Internal Audit. Capital Projects. May Final Report

Transcription

1 Internal Audit

2 TABLE OF CONTENTS Executive Summary Introduction Objectives Scope Summary of Overall and Opinion...4 Audit Tests and Management & Delivery of Projects Third Party Service Providers Invoicing Capital Expenditure Appointment of Contractors / Consultants Compliance with Legislation Staff Training External Funding Health & Safety Management Cost Estimates Community Needs Level of Assurance Appendix A Classification of Audit Assurance...16 Appendix B - Key to Priorities

3 Executive Summary 1 Introduction Internal Audit has recently completed an audit of at CODA Operations Ltd. The purpose of this review was to provide senior management with an assurance about the adequacy and effectiveness of internal control. The objectives and scope for this review were agreed with the Air Traffic Services Manager prior to the commencement of the audit. The Audit work performed was as follows: Establishing the system of controls. Evaluating the adequacy of the controls. Designing and completing the audit programme to test the effectiveness of the controls. Reporting on the adequacy and effectiveness of the controls to achieve system objectives. 2 Objectives The objectives of the audit are: To ensure that all capital projects are managed and delivered in accordance with required procedures. To ensure that third party service providers are managed appropriately. To ensure that all capital expenditure is invoiced in a timely manner. To ensure that all contractors/consultants are appointed in accordance with procurement guidelines. To ensure that an appropriate Health & Management system is in place for the management and delivery of capital projects. 3

4 3 Scope The audit encompassed a review of: Management & Delivery of Projects; Third Party Service Providers; Invoicing Capital Expenditure; Appointment of contractors/consultants; Compliance with Legislation; Staff Training; External Funding; Health & Safety Management; Cost Estimates; and Community Needs. 4 Summary of Audit is satisfied that the internal systems and controls were adequate and operating effectively at the time of the audit review. No recommendations have been made at this time. 5 Overall and Opinion On the basis of the audit work carried out the controls in place over provide substantial assurance that the system objectives will be achieved. Guidance on the classification of audit assurance is provided at Appendix A. 4

5 Audit Tests and 6.1 Management & Delivery of Projects Test 1 Ensure that adequate controls are in place in relation to the management and delivery of capital projects. Internal Audit selected the capital project Overhaul of Fire Vehicle Rescue 2 for testing. Seven companies were invited to tender and three companies replied. Tenders were assessed by a panel of four and AMDAC Carmichael were awarded the contract at a price of 127, Internal Audit was advised by the Senior Airport Fire Officer that Sammon Quantity Surveyors were engaged to draw up the Project Management Framework/ Methodology and Scope of Works. The Senior Airport Fire Officer was the appointed manager responsible for the day-to-day management of the project on behalf of CODA. Internal Audit viewed the completed Capital Expenditure Approval Form which documented the justification, benefits and budget costs associated with this project. Subsequent Board papers were then presented, outlining the proposal, alternatives, benefits, costs and procurement details (all of the above were in line with the Procurement Policy and Procedures). From review of the files held by the Senior Airport Fire Officer, Internal Audit can confirm that Terms of Reference had been compiled and the Project Initiation Plan and Report completed contained all relevant sub-processes. In discussions with the Senior Airport Fire Officer, Internal Audit is satisfied that regular meetings / briefings were undertaken during the project. On occasions this would have involved travel to England as the vehicle had been taken off site to refurbish. Internal Audit can confirm that a detailed budget had been set and monitored as the project progressed and noted that the project came in under budget. In discussions with relevant personnel, Internal Audit is satisfied that evaluations both during and post installation were undertaken in respect of this project. 5

6 6.2 Third Party Service Providers Test 2 Ensure that all third party service providers are managed appropriately. Third Party Service Providers are vetted at the Tender Stage of contract and Internal Audit is satisfied that contractual arrangements are fully documented. Service delivery / quality standards are set and fully adhered to and performance of all contractors is constantly monitored. Internal Audit is satisfied that regular meetings are held with the contractors to discuss progress. Internal Audit is satisfied that realistic goals are set and regular progress reports provided to funders. 6

7 6.3 Invoicing Capital Expenditure Test 3 For the sample of capital projects reviewed, which are managed by CODA Operations Ltd, ensure that all capital expenditure has been reimbursed from Derry City Council. Internal Audit was walked through the process of recouping expenditure from Derry City Council (DCC) by the Accounts Officer for invoice SIN in the sum of 39, plus vat that had been raised to DCC on 25 March This invoice had included capital expenditure incurred by the airport in respect of 26 Light Project, small capital items, car park expenditure and fuel equipment. A breakdown of the items being claimed is attached to the invoice which is forwarded to DCC. Back up invoices are not forwarded but are retained on file. Internal Audit reviewed the backup invoices on file and can confirm that the expenditure being claimed was in respect of the 3 months previously (i.e. December to February). Internal Audit can also confirm that the expenditure claimed had been in respect of capital costs. Internal Audit was advised that in the event that revenue expenditure had been claimed in error an adjustment would be made to the next claim and amounts subsequently re coded by journal transfer within the internal accounts system. Internal Audit is satisfied that all capital expenditure invoices are raised and reimbursed by DCC in a timely manner, and that only capital expenditure is reclaimed. 7

8 6.4 Appointment of Contractors / Consultants Test 4 Select a sample of contractors / consultants appointed and ensure that the procurement guidelines were adhered to. Procurement Policy & Procedures have been distributed to all relevant staff by the Finance & Administration. Manager and Internal Audit is satisfied that these procedures are adhered to for all procurement exercises. From the sample of contractors / consultants inspected for test, Internal Audit can confirm that the procurement guidelines had been followed. 8

9 6.5 Compliance with Legislation Test 5 Ensure that all relevant legislation was considered during completion of the capital projects. In discussions with relevant staff, Internal Audit is satisfied that all relevant legislation is considered during completion of. 9

10 6.6 Staff Training Test 6 Review evidence to indicate that all relevant staff have received appropriate project management training and attend professional development events on a regular basis. Internal Audit was advised that relevant staff are appropriately trained in Project Management and in terms of capital projects qualified consultants would be employed to manage the projects on behalf of CODA i.e. Quantity Surveyors/Engineers. 10

11 6.7 External Funding Test 7 Review evidence to indicate that there is forward planning and regular meetings and communication with clients in relation to meeting external funding deadlines. Ensure that realistic goals are set with external funders. Internal Audit was informed by the Directorate Accountant at DCC that the last round of grants made available to CODA for Capital Expenditure was in All funding had been granted, with regular meetings / communication having taken place and realistic goals having been set and achieved for / with external funders. 11

12 6.8 Health & Safety Management Test 8 Ensure that all staff are aware of their roles and responsibilities in relation to Health & Safety and that the Health & Safety Regulations are adhered to at all times. Ensure that all staff receive regular, up to date Health & Safety training. Internal Audit was advised by the Aerodrome and Quality Manager that all staff are aware of their Health & Safety roles via the Health, Safety and Wellbeing Policy and Section 3 of the Aerodrome Manual. Internal Audit was also informed that several departmental managers are capable of carrying out risk assessments. Additionally, there are ten Safety Champions, several of whom are also trained to carry out risk assessments. Internal Audit is satisfied that H&S training is ongoing for all relevant staff throughout the whole CODA operation. 12

13 6.9 Cost Estimates Test 9 Select a sample of cost estimates provided and ensure that they are robust. Ensure that all estimates provided are scrutinised to ensure that the costs are reasonable. Ensure that competent Quantity Surveyors and Engineers are appointed as required to advise and provide costings. Internal Audit viewed a sample of estimates provided and is satisfied that they were robust. Internal Audit is satisfied that only competent Quantity Surveyors and Engineers are appointed to advise and provide costings on Capital Projects. 13

14 6.10 Community Needs Test 10 Select a sample of projects and review evidence to indicate that the community have been consulted with and their needs have been taken account of (where applicable). After discussion with relevant personnel Internal Audit is satisfied that consultation with the community takes place and their needs are considered prior to the commencement of projects (where applicable). 14

15 7 Level of Assurance On the basis of the audit work carried out the controls in place over provide substantial assurance that the system objectives will be achieved. Guidance on the classification of audit assurance is provided at Appendix A. 8 Internal Audit would like to take this opportunity to thank the staff across CoDA Limited for their assistance in compiling this report. 15

16 Appendix A Classification of Audit Assurance Level of Assurance Definition Substantial Evaluation opinion: There is a robust system of risk management, control and Governance, which should ensure that objectives are fully achieved. Evaluation opinion: There is some risk that objectives may not be fully achieved. Some improvements are required to enhance the adequacy and / or effectiveness of risk management, control and governance. Limited Evaluation opinion: There is considerable risk that the system will fail to meet its objectives. Prompt action is required to improve the adequacy and effectiveness of risk management, control and governance. Unacceptable Evaluation opinion: The system has failed or there is a real and substantial risk that the system will fail to meet its objectives. Urgent action is required to improve the adequacy and effectiveness of risk management, control and governance. 16

17 Appendix B - Key to Priorities 1 Weakness with serious financial, systemic or reputation consequences which should be addressed immediately. 2 Weakness, which is not fundamental but should be addressed in the short term (6 months). 3 Improvement, which represents best practice. 17