Agenda item

The Internal Audit Annual Report 2023-2024 from the Council’s outgoing Internal Auditors, RSM.

The Deputy Chief Executive, Section 151 Officer presented the report on behalf of RSM, the outgoing Internal Auditors who had sent their apologies as there were unable to attend.  The report provided the annual internal audit opinion, based upon and limited to the work performed, on the overall adequacy and effectiveness of the Council’s risk management, control and governance processes which the Committee needed to consider.

The Deputy Chief Executive, Section 151 Officer referred the Committee to page 12 (page 46 of the agenda pack) which listed some audits that had been undertaken, but had yet to be reported to the Committee and these were:

·       Responsive Repairs

·       Payroll

·       Purchasing and Creditors

·       Section 106 Agreements

Also follow up work that had been undertaken in respect of previous audits.

RSM’s Head of Internal Audit’s opinion for South Kesteven District Council was that the Council had an adequate and effective framework for risk management, governance and internal control.

Thirteen audits had been undertaken since RSM had taken over as the Council’s Auditors since work started in October 2023 and they had delivered their audit plan and met all their own KPI targets.   A follow up audit had taken place and progress had been made with previously agreed targets.

In respect of the five audits that had taken place since the last meeting of the Committee the following assurances had been given:

Responsive Repairs – Partial Assurance

Payroll – Reasonable Assurance

Purchasing and Creditors – Substantial Assurance

Section 106 Agreements – Reasonable Assurance  

Also the follow up work had been given reasonable progress.

The recommendations and actions agreed had ranged from high to low and these would be progressed with the new internal auditors BDO who were present at the meeting. Details in respect of the five audits that had been undertaken since the last meeting were noted within the report.

A question was asked in respect of Cyber Security and its priority level to which the Deputy Chief Executive, Section 151 Officer responded that the Council had received a grant from central Government to accelerate a cybersecurity action plan. The plan had been delivered within the required timeframe and had received a high assurance level.  The cybersecurity work that had been undertaken had received a “clean bill of health” from the Government following the implementation of the agreed action plan.  There was currently one outstanding action and it was hoped that it would be completed before the end of July 2024.

Further questions were asked in respect of the audit on Debtors and Debt Recovery and concerns regarding the consistency of controls  not being adhered to.  

The Deputy Chief Executive, Section 151 Officer referred to the last meeting of the Committee at which the debtors audit findings had been received.  He reassured the Member that only five low recommendations had been given in respect of the debtor audit, no medium or high recommendations had been made.  The debtor audit had been one of the audits undertaken by the previous auditors.   The most recent debtor audit had taken place in March 2024 and a real step-change of improvements had taken place.  Some of the previous problems had been due to limitations within the existing financial system and currently a new system was being progressed which would strengthen some of the weak areas highlighted.   It had been accepted that there were some control limitations due to inherent weaknesses within the old system.  Controls had been strengthened and when the new financial system came on line, the legacy issues would become irrelevant.    It was accepted that the current scenario with debtors was not perfect, but this would improve once the new financial system was in place.

The Director of Housing then confirmed that there was a separation of duties between HR and Payroll.  When the audit had been started three new starter forms couldn’t be located and it was how these could be checked on the system when the information had not been retained.  The details of new starters were inputted by HR and then passed on to Payroll who checked the information given. A further check was also carried out to make sure the information was correct.  Going forward all paperwork would be retained after it had been entered within the system.  

Reference was then made to management action 2, that related to the time that contract change forms had been signed, it was the sequencing of the approval, Manager sign off, to HR then to Payroll, rather than paperwork not being retained.  She assured the Committee that there was a clear separation of duty between HR and Payroll.

A further comment was made in respect of Responsive Repairs and the partial assurance given. The Member felt that the same reports seemed to come through time and again and he wondered whether it was time that the system was reviewed by management to see if there was another way of doing things and a report presented to the Committee.

The Director of Housing reassured the Committee that all open responsive repair jobs were being reviewed. A number of the jobs were open as they had a suspended category and these were being looked at to see which jobs had been completed and could be closed down on the system.  Customers were being contacted to see if work had been completed or not if it was not clear on the system.  Appointments could be made and a plan put in place once all the outstanding repairs were known.  The materials contract was monitored on a monthly basis by an officer at Turnpike and any anomalies were highlighted with relevant individuals. All actions were being worked through to ensure that they were all completed.   Repairs performance would be part of the KPI suite that would go before the Housing Overview and Scrutiny Committee in the coming year.

It was stated that as the Director of Housing was new to the role that the Committee would wait on requesting a report in respect of Responsive Repairs.

The Deputy Chief Executive, Section 151 Officer requested that the Committee accepted the Internal Audit Annual Report 2023-24. It was proposed, seconded and AGREED to accept the Internal Audit Annual Report 2023-24.

Decision

That the Governance and Audit Committee accept the Internal Audit Annual Report 2023-24 from RSM.