APPENDIX E WAVERLEY BOROUGH COUNCIL AUDIT COMMITTEE 10 MARCH 2009 - PDF document

APPENDIX E WAVERLEY BOROUGH COUNCIL AUDIT COMMITTEE – 10 MARCH 2009 Title: PREPARATION FOR AND PRESENTATION OF THE DRAFT INTERNAL AUDIT PLAN 2009/10 [Wards Affected: All] Summary and purpose: The Committee’s Terms of Reference include provision for the Committee to comment on the Head of Internal Audit’s proposed Internal Audit Plan. This report presents the draft Plan, and the Committee is invited to comment before the Plan is finalised. How this report relates to the Council’s Corporate Priorities: The work of the Internal Audit service can have an impact upon all the Council’s priorities as its work involves the review of the work of all services. Equality and Diversity Implications: There are no equality and diversity implications. Resource/Value for Money implications: Internal audit work includes consideration of value for money issues and, allied to this, the potential for waste, loss, theft and inefficiency. Legal Implications: The Council must have a Plan that must cover a period of no more than a year in order to fully comply with the requirements of the Code of Practice issued by CIPFA, which is given mandatory status by the Accounts and Audit Regulations. Introduction 1. The draft Internal Audit Plan, attached at Annexe 1, has been prepared after extensive consultation with the Chief Executive, all strategic directors and service heads. Many issues were raised in those consultations, and it has been necessary to consider carefully on which of the many current developments and pressures the Internal Audit Service is best able to assist or have a meaningful input.

2. It has also been prepared after allowing for a reduction in the service’s budget of £21,000, which equates to around 80 days’ work. There have been some necessary reductions in coverage as a result, and these are explained in the report. 3. The draft Plan as presented should be adequate to cover the current issues facing Waverley. Despite a reduction in resources, it covers all the key risks and obligations, as well as allowing for some special items of work. Resources 4. At the Council’s “star chamber” meetings, an overall target saving of 8% was sought from all service heads. For Internal Audit this equated to around £21,000. As has been mentioned on previous occasions, the Internal Audit Section currently carries two vacancies, one post of Senior Auditor (IT) and one post of Auditor: a. The former Senior Auditor (IT) was seconded to the Chief Executive’s Department in 2003, and a cash sum equivalent to around 50% of the cost of this post was allocated. That sum has been increased in line with the annual pay awards and has been used to buy resources from IT audit specialists. b. A post of auditor was held vacant, after the post-holder resigned in 2004, pending the outcome of the housing transfer ballot. The budget was again used to buy resources from a specialist audit firm, and this worked well and the post has not been filled and resources continue to be bought-in. 5. It is expedient to absorb such a budget reduction by reducing the number of days bought from the general systems audit contractor. IT audit has been maintained at 45 days, as it is considered necessary to maintain a reasonable level of coverage. With this reduction, the Section is now operating at almost 80% of its previous full establishment of 5 posts. Despite this, a sound Plan is possible. 6. Time will have to be made from the management and contingency allocations to enable a re-tendering exercise to be undertaken. Both the IT audit and general systems audit contracts have been extended to the maximum possible under Contract Procedure Rules (CPRs) and new contracts for 2010/11 will be sought. Changes to historic Plan content 7. To meet the star chamber reduction, a number of non-audit activities and contingencies have been deleted from the Plan: Monitoring of cash discrepancies Reconciliation of credit card charges Scrutiny of debts submitted for write-off Maintenance of the contracts register.

8. These items will be transferred to another part of the Resources Department. It had been anticipated that the financial assessment of contractors and other parties/partners would also be transferred. It is a demand-led activity, and demand in 2008/09 has been high; however it has been possible to include 22 days for this valued work in the draft Plan. The matter will be kept under review, and a transfer may still be necessary if this would enable high priority audits to be undertaken. Projects and contingencies 9. The Head of Internal Audit wishes to maintain a pro-active stance and to help officers to develop new systems or implement projects when invited, and in giving support and advice. It is better to give advice as early as possible in order to avoid future complications and rectification costs. This helps to ensure appropriate controls are built into new systems at the outset, and the opportunity is also provided to help in identification of risks, development of solutions and the giving of advice on such matters as compliance with CPRs. 10. It is an element of the Section’s work that has always been highly valued by directors and service heads. It would not be prudent to delete all allowance for such work from the Plan. However, reductions in the time allowed have been made. Should events arise that would cause these allowances to be exceeded, either adjustments will have to be made elsewhere in the Plan or a request for a supplementary estimate will have to be made. 2008/09 Plan 11. An assessment of the resources available is attached as Annexe 2. This also shows how the resources will be allocated. 12. A key lesson gained from this year’s work has been incorporated into the 2009/10 Plan. This concerns data quality; this was an item raised by several people during the planning consultations and the work of Internal Audit in the summer of 2008 was greatly appreciated. It required considerably more time than had been envisaged, so a similar allowance has been made for next year to allow detailed examination of grant claim and performance indicator data and evidence. The new national indicators will also be considered as part of the work. 13. Allowance has been made in the draft 2009/10 Plan to complete 2008/09 reviews that are underway as at the end of March 2009. Only a very small allowance has been made for follow-up of reviews (to verify implementation of recommendations); reliance is again to be placed upon heads of service updating the Covalent system with progress details, which in turn is used as the evidence for reports to the Committee. Planned reviews 14. The Internal Audit Strategy states that all high priority audits will be undertaken in the year of the Plan, medium priority audits within two years and the situation regarding the low priority audits will be kept under review. The draft 2009/10