UPDATE ON THE INTERNAL AUDIT AND INVESTIGATION SHARED SERVICE

Transcription

1 Audit Committee 28 January 2015 UPDATE ON THE INTERNAL AUDIT AND INVESTIGATION SHARED SERVICE Report by Head of Internal Audit and Investigations Purpose To provide Audit Committee with an update and review of the shared service against the original objectives and success criteria set. This includes an update on the development of the Corporate Fraud Shared Service. Recommendation To RESOLVE that the report is noted Key Points A. The shared Internal Audit and Investigation Service went live on 1June As part of the project to establish this shared service, a number of project objectives and success criteria were set. The key objectives were as follows: Establish the shared service Implement the new structure and balance between in house and contract resources Fulfil statutory duties (Accounts and Audit Regulations 2011) and professional standards Operate on a trading account basis Achieve financial savings Improve client satisfaction Extend shared service arrangements and seek new business Improve annual effectiveness score based on CIPFA s measures Improved cost effectiveness and quality of service by simplifying processes and adopting common approaches to best practice B. An assessment has been undertaken to review the shared service against these objectives and the results are detailed in Annex 1 to this report. C. The report also provides an update on the shared service following the transfer of benefit investigations work to the Department for Work and Pensions (DWP) as part of the Single Fraud Investigations Service (SFIS). This includes development of a 5 borough corporate fraud shared service with the London Boroughs of Wandsworth, Richmond, Sutton and Merton.

2 Review of the shared Internal Audit and Investigations Service against project objectives 1 A review of the shared service against original project objectives and targets has been undertaken and the results are detailed in Annex 1 to this report. 2 5/9 of the objectives have been met. In the main, these related to the development of the shared service and achievement of anticipated savings. 3 4/9 are partially met or we are not currently in a position to measure achievement: 3.1 It was agreed by the Directors of Finance that a trading account would not be set up but that this would be considered alongside the future development of the shared service and possible introduction of hard charging. This will be subject to further discussion by the Shared Service Board. 3.2 Client satisfaction has remained high both pre and post the shared service. However, there has remained a low return rate of client satisfaction questionnaires which we have tried to address through the use of on-line returns (survey monkey). This is a recent introduction and results will be reported to the next Audit Committee meeting. 3.3 Work has been undertaken to develop and extend the current shared service arrangements. Discussions took place with Merton and Sutton in 2013/14 to establish a 4 borough shared audit service and an external independent review was undertaken. The Directors of Finance agreed to continue with current delivery arrangements for the time being but to establish more robust collaborative working across the 4 boroughs. There has been an ongoing sharing of information and knowledge across the partnership however, more formal sharing arrangements have not been established. Further discussions are to take place early in 2015 on future sharing arrangements. Work to establish the 5 borough corporate fraud service is ongoing and an update on progress is provided within this report. 3.4 Improvement of the annual effectiveness score is difficult to demonstrate since CIPFA s Code of Practice for Internal Audit was replaced by its Public Sector Internal Audit Standards (PSIAS) from 1 April The first self assessment against the new standards was undertaken in June The assessment identified that most areas were fully complied with. A further assessment will be undertaken and reported to Audit Committee in June Update on the Corporate Fraud Shared Service 4 Following agreement by the Section 151 officers, work continues in developing the South West London Fraud Partnership across the 5 boroughs, led by Wandsworth Council. It is proposed that the shared service will go live on 1 April 2015 although some informal collaborative working will be undertaken in advance of this date. It is proposed that this will include some data matching across the partner authorities. 5 Wandsworth have successfully bid for 472k of DCLG funding on behalf of the SWLFP. This will provide funding to support the establishment of the shared service and future service delivery. It includes funding for IT, training, data sharing, housing

3 fraud work and a financial investigator resource to assist in recovering money through the Proceeds of Crime Act. 6 A draft Fraud Strategy and structure for the SWLFP have been established. The purpose of the strategy is to sit alongside each authority s current Anti-fraud and corruption strategies establishing objectives specific to the SWLFP. This includes the creation of a Steering Group to oversee and monitor the work of the shared service and setting up a framework for referrals, investigation and reporting. 7 A draft Fraud Service Agreement has also been established to provide the legal basis for the partnership. This has been reviewed by Legal and a number of suggested amendments have been made. This will be agreed and finalised before the shared service goes live on 1 April The Audit Committee will be kept up to date with continuing developments and a written report will be made to the next Audit Committee meeting. Author of report - Alix Wilson, Head of Internal Audit and Investigations, alix.wilson@.kingston.gov.uk Background papers held by author of report

4 Achievement against project objectives Annex 1 Objective Achievement against the objective as at January Establish a shared service The shared service went live on the 1 st June A collaboration agreement was agreed and signed off by the Shared Service Board. 2 Implement new structure and balance between in house and contract resources 3 Fulfil statutory duties (Accounts and Audit Regulations 2011) and professional standards All staff were assimilated to the new structure and any vacant posts were recruited to and staff in post by the 1 st October A new Letter of Engagement with Mazars (then Deloitte) was agreed as part of the new arrangements. Mazars continue to provide internal audit work under the framework contract with Croydon Council. The current structure retains the mix of in-house and contractor resources. This is particularly important in providing some specialist audit skills, particularly around ICT and contract audit although work has been ongoing in developing these skills inhouse. Additional audit days have been procured via the contract following the retirement of the Joint Head of Audit and loss of Audit Manager in June Whilst the Audit Manager post has now been filled, Mazars were able to provide some management support in the intervening period. Work delivered is monitored by the Shared Service Board and Audit Committee. 4 Operate on a trading account basis The service is not set up as a trading account as agreed by the Directors of Finance although this may be considered in the future alongside the possibility of introducing hard charging. 5 Achieve financial savings Prior to the establishment of the shared service, savings were delivered by both Authorities through different service and budget reviews. The structure for the new shared

5 Objective Achievement against the objective as at January 2015 service projected the delivery of a further 77k savings ( 73k for Richmond and 4k for Kingston). This savings target was exceeded with additional underspends in both 2012/13 and 2013/14. Further savings are projected for 2014/15. 6 Improve client satisfaction Client satisfaction is regularly reported to the Audit Committees. Client satisfaction remains high however we still have a low return rate on client satisfaction questionnaires. A new system of completing surveys has recently been established using survey monkey. 7 Extend shared service and seek new business Discussions took place with Merton and Sutton in 2013/14 to establish a 4 borough shared audit service and an external independent review was undertaken. The Directors of Finance agreed to continue with current delivery arrangements for the time being but to establish more robust collaborative working across the 4 boroughs. There has been an ongoing sharing of information and knowledge across the partnership however, more formal sharing arrangements have not been established. Further discussions are to take place in 2015 on future sharing arrangements. Work is currently being undertaken to establish a 5 borough corporate fraud shared service with Wandsworth Council as lead. This has previously been reported to Audit Committee and it is hoped that this service will go live on the 1 st April In respect of seeking new business, a Service Level Agreement has been established with schools and additional work is being provided to an Academy School at Kingston. Some reactive investigation resource was also provided to another Academy school in the borough.

6 Objective 8 Improve annual effectiveness score based on CIPFA measures 9 Improved cost effectiveness and quality of service by simplifying, streamlining and standardising processes, and adopting common approaches including best practice. Achievement against the objective as at January 2015 This is difficult to demonstrate since CIPFA s Code of Practice for Internal Audit was replaced by its Public Sector Internal Audit Standards (PSIAS) from the 1 st April The first self assessment against the new standards was undertaken in June The assessment identified that most areas were fully complied with. Where gaps were identified, an action plan was established and this is being monitored to ensure issues are addressed within the timescales set. External reviews of Internal Audit and Fraud were undertaken as part of the development of the shared service. Recommendations coming out of these reviews have been implemented. Galileo Audit software was procured and implemented in April 2013 to streamline and standardise audit processes. The audit plans have also been much better aligned and auditors allocated to do the same audit across both authorities. This has resulted in a reduction in audit days, particularly on key financial audits. Some gaps were identified as part of the PSIAS assessment and these are due to be addressed by April RAG status Red Amber Green Not Met Partially met or not able to measure at present Met