AUDIT COMMITTEE 19 MARCH 2014

Transcription

1 AUDIT COMMITTEE 19 MARCH 2014 AGENDA ITEM 11 Subject: Report by: ITEMS TO BE BROUGHT TO MEMBERS ATTENTION, OUTSTANDING HIGH RISK RECOMMENDATIONS, INTERNAL AUDIT REPORTS INCLUDING HIGH RISK RECOMMENDATIONS, AND PROGRESS ON THE AUDIT PLAN AUDIT AND INVESTIGATIONS MANAGER Enquiries contact: Ray Joy ( ) Purpose This report: details any item which should be brought to Members' attention; lists all reports where there are outstanding high risk recommendations lists the audits which have been completed together with their main objectives and high risk recommendations; lists the audits, together with their main objectives, which are in progress; and lists audits to be undertaken before the end of the financial year. Recommendation 1. It is recommended that the report be noted. Corporate Implications Legal: Financial: Personnel: Risk Management: Equalities and Diversity: Health and Safety: IT: Other: Consultees The Council is required by law to maintain an effective Internal Audit function There are no additional financial implications. No additional staffing requirements are envisaged The Internal Audit function contributes to the effectiveness of the Council s risk management arrangements Director of Financial

2 Policies and Strategies Internal Audit Strategy Anti-Fraud and Corruption Strategy Corporate Plan Priorities The report relates to the following priorities in the Corporate Plan Attracting investment and delivering infrastructure Facilitating suitable housing for local needs Providing high quality public spaces Promoting a more sustainable environment Promoting healthier and more active lives Enhancing participation in cultural activities

3 1. Any item(s) which should be brought to Members' attention 1.1 Since 1 st January 2014 the staffing level has stabilised and the team consists of the Audit and Investigations Manager, two Senior Auditors, one of which works three days per week and an Auditor. Approximately 25% of the Audit and Investigations Manager s time is spent on Investigation work mainly relating to Housing Benefits. In addition, the three Investigators undertake counter fraud work for this Council and assist in Proceeds of Crime Act investigations for this and other Councils. 1.2 Internal Audit staff use the Covalent system for storing their documentation including audit recommendations and to produce reports including Committee reports. It is pleasing to report that there has been a decrease in the number of outstanding medium risk recommendations. 1.3 One investigation relating to a former employee was referred to the Police in September The case is to be heard in the Crown Court in October Internal Audit assisted in an investigation in the Housing Service which resulted in an employee resigning prior to his disciplinary. 1.5 The Council s two Fraud Investigators are currently investigating three cases where it is intended to use the Proceeds of Crime legislation to recover any losses. Two cases relate to investigations with other authorities and the third relates to an investigation with the County Council and the Department of Works and Pensions. 2. Outstanding Critical and High Risk Recommendations 2.1 At the conclusion of the fieldwork, where there are audit findings to be discussed with the auditee, a Matters Identified for Review Report is generated by the Covalent system. This report forms the basis of the discussion of the matters identified in the audit with the auditee. As a result of the discussion the Matters Identified for Review Report is finalised and the recommendations are allocated to the appropriate officers. The database contains the findings, risks, recommendations, priority, any response comments and due date of each recommendation and generates the Audit Report together with Committee Reports. 2.2 The risk priorities are defined as follows:- Critical Priority - A fundamental control weakness which presents a serious risk of error, irregularity or inefficiency and requires immediate action High Priority A significant system weakness, which presents material risk to the system and requires urgent attention Medium Priority A system weakness, whose impact or frequency presents an unacceptable risk to controls and needs to be addressed Low Priority The system is not exposed to significant risk but the issue merits attention Matrix Number of Recommendations 0 1 2>9 10> Critical Substantial Minimal Minimal Minimal Minimal High Substantial Adequate Limited Minimal Minimal Medium Substantial Substantial Adequate Limited Limited Low Substantial Substantial Substantial Adequate Limited

4 2.3 With effect from 1 st April 2013 only critical and high risk recommendations for new audits are followed up, auditees will normally attach evidence to the medium risk recommendations thereby replacing the need for the follow up audit. 2.4 There are no outstanding High Risk Recommendations which have not been implemented in accordance with the agreed implementation date. 2.5 A table listing the number of outstanding medium recommendations for each directorate is contained in Appendix 1. There has been a decrease since the last meeting. It must be noted that the Directors of Financial and Corporate normally receive more recommendations than the others due to the majority of audits being in their areas of responsibility. 3 Internal Audit Reports 3.1 Thirteen Audit Reports (listed in Appendix 2) have been issued since the last meeting. 3.2 Three Main Financial Audit Reports (listed in Appendix 3) are in progress. 3.3 Five Audits (listed in Appendix 4) are in progress. 3.4 Planned Audits to be undertaken in 2013/14 yet to be started but will be reprioritised in 2014/15 Audit Plan -. (Appendix 5) 4. Conclusion 4.1 Outstanding audit recommendations, audits in progress and the completion of the Audit Plan continue to be monitored. List of Appendices (1) Number of Outstanding Medium Risk Recommendations as at 28 th February (2) Audits completed since Previous Report on 11 th December 2013 (3) Main Financial Audits in progress (4) Audits currently in progress As At 28 th February 2014 (5) Planned Audits to be undertaken in 2013/14 yet to be started but will be reprioritised in 2014/15 Audit Plan. Background Papers Audit reports on:- Covalent Database of Audit Recommendations

5 Appendix 1 Outstanding Overdue Medium Risk Recommendations as at 28th February 2014 Directorate Number of Outstanding Overdue Medium Risk Recommendations Corporate 18 Financial 5 Leisure 9 Public Places 5 Safer 10 Sustainable 15 TOTAL 62 1

6 Audits completed since previous report on 11 th December 2013 Appendix 2 Audits Objectives of Audit Actual Date Level of * Recycling and Waste Collections 2012/13 Park and Ride Follow Up 2013/14 Review recycling and waste collection operations to ensure that: Adequate and effective management controls are in place to monitor the effectiveness of recycling and waste collection services provided by the Council. Service users are sufficiently aware of the Council s policies and responsibilities as a waste collection authority. All payments and credits are received in line with contracts and supported by documentation. Appropriate arrangements are in place to monitor and review service performance against targets, including quality issues such as missed collections and that where necessary appropriate remedial action is taken. The budget for recycling and waste collection services is regularly reviewed and any variations from budget examined and reported appropriately. The recommendations in the 2011/12 Park and Ride audit report have been implemented 15-Jan-2014 Substantial Critical and High Priority Recommendations Directorate Public Places 06-Dec-2013 Safer 2

7 Audits completed since previous report on 11 th December 2013 Audits Objectives of Audit Actual Date Level of * Safeguarding Children 2013/14 Planning Enforcement 2013/14 Youth Activities- Crucial Crew and Ad Hoc Projects 1314 Prevention and awareness raising measures are in place Key staff are identified, vetted and trained Procedures are in place and followed when reporting an incident The information contained in the Essex County Council Audit return is correct and judgements could be evidenced if required Enforcement Procedures are in place Complaints are recorded, progressed and monitored Proactive Enforcement is carried out in accordance with Development Management Enforcement Plan Health and Safety Procedures are in place to protect staff from threat of abuse and aggression There is a defined program of activities in place Spending is appropriate and regularly monitored Staff including casuals, volunteers and subcontractors is CRB/DBS checked Insurance arrangements are in place in respect of all Youth Activities 26-Feb-2014 Adequate 23-Jan-2014 Adequate 05-Dec-2013 Adequate Critical and High Priority Recommendations Directorate Safer Sustainable Safer 3

8 Audits completed since previous report on 11 th December 2013 Audits Objectives of Audit Actual Date Level of Critical and High Priority Recommendations Directorate Youth Activities- Play Activities 1314 MFS IT Controls 2012/13 Follow Up High Priority Rec 2013/ /14 Follow Up of AU FN A372 Credit & Debit Card Income 2012/13 Parking Enforcement 2013/14 There is a defined programme of activities in place Spending is appropriate and regularly monitored Staff including casuals, volunteers and subcontractors is CRB/DBS checked Insurance arrangements are in place in respect of all Youth Activities Follow up implementation of recommendation 3.1 from the 2012/13 Main Financial Systems IT Controls Audit. Follow up implementation of the agreed high risk recommendations from the 2012/13 audit of Credit & Debit Card Income. Enquiries to DVLA regarding vehicle ownership are made in the official format required Enforcement officers have written instructions regarding issuing penalty charge notices All relevant records and accounts are updated to record notices issued and income received Recovery action is undertaken promptly Write offs are in accordance with Council rules 05-Dec-2013 Adequate Leisure 14-Feb-2014 Corporate 26-Feb-2014 Financial 06-Dec-2013 Adequate Safer 4

9 Audits completed since previous report on 11 th December 2013 Audits Objectives of Audit Actual Date Level of Community Sport and Wellbeing 2013/14 Dovedales Follow Up 2012/13 rec 1.1 Staff Recruitment Follow Up 2013/14 Partnerships Follow Up 2013/14 Rec 1.4 only There is a strategy and policy in respect of Sports 07-Dec-2013 Adequate Development There are adequate procedures in place in respect of the bidding for grants and external funding, and the control of funding expenditure There is a defined, appropriate and effective framework in place in respect of the day to day operational controls of the function All income due is received, recorded accurately and banked promptly Procedures are in place where services are commissioned and grants are awarded Risk focused procedures are in place and are undertaken as appropriate Security of assets/data is adequate and appropriate Reporting and Monitoring procedures are effective and appropriate The pdq machines at Dovedales have been correctly programmed. The high risk recommendation in the 2012/13 Staff Recruitment Follow Up audit report has been implemented The high risk recommendation in the 2012/13 Partnerships Follow Up audit report has been implemented Critical and High Priority Recommendations Directorate Leisure 06-Dec-2103 Leisure 06-Dec-2013 Corporate 10-Dec-2013 Safer 5

10 Appendix 3 Main Financial Audits in Progress 2013/14 as At 28 th February 2014 Audits Position of Audit Objectives of Audit Directorate Income and Debtors 2013/14 Payroll 2013/14 Fieldwork in progress Fieldwork in progress Debtor procedures comply with the Council s Financial Rules and procedures; There is documentary evidence to support transactions; Debtor invoices provide sufficient information of the debt; All relevant records and accounts are updated promptly; Sums due are calculated and coded correctly; The debt is monitored; Prompt debt recovery is undertaken; Write offs and credit notes are controlled; All income is invoiced in respect of hires at Oaklands Museum All employees on the payroll are valid and are employed by the Council; Payments are made only for hours worked or allowable expenses; Gross payroll costs and material deductions are properly calculated and in accordance with approved pay rates or staff contracts; Payroll costs are properly accounted for in the main accounting system; Segregation of duties is in place between creation of an employee record, processing payroll information and authorising payments Follow up the implementation of the recommendations contained within the 2012/13 Payroll Audit Report. Financial Corporate Cash and Bank 2013/14 Fieldwork in progress Cash and other cashable orders are held securely; All remittances received are properly recorded and banked in full and are properly accounted for; Payments are properly authorised, including manual cheques and BACS; Cash and bank balances are accurate and agree to recorded cash transactions; Financial 6

11 Main Financial Audits in Progress 2013/14 as At 28 th February 2014 Audits Position of Audit Objectives of Audit Directorate There is adequate segregation in the cash receipting, recording and authorising process; Follow up the implementation of recommendations from the 2012/13 audit. 7

12 Appendix 4 Audits Currently in Progress - As at 28th February 2014 Audits Position of Audit Objectives of Audit Directorate Housing Tenancy Insurance & Health and Safety Accident Investigations 2012/13 Matters Identified Meeting to be held 19-Mar-2014 Start Delayed Checks carried out on social housing and homelessness applicants ensure that only eligible applicants receive assistance. Bed & breakfast and nightly let accommodation for homeless applicants is procured in a cost effective manner and the number of nights homeless applicants spend in this type of accommodation is monitored effectively. Where applicants are placed in temporary accommodation any charges for which they are liable are recovered from them in full and, in cases of nonpayment, action is taken to effect recovery. Information is shared within Chelmsford Council and with social landlords in order to prevent and detect of housing fraud. Accident and investigation procedures have been produced and communicated to staff Accidents are promptly recorded and notified to Health & Safety and to Insurance Action is taken to prevent similar incidents in future Sustainable Financial 8

13 Audits Currently in Progress - As at 28th February 2014 Audits Position of Audit Objectives of Audit Directorate Vehicles Management and Maintenance 2013/14 Business Continuity 1314 Matters Identified Meeting to be held 06-Mar-2014 Control Objectives to be reviewed by Audit and Investigations Manager There are procedures in place for the purchase, temporary hire and disposal of Public Places Vehicles Vehicle databases are complete, accurate and properly maintained Documents such as MOT, insurance and tax are stored securely and are not out of date Periodic Maintenance is carried out in a timely manner and there are adequate arrangements for the assessment, recording and repair of faults Drivers have the correct qualifications and that the arrangements are in place to recheck their documentation periodically Fuel and vehicle parts are stored securely, usage is accounted for and costs are correctly allocated Management information reports are produced regularly and contain sufficient information to assist in making financial and operational decisions Confirm that Business Continuity Management Strategy, Policy and Procedures have been established Verify that hazards to Mission Critical Activities (MCA's) activities are determined and response is formulated Asses that work area recovery strategies are in place Check that mechanisms are in place to test, monitor and review Business Continuity Plans Training is provided to staff in order to prepare for specific incidents Safer 9

14 Audits Currently in Progress - As at 28th February 2014 Audits Position of Audit Objectives of Audit Directorate Procurement - Adherence to CCC and EU rules 2013/14 In progress Staff notify the Procurement Manager and Legal of any and all purchases being planned that are over 10,000 For all expenditure between 10,000 and 50,000 at least three formal written quotations are obtained and an evidence of quotation form is completed For all expenditure over 50,000 a formal tender process managed by the Procurement team is undertaken. For expenditure over 173,934 for Goods or, or 4,348,350 for Works, competitive tenders are invited from six contractors where possible and that the tender process is followed in line with contract rules Contract values are not divided up into smaller parts so as to avoid going over a threshold for expenditure Chelmsford City Council makes available to public scrutiny details of all expenditure above 500. Financial 10

15 Appendix 5 Proposed Audit Plan until 31 st March 2014 NAME OF AUDIT Annual Audits Cash and Bank Council Tax Benefits Business Rates IT Controls Main Financial Systems Pro-active Fraud Business Rates Council Tax Discounts - Students General Auditable Areas Hylands House Business Continuity Planning Health and Safety High Risk Recommendations Follow Up Retail Market Mobile Computing- Management of Removable media Car Parks IT Business Continuity REASON FOR AUDIT Main financial systems these will be undertaken on an annual rotational basis Pro-active fraud initiatives Potential Risk Poor public image Damage to the Council s reputation Legal implications Potential Risk In accordance with new procedures only high and critical risks are followed up as audits 11