Agenda item

Minesh Jani, Head of Audit and Risk Management, introduced a report which updated Members on the overall adequacy and effectiveness of the system of internal control and risk management for 2017/18. The report also presented a summary of the audit work undertaken in 2017/18. In summary, the Head of Audit and Risk Management advised that there was an adequate level of assurance overall.

The following points were noted in discussion of the report:

1. In response to a request for clarification on the overall level of assurance, the Committee was advised that this was a reflection of the organisation’s ability to manage risks given the level of staff and resources that were available.
2. In response to a query in relation to Osborne Grove, the Head of Audit and Risk Management advised that the initial audit resulted in no assurance being given. The subsequent audit found that whilst all of the audit points had been implemented from the previous audit, the overall assurance level remained as no assurance.
3. In response to queries in relation to school management audits, the Head of Audit and Risk Management acknowledged that this covered both primary and secondary school audits. The Committee were advised that the Schools Audit Report would be brought to the Committee at its next meeting in September. The Head of Audit and Risk Management also agreed to look into how the audit plan compared to the previous year. (Action: Minesh Jani).
4. In response to a question, the Head of Audit and Risk Management acknowledged that of the 54 audits undertaken last year, none had received full assurance. In clarifying, the Head of Audit and Risk Management advised that the vast majority of audits undertaken resulted in limited assurance being given. The Committee noted that this was not seen as a problem, as receiving full assurance was a relatively high bar to achieve. The Head of Audit and Risk Management advised that he was considering developing a further category of assurance to better help differentiate audit projects receiving limited assurance. 
5. In response to a request for clarification on the limited assurance received in relation to the contract extension and waiver process, the Head of Audit and Risk Management advised that this reflected how well contracts were managed by the Council. The Head of Audit and Risk Management elaborated that the audit was undertaken to measure the effectiveness of processes related to contracts, waivers and extensions; and to consider the extent to which they were managed in a timely way, so that when one contract ended another was in place.
6. Head of Audit and Risk Management confirmed that the most serious breaches that occurred last year were Osborne Grove and the two schools that received no assurance. The Head of Audit and Risk Management agreed to meet with any members of the Committee who wanted to discuss Osborne Grove in more detail. (Action: Minesh Jani/Committee Members).
7. The Committee raised concerns about schools who consistently received no assurance and queried whether a tougher stance should be taken. In response, the Head of Audit and Risk Management suggested that the Council needed to strike a balance and that the Council should adopt a broadly understanding approach. The Head of Audit and Risk Management cautioned against referring cases to Ofsted.
8. The Committee requested that a paper be brought to the next meeting which sets out school audit issues. The Committee also requested that the Assistant Director of Schools be invited to the meeting, along with the Cabinet Member. (Action: Minesh Jani/Clerk).
9. In response to a question, the Head of Audit and Risk Management advised the Committee that the audit of Looked after Children and the high cost of placements was deferred at management’s request. The Head of Audit and Risk Management assured the Committee that this would be undertaken as part of the Audit Plan for 2018/19.
10. The Committee requested an update from the Head of Audit and Risk Management at its next meeting explaining the reasons why some audits were deferred from the 2017/18 audit plan to 2018/19. (Action: Minesh Jani).
11. In response to concerns raised around counter-fraud work and No Recourse to Public Funds (NRPF), the Committee were advised that the Fraud Team simply did not have the resources available to be involved with every NRPF transaction. The Head of Audit and Risk Management agreed to bring a paper to the next Committee which set out some of the issues in relation to NRPF and fraud. (Action: Minesh Jani).
12. In relation to concerns about the nature of the role of the Fraud Team in Right to Buy applications, the Committee was advised that the Fraud Team’s role was, in most cases, limited to checking that the mortgage was bona fide, came from a proper financial institution and that money laundering regulations had been complied with.

RESOLVED

1. That the Committee noted the content of the Head of Audit and Risk Management’s annual audit report and assurance statement for 2017/18.