PART ONE
ITEM NO. 9
REPORT OF THE CITY TREASURER
TO THE: AUDIT & ACCOUNTS COMMITTEE
ON: Wednesday 28th April 2010
TITLE: INTERNAL AUDIT OUTPUT REPORT APRIL TO MARCH 2009/10
RECOMMENDATION:
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 2009/10, the activities undertaken in the reporting period, and
the planned work for the first quarter of 2010/11.
BACKGROUND DOCUMENTS:
(Available for public inspection)
Quarterly Committee reports, Audit Management Information System.
KEY DECISION: NO
DETAILS:
See report attached.
KEY COUNCIL POLICIES: N/A
EQUALITY IMPACT ASSESSMENT AND IMPLICATIONS: N/A
ASSESSMENT OF RISK:
Internal Audit projects are managed within the Unit’s risk based audit protocols
aimed at giving assurance regarding the management of the City Council’s key
business risks.
SOURCE OF FUNDING:
Existing revenue budget.
LEGAL IMPLICATIONS Supplied by: N/A
FINANCIAL IMPLICATIONS Supplied by: N/A
OTHER DIRECTORATES CONSULTED: N/A
CONTACT OFFICER: Andrew Dalecki
WARD(S) TO WHICH REPORT RELATE(S): N/A
TEL. NO. 0161 607 6961
INTRODUCTION
This report provides Members of the Audit & Accounts Committee with details of the
resources utilised by Internal Audit since the commencement of Internal Audit’s
2009/10 plan and the activities undertaken, primarily reports issued, since the last
sitting of this Committee in January 2010.
The report advises Members of the volume of recommendations categorised by
critical, high, medium, and efficiency, in respect of the control environment under
review. In addition, the report advises Members of the progress made in the
implementation of agreed recommendations by way of Post Implementation
Reviews.
RESOURCES UTILISED
The planned chargeable days, that is those which can be directly attributable to a
client, for the financial year 2009/10 were 2194. Internal Audit has a target to
achieve 100% of these days for the year. We are pleased to report that for the
period 1st April to 31st March 2010, 105% of the overall plan has been delivered
relative to the ‘chargeable days’ element.
Internal Audit continues to respond to the need to undertake special investigations.
Internal Audit has responded to a high number of allegations, and incurred 215% of
its planned activity in this regard. Investigations concluded are reported separately
under Part Two of this Committee.
Exhibit A - Internal Audit Progress Report (As at 31st March 2010)
Directorate
Actual Days
Annual Plan
(Total to date)
(Total to date)
% Plan
Achieved
Chief Executive's
164
153
107%
Children's Services
737
527
140%
Community Health & Social Care
112
181
62%
Customer & Support Services
396
482
82%
Environment
118
86
137%
Sustainable Regeneration
76
60
126%
General
18
280
6%
1619
1769
92%
Irregularity
484
225
215%
Management and Planning
206
200
103%
Total
690
425
162%
Combined Total
2309
2194
105%
Total
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REPORTING
During the period from the 1st January 2009 to 31st March 2010, a total of 17audit
reports have been issued to various client directorates across the council. This does
not include reports that have been issued to schools under our FMSiS reporting
protocol.
The table at Exhibit B below shows the audits that have been undertaken and the
recommendations that have been put forward for management consideration.
A total of 108 recommendations have been made and classified over four categories
of critical, high, medium, and efficiency (See Exhibit E on Page 11 for explanations
of the different categories). 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 critical or high
recommendations and those which fall into the other two categories.
Our recommendations are designed to improve the control environment within the
auditee’s area of responsibility and it is pleasing to note that all of the
recommendations made have been accepted by management. Our audit reports
include an action plan that records the detail of our findings, the related
recommendations and the action management intend to take to implement our
recommendations. This provides a record that progress can be monitored against
when we undertake our Post Implementation Reviews.
The level of assurance given to each audit is a balanced judgement based upon the
subjects’ established system of controls, the subjects’ approach to risk management,
and the nature of any recommendations made (See Exhibit F on Page 11 for
explanations of the different levels of assurance).
Exhibit B - Recommendation Priorities
Recommendations
Audit
Critical
Dukesgate Primary
School
Assurance
Level
High
Medium
2
4
6
Limited
1
1
High
2
15
Limited
Salford Art Gallery
Museum
Efficiency
Number
Agreed
Sickness Management
13
Incident Reporting
3
3
Moderate
Council Tax
1
1
High
Purchase Cards
4
15
Moderate
Community Safety
4
4
Limited
Purchase Cards Children's Homes
3
3
6
Limited
4
4
Moderate
Broadoak Primary School
11
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Recommendations
Audit
Critical
Clifton Primary School
St Mary’s RC (Swinton)
Primary School
St Peters CE Primary
School
R.M.C.H. (Assets and
Accounts)
All Hallows RC Business &
Enterprise College School
Assurance
Level
High
Medium
1
5
6
Moderate
1
2
3
Moderate
7
4
11
Limited
3
2
5
Limited
6
3
9
Moderate
5
6
Limited
5
Limited
8
Limited
Harrop Fold High School
1
Wentworth High School
1
4
PARIS
1
2
5
Efficiency
Number
Agreed
POST IMPLEMENTATION REVIEWS
Internal Audit undertakes Post Implementation Reviews (PIRs) of all the services
that have been subject to an audit.
The timing of a PIR is determined by the agreed implementation dates, detailed
within the audit report, and is generally undertaken within six months of the audit.
The PIR generally takes the form of an actual site visit to verify the implementation
of agreed recommendations. However, the PIR may be undertaken by a process of
self-assessment and formal notification to Internal Audit of implementation of the
recommendations.
During the period from the 1st January 2009 to 31st March 2010, a total of 3 post
implementation reviews have been reported. Exhibit C below provides details of the
progress made by directorates in implementing the agreed recommendations.
In respect of the Post Implementation Reviews undertaken within the reporting
period, there was only one review that identified significant outstanding issues.
However, this related to a PIR that was completed early at the requested of the
Acting Strategic Director (Children’s Services). The PIR was completed three
months after the audit. A further PIR of this area will be completed to ascertain
progress made after six months.
Revised implementation dates have been agreed with management to implement
the recommendations as soon as possible. Where there are high priority
recommendations, or a significant number of medium priority recommendations
outstanding, we will be seeking to confirm their implementation.
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Exhibit C - Results of Post Implementation Reviews
Recommendations
Post Implementation
Review
Sustainable Regeneration
Complaints
Made:
Implemented:
Outstanding:
Critical:
0
0
0
High:
0
0
0
Medium:
2
1
1
Efficiency:
0
0
0
Critical:
3
1
2
High:
22
7
15
Medium:
5
4
1
Efficiency:
0
0
0
Audit Comment: N/A
Barton Moss Secure
Unit
Audit Comment:
The Unit has taken important steps forward in terms of the recommendations made within
the original audit report. An element of progress has been made in the majority of the
required areas. Although the original planned timescales have not been achieved in many
instances, this is due to the nature and complexity of the issues and the intended
implementation dates may have been slightly over-ambitious in the first instance. There are
only a small number of areas where no improvement has been made at all, and in most of
these instances, the recommendations are dependent on the full implementation of other
recommendations.
We feel that whilst progress has been made to date, there is a need to maintain the
current impetus and continue to work towards full implementation of the remaining
recommendations.
Implementation of the
Joint Area Review
(2006)
Recommendations.
Immediate
3
2
1
Within 6 months
2
2
0
Long term
1
1
0
Total
6
5
1
Audit Comment:
Joint Area Reviews (JAR) evaluate and report on the extent to which services within an
area improve the well-being of children and young people. They focus on the experience
of children and young people within the local authority across the five 'Outcomes for
Children' set out in 'Every Child Matters'. These five outcomes are staying safe, being
healthy, enjoy and achieve, making a positive contribution, and achieving economic wellbeing.
In 2006, the council was the subject of a JAR and the findings were reported on 11th April
2006. The report included six recommendations. Although the recommendations were not
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made by Internal Audit, a Post Implementation Review of these recommendations was
completed to verify the status of these recommendations.
AUDIT WORKPLAN FOR QUARTER 1 (20010/11)
Members have stated that they would welcome an indication of the planned
workload of Internal Audit for the ensuing period of account. The table at Exhibit D
below provides an indication of the key 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, and which could be subject to
amendment. Committee summary reports on these subject matters will be issued to
Members at the conclusion of each review.
Exhibit D
Subject Matter
Directorate
Audits currently being reported
Urban Vision Client Side
Sustainable Regeneration
Children’s Homes
Children’s Services
Insurance Claims PIR
Environment
Direct Payments
Community, Health, & Social Care
Depot Security
Environment
Schools PIRs for 08-09 School Audits
Children’s Services
Schools Audits and FMSIS Assessments
Children’s Services
Managing Overtime
Environment
Citywide Services
Environment
National Indicators
Chief Executive’s
Insurance Claims & Highway Investment
Customer & Support Services/ UV
Health & Safety
Sustainable Regeneration
Partnerships PIR
Sustainable Regeneration
Crematorium and Cemeteries
Environment
Audits currently in progress
Salford Women’s Centre
Community, Health, & Social Care
Major Adaptations
Community, Health, & Social Care
Transport
Schools PIRs for 08-09 School Audits and
FMSiS
Community, Health, & Social Care
Schools Audits and FMSIS Assessments
Children’s Services
Children’s Services
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Telephone Contacts and Referral System
Children’s Services
Payroll
Customer & Support Services
Housing & Council Tax Benefits
Customer & Support Services
Treasury Management
Customer & Support Services
Key audits planned to start in Quarter 1 2010/11
Schools Audits and FMSIS Assessments
Children’s Services
Freedom of Information
Children’s Services
Net-TOPIC Grant
Sustainable Regeneration
HMRF Statement of grant usage
Sustainable Regeneration
Integrated Working in Localities
Children’s Services
Fostering & Adoption
Children’s Services
Commissioning
Community, Health, & Social Care
Gifts and Hospitality
Sustainable Regeneration / UV
Growth Point Statement of grant usage
Sustainable Regeneration
LPSA Claim 6
Chief Executive’s
Section 75
Children’s Services
Section 106 (planning obligations) PIR
Sustainable Regeneration
PIRs for 09-10
All Directorates
SUMMARY
The report has identified that at the end of the financial year 2009/10, Salford’s
Internal Audit team achieved its target of planned chargeable days, including
computer audit and investigations.
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 areas where
recommendations have not been completely implemented, and where appropriate,
amended timescales have been agreed for their introduction.
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Exhibit E - Recommendation Priorities:
Critical
High
Medium
Efficiency
These recommendations are control weakness that could have a
significant impact on achievement of the council’s (or respective
organisation’s) objectives.
These recommendations are likely to include fundamental control
breakdowns within the audited service, illegal acts, fraud, and
recommendations for improvements in systems design.
These recommendations are likely to consist of non-recurring,
explainable events in internal controls which may have already been
rectified.
These recommendations relate to improvements in working
practices that would lead to a more efficient and/or cost reduced
service.
Exhibit F - Levels of assurance:
High
Moderate
Limited
No
Key controls are adequately designed and are operating effectively to
deliver the area’s key objectives.
Some weaknesses in the design and/or operation of controls, but
low impact on the achievement of the area’s key objectives.
Weaknesses in the design and/or operation of controls which could
have a significant impact on the achievement area’s objectives but
should not have a significant impact on the achievement of the
council’s objectives.
There are weaknesses in the design and/or operation of controls that
not only have a significant impact on the achievement of the area’s
objectives but also may put at risk the achievement of the council’s
objectives.
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