due to be signed off on 30 August, with it being anticipated that audit recommendations would be implemented as a result. In relation to GDPR, the Chief Legal Officer acknowledged its importance. Engagement was taking place with services to complete the work but resource limitations and the impact of Covid-19 meant that the work could not progress as quickly as liked. Risk was being managed with the areas identified as having the highest risk being addressed first.

It was requested that a meeting be arranged for the Chairman of the Committee to meet with the Head of Audit to discuss issues relating to outstanding audit actions.

Decision

The Committee:

i)      Noted the work undertaken by the Audit and Counter Fraud Shared Service for Medway during 2019-20 in providing an effective service to the Council.

ii)    Considered and endorsed the opinion on the Council’s internal control environment provided by the Head of Audit & Counter Fraud Shared Service, that Medway Council’s framework of governance, risk management and system of internal control is adequate and effective, and contributes to the proper, economic, efficient and effective use of resources in achieving the council’s objectives.