Agenda item

To receive a report from the Director of Finance and Corporate Services outlining the Internal Audit Plan for 2024/25.

With the aid of a report by the Director of Finance and Corporate Resources (a copy of which is appended in the Minute Book) the Committee were presented with the Internal Audit Plan for 2024/25 and the Internal Audit Charter. The Director of Finance and Corporate Resources informed Members that the Committee had responsibility under its terms of reference for ensuring the Council undertook effective internal audits to evaluate the effectiveness of its risk management, control and governance processes in accordance with the Public Sector Internal Audit Standards.

It was reported that the Plan was based on a list of assurance activities and showed areas where audit activity was planned. It included services where internal audit activities were either deferred from last year’s Plan or were unable to be completed, areas of risk highlighted in the organisation’s risk registers and the mitigating actions put in place to control these, and areas of statutory review. In addition, the Plan linked to the Corporate Plan and the Risk Register. Should new areas of risk emerge, they would be assessed against the Plan and the Plan would be adjusted to allow for higher-priority reviews to be included. In addition, a capacity review of the Internal Audit team had been undertaken and the Plan was linked to the current team establishment and the use of BDO for internal audits.

Members noted that the Internal Audit Charter established a framework within which the Internal Audit Service operated best to serve the Council and to meet its professional obligations under applicable professional standards. It defined the purpose, authority and responsibility for internal audit activity, established the Internal Audit Service's position within the organisation; authorised access to records, personnel and physical properties relevant to the performance of engagements; and defined the scope of internal audit activities. Finally, following the recommendations from the LGA Peer Challenge Review, the Charter had been reviewed in line with the recommendations of Chartered Institute of Public Finance and Accountancy and Public Sector Internal Audit Standards.

Following a question from Councillor Hodgson-Jones, the Committee was advised that it would be provided with the capacity calculations in terms of available audit days and resources including any plans to bring in internal audit resource from other areas such as that the BDO contract allowed to deliver general audit work. Notwithstanding this the Internal Audit Team would undertake an increasing number of reviews and, more importantly, have a much wider remit across the organisation rather than just focusing on the central key controls. This would have a positive impact on the information risk position and the Council’s ability to use Internal Audit to achieve better value and governance.

Councillor Gray asked a question about work to implement the new Procurement Regulations in October 2024. It was reported that the Code of Procurement would be updated and presented to the Committee for its consideration and comment.

Comment was made that for the Internal Audit Team to be effective in providing assurance, it needed to be sufficiently resourced, both financially and in terms of qualified, experienced staff. In addition, it should have well developed work practices and be independent and objective. Councillors Hodgson-Jones, Gray and Jennings placed on record their view that the Plan required further work to be undertaken and should be revised. They then expressed the view that based on the report, the Internal Audit Team had insufficient knowledgeable and competent resources to provide assurance and ensure that advisory work was performed in alignment with the Council’s expectations and in conformance with widely accepted principles and standards. Therefore, consideration needed to be given to how greater resilience could be achieved so that the Internal Audit function was able to deliver the necessary level of service.

The Committee stressed the need to have an internal audit function that could effectively provide independent assurances that the Council’s risk management, governance and internal control processes were operating effectively. The Director of Finance and Corporate Resources stated that she recognised the importance of the Committee being informed of amendments that were made to the Internal Audit Plan under the delegated authority. In that context the Committee:

RESOLVED

a)  that the Internal Audit Plan be approved;

b)  that the Internal Audit Charter be approved, and

c)  that the S.151 Officer be authorised to make changes to the Internal Audit Plan following consultation with Internal Audit Manager and the Chairman of Corporate Governance Committee.