Part One ITEM NO. 11
REPORT OF THE CITY TREASURER
TO THE: AUDIT COMMITTEE
ON Tuesday, 22 nd April 2008
TITLE: INTERNAL AUDIT OUTPUT REPORT APRIL TO MARCH
2007/8
RECOMMENDATIONS:
Members are requested to consider the contents of the report.
EXECUTIVE SUMMARY:
The purpose of this report is to inform Members of the resources utilised by Internal
Audit during 2007/2008, the activities undertaken since the previous reporting period, and the planned work for the first quarter of 2008/9.
BACKGROUND DOCUMENTS:
(Available for public inspection)
Quarterly Committee reports, Audit Management Information System.
ASSESSMENT OF RISK:
Internal Audit projects are managed within the Unit’s risk based audit protocols aimed at giving assurance reg arding the management of the City Council’s key business risks.
SOURCE OF FUNDING:
Existing revenue budget.
COMMENTS OF THE STRATEGIC DIRECTOR OF CUSTOMER AND SUPPORT
SERVICES (or his representative):
1. LEGAL IMPLICATIONS
2. FINANCIAL IMPLICATIONS
Provided by: N/A
Provided by: N/A
PROPERTY (if applicable): N/A
HUMAN RESOURCES (if applicable): N/A
CONTACT OFFICER:
Andrew Waine
Tel: 0161 793 3357 andrew.waine@salford.gov.uk
1

WARD(S) TO WHICH REPORT RELATE(S): N/A
KEY COUNCIL POLICIES: N/A
DETAILS: See report attached.
2

This report provides Members of the Audit Committee with details of the resources utilised by Internal Audit since the commencement of the financial year and the activities undertaken, primarily reports issued, since the last sitting of this Committee.
The report advises Members of the volume of recommendations categorised by high, medium, and low, in order of their significance to the control environment under review. It also advises Members of the progress made in the implementation of agreed recommendations by way of Post Implementation Reviews. This report will also provide Members with the proposed workplan for the forthcoming quarter.
Members should be advised that this may be subject to change.
The planned chargeable days, that is those which can be directly attributable to a client, for the financial year 2007/8 are 2024. The tables below show the movement in resources utilised since the previous report to this Committee which was at the end of January 2008.
For the period 1 St April 2007 to 31 st March 2008, 107% of the overall plan for Salford
Internal Audit, including planned Computer Audit, and Special Investigations, had been delivered relative to the chargeable days element. This figure is slightly higher than the projected 100% which was anticipated at the start of the year.
As reported at the previous Committee, Salford Internal Audit have been undertaking
International Standard s on Auditing, (ISA 315 work) on the City Council’s fundamental systems during quarter 4, together with assessments at primary schools in respect of the Financial Management Standard in Schools. This has formed the majority of work undertaken in this reporting period.
Internal Audit continues to respond to requests from managers for special investigations to be undertaken. At the end of the financial year, it can be seen that the planned workload did not materialise which is a positive step forward. Members are advised that the time spent on investigations does not necessarily imply that 306 days were spent investigating but we are also responsible for maintaining the Anti-
Fraud & Ant-Corruption Strategy amongst other things. Investigations concluded during this period of account are reported under Part Two of this Committee.
st
Category
Actual Days
(Total)
Annual Plan
(Total) % Achieved
Chief Executive's
Children's Services
Community Health & Social Care
Customer & Support Services
Environment
General
Housing & Planning
Irregularity
Management and planning
85
408
108
391
46
9
86
1133
250
190
440
1401
329
294
623
81
76
65
71
3

1574 2024
st
78
Category
Actual Days
(Total)
Annual Plan
(Total) % Achieved
Chief Executive's
Children's Services
Community Health & Social Care
Customer & Support Services
Environment
General
Housing & Planning
Irregularity
Management and planning
116
742
115
454
58
12
104
1600
306
263
569
2170
1401
329
294
623
2024
During the period January to March 2008, a total of 17 audit reports have been issued, to various client directorates across the City Council. The table at Exhibit A below shows the audits that have been undertaken and the recommendations that have been put forward for management consideration. A total of 82 recommendations have been made classified over three categories of high, medium, and low. It is pleasing to note that all of the recommendations made have been accepted by management, as these issues are designed to improve the control environment within their areas of responsibility.
114
93
89
91
107
The distinction between the categorisation of recommendations is based on their implications and impact on the system under review. There is a level of Auditor judgement in determining which are high recommendations and those which fall into the other two categories. High recommendations are likely to include fundamental control breakdowns, illegal acts, fraud, and recommendations for improvements in systems design.
Medium and low classified recommendations are likely to consist of non-recurring, explainable events in internal controls which may have already been rectified. These recommendations are included in the final report to ensure they have been mentioned in the event that the underlying factor which initiated the matter recurs.
Further to this, Internal Audit undertakes Post Implementation Reviews (PIRs) of all the services that have been subject to audit within the previous six months. This approach may take the form of an actual site visit to verify the implementation of agreed recommendations, or by a process of Self Assessment and formal notification to Internal Audit of agreed actions. In general, PIR Audit Reports are issued predominantly after site visits where there have been instances of non-conformity with agreed recommendations.
4

Ref
3160
3169
3178
3195
3198
3200
3201
3207
3211
3213
3221
3239
3241
3242
3247
3253
3259
Exhibit A
Audit
Adult Placements
Harrop Fold
Corporate Programme Management
The Deans Primary School
Lower Kersal Primary School
Payroll
Housing & Council Tax Benefits
Building Schools for the Future
St Andrew’s Methodist School
Oakwood High School
St Mary’s RC Primary School
St Paul’s CE Primary School
Council Tax
Cathedral School of St Peter & St John
Royal Manchester Children’s Hospital School
Wardley CE Primary School
Light Oaks Infants School
Recommendations
High Medium Low
Number
Agreed
6 5
5
11
5
13
2
1
1
1
4
4
1
5
17
1
3
5
6
2
1
2
1
2
2
2
3
5
3
3
1
4
3
4
2
2
5
3
4
3
6
0
5
TOTALS 33 49 82
Percent
40% 60% 0% 100%
Members have previously expressed interest in establishing the progress in implementing recommendations, and the table at Exhibit B below provides details of the progress made by way of conducting Post Implementation Reviews.
Of the 6 Post Implemetation Reviews undertaken within the reporting period, 2 had fully implemented the recommendations and are now closed. In all of the other cases, most have made some progress towards implementing the agreed recommendations, although some are proving more difficult to implement due to other external factors, and the original timescales may have been too ambitious.
However, it is anticpated that all the agreed recommendations will be in place by the end of March 2008.
On a risk-based approach, Internal Audit will revisit these outstanding issues and advise Members of the progress in implementation in due course. This is designed to make the best use of internal audit resources and to target those areas where it is perceived that controls are at their weakest.
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Exhibit B
Ref Audit
Recommendations
High Medium Low
Number
Agreed
3021 Attendance Management
3031 Purchase Cards (B)
3050 ERDF Retention of Records
5
2
7
5
2
1
0
0
0
10
4
8
Outstanding Recommendations
PIR Due High Medium Low Comments
January
2008
November
2007
4
2
1
0
0
0
All outstanding recommendations are due to be completed by March 2008. Audit testing has found significant improvements since the original audit. A further PIR has been programmed in for quarter 2 2008/9.
Financial Regulations are in need of updating regarding this subject matter.
Authorisation list of Assistant Directors is to be compiled for authorising new applications.
January
2008
0 0 0
3059 Fixed Assets 0 1 0 1
January
2008
0 0
3123 ICT Governance in schools 1 4 0 5
December
2007
1 4
0
0
Areas of concern surround:

Security and support

Back-up procedures

Asset management

Good practice guidelines

At the previous meeting of the Audit Committee, Members stated that they would welcome an indication of the planned workload of Salford Internal Audit for the ensuing period of account. The table at Exhibit C below provides an indication of the areas we intend to cover during this period. Members need to be aware that these subject matters have arisen as a result of the annual audit planning process, and that these are only indicative subject matters due to our flexible planning methodology.
Summary reports on these subject matters will be issued to Members at the conclusion of each review.
Exhibit C
Subject Matter Directorate
Helping hands
Urban Vision Client Side
HMRF Statement of Grant Usage
Housing Market Renewal PIR
Extended Schools Provision
Child Protection
City Learning Centres
Primary Schools FMSiS
Local Area Agreements Part 3
Housing & Planning
Housing & Planning
Housing & Planning
Housing & Planning
Children’s Services
Children’s Services
Children’s Services
Children’s Services
Chief Executives
E-Procurement Community Health & Social Care
Greaves Trust Customer & Support Services
The report has identified that at the end of the financial year, Salford’s Internal Audit team had achieved in excess of its planned commitments.
Recommendations arising from our reviews appear to have been appropriate in their objectives of improving the control environment as this can be demonstrated by the acceptance of management to implement such actions.
Furthermore, our Post Implementation Reviews have highlighted few areas where recommendations have not been completely implemented.