PART ONE
ITEM NO. 11
REPORT OF THE CITY TREASURER
TO THE: AUDIT & ACCOUNTS COMMITTEE
ON Wednesday, 27th January 2010
TITLE:
INTERNAL AUDIT BENCHMARKING
RECOMMENDATION:
That Members consider the report which provides details of the benchmarking activity
undertaken by Internal Audit during 2009.
EXECUTIVE SUMMARY:
The purpose of this report is to inform Members of the results of the benchmarking
exercise undertaken by Internal Audit.
BACKGROUND DOCUMENTS:
Various reports and working papers.
KEY DECISION:
NO
DETAILS:
See report below – Internal Audit Benchmarking
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
Internal Audit – Benchmarking 2008/9 Actuals and Estimates
2009/10
INTRODUCTION
Salford Internal Audit (SIA) has participated in the CIPFA Benchmarking exercise for
several years. The purpose of engaging in this form of activity is to identify areas where
the Council’s Internal Audit service scores favourably against other authorities, those
areas where it does not perform as favourably, and identify potential areas for
improvements.
It should be noted that there are inherent risks in making intra-authority comparisons in
that the basis for the compilation of data differs between authorities, such as volume of
client base, period of account, and chargeable days, even though CIPFA has produced
guidance which authorities should follow in the compilation of data. This has become
apparent when participating in Benchmarking Club activities.
CIPFA’s view of benchmarking is that it should not be construed as a competitive
measure, but should be used to identify areas for improvement amongst like authorities,
bearing in mind the basis of data compilation.
As part of the data collation exercise, each authority is requested to nominate a
maximum of eighteen authorities against which its own data can be measured. Salford
Internal Audit chose participating Greater Manchester authorities, and other similar
metropolitan and unitary authorities in terms of services provided and demographics of
population. The final report for 2008/9 revealed that Salford Internal Audit was compared
against eighteen other authorities, as indicated below.
Barnsley
Bolton
Bury
Gateshead
Halton
Oldham
Rochdale
Rotherham
Sefton
Solihull
St Helens
Stockport
Sunderland
Tameside
Trafford
Wakefield
Warrington
Wigan
Findings of the Exercise
This section provides details of the results from comparing the actual costs of providing
an in-house internal audit service, and the actual performance of the service for the year
2008/9 against comparator authorities:
1)
2)
3)
4)
5)
6)
The cost per chargeable day for Salford Internal Audit (SIA) staff is 11% under the
group average.
SIA staff costs excluding superannuation and national Insurance are 6% less than
the group average. Only three organisations incurred costs that were less than
Salford in this category.
The number of chargeable days per auditor for SIA amounted to 9% less than the
group average. This was due to Salford’s commitment to the training and
development of our human resources, also a higher than average level of sickness
absence reduced the number of chargeable days per auditor
On average Salford has approximately the same level of annual leave across all of
the comparators.
In respect of other non-chargeable days, such as administration, recruitment, staff
appraisals, Salford incur 8.66% of the available days against a group average of
almost 14.47%.
In terms of overheads, Salford Internal Audit incurs the second highest cost in
terms of transport, due to staff being in receipt of Essential Car User. However,
with all other running costs such as, accommodation, IT support and Central
establishment charges included, Salford had the third lowest cost and were 49%
below the group average.
From the survey undertaken, the following matters relate to estimates for the current
financial year, 2009/10:
1)
2)
3)
4)
5)
6)
7)
The cost per chargeable day is estimated at being 13% less than the group
average.
The cost per auditor in-house is estimated to be the second lowest in the group,
19.5% less than the group average.
The number of chargeable days per auditor has been estimated at 174 days,
compared to a group average of 179 days. This is an estimated increase of 10%
per auditor.
Salford’s estimates for professional training equate to 10.9 days per auditor
against a group average of 9.6 days. This is an estimated decrease of 58% per
auditor. This has decreased as staff are attaining their professional qualifications.
It is estimated that other non-chargeable days will be 10.9% of the available days
against a group average of 12.5%.
In compiling estimates for sickness, it is best practice to include as much known
data as possible, particularly in respect of long-term recuperation from previous
periods of absence. This has resulted in 10.2 days per auditor being estimated on
average compared to the group estimated average of 6.1 days per auditor.
The analysis of estimates in conducting reviews of the Council’s fundamental
systems, such as Payroll, Council Tax etc, has shown Salford Internal Audit to
estimate the least amount of time in auditing these systems. Not all of the main
systems are reviewed annually in that a follow-up review will take place after a
main review, which in essence means that a fundamental system is reviewed
biennially.
Conclusions
Overall, the benchmarking exercise has found that Salford’s Internal Audit service
compares favourably with its comparator authorities. The following key points are of
note:
1)
2)
3)
4)
.
A cost effective and efficient audit service is provided to the Council.
SIA’s approach to auditing fundamental systems is recognised as good practice by
the Audit Commission as less input is required to achieve the same level of
assurance as approaches taken by our comparators.
The amount of training per member of staff is reducing as they attain their
professional qualifications.
In terms of being able to respond to requests from Directorates for specific pieces
of work, including responses to Special Investigations, it has been necessary to
create a contingency against which allocations of time can be drawn down and
charged appropriately. It is normal practice within internal audit units to allow for a
contingency for unforeseen circumstances.