AGENDA ITEM 6
BOROUGH OF POOLE
REPORT TO COMMUNITY SUPPORT & EDUCATION SCRUTINY COMMITTEE
17 FEBRUARY 2004
INTERNAL AUDIT & REVIEW SECTION –
JULY 2003 – DECEMBER 2003
PART OF PUBLISHED FORWARD PLAN: NO
STATUS – GENERAL
1. PURPOSE AND POLICY CONTEXT
1.1 This Report gives details of the audit work undertaken by the Section (relating to Community Support and Education areas) during the second and third quarters of 2003/2004 and highlights the key findings and recommendations.
2. DECISION REQUIRED
2.1 Members are asked to note the following report on the audits carried out (relating to Community Support and Education areas) during the second and third quarters of 2003/2004.
3. BACKGROUND
3.1 The Internal Audit & Review Section reports its performance to the Resources Overview Group and it was recently agreed that audit issues relating to services be reported to the scrutiny committees.
4. INTRODUCTION TO INTERNAL AUDIT & REVIEW
4.1 Internal Audit and Review section, encompassing Internal Audit and Risk Management and Insurance, sits within Financial Services.
4.2 Internal Audit is commonly defined as an “Assurance function that primarily provides independent & objective opinion to the organisation on the control environment, comprising risk management, control and governance, by evaluating its effectiveness in achieving the organisations’ objectives. It objectively examines, evaluates and reports on the adequacy of the control environment as a contribution to the proper, economic, efficient and effective use of resources.” (Source: CIPFA Code of Practice for Internal Audit in Local Government in the UK (2003))
4.3 There is a statutory requirement for the Council to maintain an internal audit function. Section 151 of the Local Government Act 1972 requires that authorities “make arrangements for the proper administration of their financial affairs” and the Accounts and Audit Regulations 2003 require the Council to operate "proper internal audit practices”. The role of Internal Audit is defined within the Council’s Financial Regulations.
4.4 The Chief Auditor reports to the ‘Section 151 Officer’ (Head of Financial Services) and has direct access, if needed on a particular matter, to the Chief Executive, and Leader of the Council.
4.5 The work carried out by Internal Audit is determined by the production of a risk based Audit Plan, which is approved by the S151 Officer and elected members. Those services/systems with higher risk will attract a higher level of audit resource. Additional work carried out includes investigations, advice and consultancy.
5. PLANNED AUDITS
5.1 Audits were completed in the following Service Units:
Adult Social Services Provider
5.1.1 Community Employment - The system generally appeared to be operating satisfactorily. However a total of three recommendations were made, all were ‘medium priority’ and covered:
· Procedures for the receiving of income
· Collection and security of income
· Written procedures
5.1.2 Direct Payments - The system generally appeared to be operating satisfactorily.
No recommendations were made.
Culture and Community Learning
5.1.3 Adult Learning - The system generally appeared to be operating satisfactorily. However a total of eighteen recommendations were made including nine which had not been implemented from the previous audit (three ‘high’, four ‘medium’ and two ‘low’ priority – see para. 5.1).
The ‘high priority’ recommendations reiterated from the previous audit were:
· Compliance with Contract Standing Orders
· Written requisitions completion
· Regular review of outstanding orders
The following ‘medium priority’ recommendations were also reiterated:
· Completion of official orders
· Full completion of payment slips
· Documented procedures
· Control of financial stationery
The new recommendations made were as follows:
High Priority
· Action plan regarding prompt and accurate updating of the AQUA computer system
· Urgent action to clear backlogs in the processing of enrolments
Medium priority
· Enrolments processing promptness
· Official receipts for cash payments from learners
· Review of system for processing refunds
· Regular petty cash float checks
· Creation of imprest account for Petty Cash
· Risk assessment regarding banking procedures
Housing and Community Safety
5.1.4 Homelessness, Social Landlords & Asylum Seekers – The system generally appeared to be operating satisfactorily. However a total of nine recommendations were made including one which had not been implemented from the previous audit (‘medium’ priority – see para. 5.1)
The recommendation (‘medium priority’) reiterated from the previous audit was:
· Follow up visits for Housing Benefit cases
The following four new ‘medium priority’ recommendations were made :
· Structured programme of regular visits
· Temporary accommodation compliance with Contract Standing Orders
· System prompt re the raising of debtor accounts
· Review of arrears printouts
5.1.5 Community Safety / CCTV - The system generally appeared to be operating satisfactorily.
No recommendations were made.
5.1.6 Housing Strategy and Advice - The system generally appeared to be operating satisfactorily. No recommendations were made.
5.1.7 Housing Renewal Grants – The system generally appeared to be operating satisfactorily. However a total of four recommendations were made. Three ‘medium’ priority recommendations included:
· Procedure documentation
· Grant condition checks
· Complaints procedure
Housing Management
5.1.8 New Academy Computer System – The system generally appeared to be operating satisfactorily. However a total of 10 ‘medium priority’ recommendations were made covering:
· Management reports
· Reconciliation between rent accounts and main accounting system
· Prompt follow up procedures for notification of deaths
· Procedures manual to be updated
· Protocol required for data transfer procedures
· Reviewing system administrator security
· Use of notification form for new users of the system
· Introduction of a leavers notification system
5.1.9 Planned Maintenance and Response Repairs – The system generally appears to be operating satisfactorily. No recommendations were made.
Pupil and Parent Support
5.1.10 Down in the Woods Nursery – The conditions of the Nursery Education Grant (NEG) appeared to be complied with. No recommendations were made.
5.1.11 Noah’s Ark Nursery – The conditions of the Nursery Education Grant (NEG) appeared to be complied with. No recommendations were made.
School Advice and Support
5.1.12 Poole Grammar School – The system generally appeared to be operating satisfactorily. However a total of two recommendations were made including one which had not been implemented from the previous audit (‘high’ priority – see para. 5.1). The one repeat ‘high priority’ recommendation covered:
· Compliance with the Council’s Contract Standing Orders
5.1.13 Corfe Hills School – The system generally appeared to be operating satisfactorily. However a total of five recommendations were made including one which had not been implemented from the previous audit (‘medium’ priority – see para. 5.1).
The ‘medium’ recommendation reiterated was:
· Revision of the Tendering section of the school’s Finance Manual
The two new ‘high priority’ recommendations were:
· Compliance with the Council’s Contract Standing Orders
· Consideration of all risks and insurance cover required for major building projects
The one new ‘medium priority’ recommendation covered:
· Staff signing up to a ‘use of computers’ policy
5.1.14 Ad Astra 1st School - The system generally appeared to be operating satisfactorily. However a total of six recommendations were made including two which had not been implemented from the previous audit (‘medium’ priority – see para. 5.1).
The recommendations reiterated were ‘medium priority’ covering;
· Written procedure notes for the financial systems should be produced
· The Register of Pecuniary Interests should be reintroduced
All new recommendations made were ‘medium priority’ covering:
· The three year business plan should be completed
· Nomination of a Data Protection Officer
· Staff should sign up to a ‘use computers’ policy
· Inventories agreed and signed off annually
5.1.15 Turlin Moor Middle School - The system generally appeared to be operating satisfactorily. However a total of fourteen recommendations were made including one which had not been implemented from the previous audit (‘medium’ priority – see para. 5.1).
The one repeat high priority recommendation covered:
· awarding contracts
One medium priority recommendation was also reiterated:
· Financial monitoring returns
Eight ‘medium priority’ recommendations were made covering:
· Delegated financial powers
· Register of pecuniary interests
· Password changes and password protected screen
· Risk assessment of access to school premises
· Risk assessment of banking procedures
· Requisitions and official orders
· Letting fees agreed by the Governors and reviewed annually
· Close control over “administrative supplies” budget
6. ADVICE, CONSULTANCY & OTHER WORK
6.1 Advice and Consultancy
6.1.1 ALMO – Assistance was provided with regard to the Authority’s work on setting up an Arms Length Management Organisation (ALMO) for Housing Management Services.
6.2 Performance Indicators
6.2.1 Work was carried out in conjunction with the Audit Commission on the audit of the Authority’s Performance Indicators for 2002/03.
6.3 Risk Management
6.3.1 Audit and Review are assisting the Management Team with the development of a risk management framework in conjunction with the performance management framework.
6.3.2 The Audit Plan has been revised in line with an interim risk assessment and agreed with the Head of Financial Services and the Audit Commission.
7. RECOMMENDATIONS NOT IMPLEMENTED
7.1.1 Follow up reviews were carried out to ascertain whether the risks identified in previous audits had been appropriately addressed through implementation of the audit recommendations. The tables below summarise the findings of the follow up audits.
Number of Recommendations Followed Up in the Quarter / Number of Recommendations Not Implemented During Quarter / % Recommendations Not Implemented71 / 15 / 21%
7.1.2 Audit recommendations are graded from three stars (high priority) to one star (low priority). A three star recommendation will be made were there is considered to be a high risk, either operationally or strategically, to the Council, and are expected to be addressed within a short timescale. One star recommendations are normally of an advisory or low risk nature.
7.1.3 Depending on the urgency and risk of the recommendation, Internal Audit will work with the Service Unit to obtain a commitment to address any outstanding risks. If this does not obtain a satisfactory response, then this will be escalated to the appropriate level of management, including the S151 Officer and Management Team. It may be appropriate for managers to “accept the risk” of non-implementation of a recommendation. However, where this is not deemed to be appropriate, this would be escalated as above and ultimately informed to members via the appropriate Scrutiny Committee.
Audit(Service Unit) / No. Original Recs / Recs
Not Implemented / Priority of Recs Not Implemented / Service Unit Head/ Headteacher Reasons for Non-Implementation / Further Action Taken
Adult Learning (Culture and Community Learning) / 37 / 9 / 3 high priority, 4 medium priority, 2 low priority / · “Due to time constraints” / · Recommendations have been re-iterated and an action plan for implementation agreed.
Homelessness (Housing & Community Services) / 7 / 1 / 1 Medium Priority / · “Due to time constraints” / · Recommendations have been re-iterated and an action plan for implementation agreed.
Poole Grammar School (SASS) / 4 / 1 / 1 high priority / · “Due to time constraints” / · Recommendations have been re-iterated and an action plan for implementation agreed.
Corfe Hills School (SASS) / 8 / 1 / 1 medium priority / · “Due to time constraints” / · Recommendations have been re-iterated and an action plan for implementation agreed.
Ad Astra 1st School (SASS) / 10 / 2 / 2 medium priority / · “Due to time constraints” / · Recommendations have been re-iterated and an action plan for implementation agreed.
Turlin Moor Middle (SASS) / 14 / 1 / 1 medium priority / · “Due to time constraints” / · Recommendations have been re-iterated and an action plan for implementation agreed.
8. Investigations
8.1 A follow up was commenced during the period into the review of financial management
arrangements within Social Services. Progress on the implementation of the recommendations
contained in the report will be reported to the next committee meeting.
8.2 Work was completed on the Audit Commission’s “National Fraud Initiative” data matching
exercise. Approximately £11,200 of savings were identified at Poole as a result of the exercise, all relating to housing benefit overpayments.
8.3 Further work was carried out on a matter concerning Council landlord consent.
8.4 A review into the residential/home care budget status was carried out. Recommendations were
made to improve management reports, computer system controls and budgetary control.
8.5 A review was carried out to concerning the use of New Opportunities Fund (NOF) grant at an
after school club. The NOF grant appeared used in accordance with the guidelines and
therefore no formal recommendations were made.
8.6 Audit & Review investigated an incident involving a sum of missing money at a school.
Recommendations were made to improve income procedures/security.
9. Conclusion
9.1 Recommendations have been made following audits and investigations in a number of areas. These should ensure that adequate internal controls are operating in the Authority. The recommendations will be followed up to ensure that any risks have been appropriately addressed.
R L Jackson
Head of Financial Services
Background Papers Nil
Name and Telephone Number of Officer to Contact: Keith McCormick 633123
file metis/committee reports\CSESCdec2003
1