AUDIT & GOVERNANCE COMMITTEE 14 April 2015 AUDIT MONITORING REPORT: January – March 2015 1 LEAD OFFICER: Angela George, Agenda Item 8 Acting S.151 Officer AUTHOR: Peter Usher, Audit Manager 1.0 INTERNAL AUDIT WORK COMPLETED IN PERIOD (JANUARY – MARCH 2015) 1.1 This report summarises progress on internal audit work in the latest period. Final risk-based audit reports 1.2 Six final reports for 2014/15 have been agreed and summaries are attached at Appendix A. Full copies of these reports are available to Members of the Committee. Assurance levels were as follows: Sundry debtors – Substantial (see Appendix A – 1) Payroll – Substantial (see Appendix A – 2) Parks Service, including Crematorium - Reasonable (see Appendix A – 3) IT Strategy – Substantial (see Appendix A – 4) Leisure – NCL contract management – Reasonable (see Appendix A – 5) Partnership governance – Reasonable (See Appendix A – 6) 1.3 Progress against individual audits in the 2014/15 plan is set out in the table below. This is shown against the original planned schedule. The plan comprises 17 risk-based audits (R) and 3 cyclical audits (C) of fundamental systems. There is also provision for follow up work on 2 audits completed in 2013/14 where the assurance level was less than reasonable – these are Housing Options and Petty Cash. Qtr 1 (Apr – June) Status R1 Freedom of Information Act compliance Final report issued September 2014. R2 Change management Final report issued January 2015. R3 Refuse Collection Final report issued 6 October 2014. R4 Parks & Open Spaces Final report issued March 2015. R5 External funding Final report issued 11 September 2014. Qtr 2 (July – Sept) R6 Customer Services/Access Strategy Final report issued 27 November 2014. R7 Contract management – RBSS Audit & Governance Committee approved cancellation of this audit given changes to Revenues and Benefits Shared Service. The 20 days allocated budget will be taken as a saving in 2014/15.
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AUDIT & GOVERNANCE COMMITTEE 14 April 2015 AUDIT MONITORING REPORT: January – March 2015
1
LEAD OFFICER: Angela George, Agenda Item 8 Acting S.151 Officer AUTHOR: Peter Usher, Audit Manager 1.0 INTERNAL AUDIT WORK COMPLETED IN PERIOD (JANUARY – MARCH 2015) 1.1 This report summarises progress on internal audit work in the latest period.
Final risk-based audit reports
1.2 Six final reports for 2014/15 have been agreed and summaries are attached at Appendix A.
Full copies of these reports are available to Members of the Committee.
Assurance levels were as follows:
Sundry debtors – Substantial (see Appendix A – 1)
Payroll – Substantial (see Appendix A – 2)
Parks Service, including Crematorium - Reasonable (see Appendix A – 3)
IT Strategy – Substantial (see Appendix A – 4)
Leisure – NCL contract management – Reasonable (see Appendix A – 5)
Partnership governance – Reasonable (See Appendix A – 6)
1.3 Progress against individual audits in the 2014/15 plan is set out in the table below. This is shown
against the original planned schedule. The plan comprises 17 risk-based audits (R) and 3 cyclical
audits (C) of fundamental systems. There is also provision for follow up work on 2 audits
completed in 2013/14 where the assurance level was less than reasonable – these are Housing
Options and Petty Cash.
Qtr 1 (Apr – June) Status
R1 Freedom of Information Act compliance
Final report issued September 2014.
R2 Change management Final report issued January 2015.
R3 Refuse Collection Final report issued 6 October 2014.
R4 Parks & Open Spaces
Final report issued March 2015.
R5
External funding Final report issued 11 September 2014.
Qtr 2 (July – Sept)
R6 Customer Services/Access Strategy Final report issued 27 November 2014.
R7
Contract management – RBSS
Audit & Governance Committee approved cancellation of this audit given changes to Revenues and Benefits Shared Service. The 20 days allocated budget will be taken as a saving in 2014/15.
AUDIT & GOVERNANCE COMMITTEE 14 April 2015 AUDIT MONITORING REPORT: January – March 2015
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R8 Information Security / Records
management
Audit & Governance Committee approved this review to be undertaken in April 2015. Scoping meeting has been held and Client Notification issued in March 2015.
R9 IT Strategy support to service plan -
Final report issued March 2015.
R10
Communications
The Council appointed a new Communications Manager in January 2015 and the audit scope was agreed with her in March. Audit work is ongoing.
R11
NCL contract management
Draft report issued 10 December 2014. Closeout meeting held January 2015. Final report issued April 2015
R12 Performance management
Draft report issued and closeout meeting held 18 March Report still to be finalised
Qtr 3 or 4 (Oct – Mar 2015)
R13
Beacon - New operating arrangements
Work in progress Draft report was due by 31 March 2015 but delayed following staff sickness in Internal Audit.
R14
Accommodation strategy
Scoping meeting held and Client Notification issued Dec 2014. Work in progress Draft report now due by 30 April 2015.
R15 Cemeteries & Crematorium
Combined audit with Parks Service – see R4 above.
R16 Partnership governance
Final report issued March 2015.
R17 NCL Pool extension
Final report issued October 2014. Substantial assurance
C1 Payroll
Final report issued March 2015
C2 Sundry debtors
Final report issued March 2015
C3
Benefits
This audit is being done jointly to cover Copeland and Carlisle. Draft report was due 31 March 2015 but will be delayed until end of April.
1.4 There were 20 reports in the original plan. The Committee approved the cancellation of 1 audit
and the merger of 2 other audits into a single review. The revised plan therefore comprises 18
AUDIT & GOVERNANCE COMMITTEE 14 April 2015 AUDIT MONITORING REPORT: January – March 2015
3
audits. Of these, 12 have been finalized, 1 has been issued in draft and 5 are still work in
progress. These are:
Information Security / Records management;
Communications
The Beacon
Accommodation strategy
Benefits (being done jointly with Carlisle City Council)
National Fraud Initiative
1.5 Data for the National Fraud Initiative was uploaded to the NFI 2014 website in October and
matches were made available for investigation at the end of January 2015. Progress has been
made on investigating matches although Internal Audit has only recently been advised of the
contact to be set up to investigate benefit matches.
1.6 Data matching in order to identify Single Person Discount (SPD) fraud is now being undertaken
annually. Relevant information (council tax and electoral roll) was uploaded to the NFI Flexible
Matching Service website in December 2014 and the SPD match reports are being investigated
by the Revenues Section.
2.0 INTERNAL AUDIT PERFORMANCE AGAINST AUDIT PLAN 2.1 Internal Audit performance measures are set out at Appendix B. 3.0 CONCLUSION AND RECOMMENDATION 3.1 The Committee is asked to note progress against the audit plan and that final reports
for remaining 2014/15 planned audits should be reported to the next Committee along with the Internal Audit annual report.
List of Appendices: Appendix A – Summaries of final reports agreed in period Appendix B – Performance measures Consultees: Corporate Leadership Team
Copeland does not currently have a Corporate Health & Safety Risk Register. The Council as a corporate body has overarching responsibility for the health and safety and welfare of employees and those who are affected by the Council’s activities.
A Corporate Health & Safety Risk Register would help management to:
understand the nature of the risks the organisation faces;
be aware of the extent of those risks;
identify the level of risk that they are willing to accept;
recognize its ability to control and reduce risk.
Agreed management action:
The wider benefits of a H&S risk register to support
the corporate risk register are acknowledged.
Information from individual departments risk
assessments will be reviewed and relevant risks
identified for a corporate H&S risk register.
A reviewed H&S strategy with supporting H&S
policy is being presented to executive as part of the
final years report on H&S and the corporate H&S
risk register will be included in this strategy.
This recommendation is council wide and the
timescale for completion reflects this. Recommendation 6:
The Council should compile a register of the main health and safety risks which are under its
control. The register should list the main sources of harm to staff, public and Council buildings and
summarise the steps which should be taken to manage the risks.
5.3 Information - reliability and integrity of financial and operational information.
● Medium priority
Audit finding Management response
(a) Information Management
The Parks Department has a Local Asset Register which mainly records items of low value. The
register is held electronically on the Council’s network using a spreadsheet. There is the facility on
the spreadsheet to record when individual items were checked to ensure they are still held by the
Council, and also space to record when they are written off. After discussions it was ascertained
that regular checks are not carried out and that write offs are recorded in a separate hard copy
book but then not transferred to the spreadsheet.
The spreadsheet records “estimated costs to renew” but does not record the actual purchase price of any of the items listed. Financial Regulations state “To ensure that an asset register is maintained in accordance with good practice. All assets with either a purchase price (if known) or an appropriate replacement value of over £100 should be included. Highly desirable portable assets with a lower value may also be included.”
Agreed management action:
Asset register spreadsheet now updated to include
column for stock check and by whom, random
stock checks to be carried out on 6 monthly basis
by Officer nominated by Parks Manager.
Purchase prices now being input onto spreadsheet
Recommendation 7:
Regular checks should be carried out to ensure all equipment is accounted for and where
necessary write offs should be recorded on the spreadsheet. Any discrepancies should be
investigated and reported where appropriate.
Recommendation 8:
To aid with any request for information on the value of assets held or any potential insurance claim
purchase costs should be recorded on the Local Asset Register.
Risk exposure if not addressed:
All relevant records and accounts are not updated
Loss of key information
Duplication of work, not efficient use of resources
A Summary Total Labour Rate spreadsheet, used by the Parks department for the calculation of the annual quotations does not reflect the current employers National Insurance and Superannuation rates in the calculation of an hourly labour rate. Contract management arrangements should ensure that costs are fully covered and external work is not an additional cost to the council. Finance has recently updated the spreadsheet with the correct costs, so 2015/16 quotations will be correct; however, previous quotations have been inaccurate but the amounts are not material.
Agreed management action:
Spreadsheet reviewed and updated on an annual
basis, labour rates are reviewed and updated by
finance department.
If there is any pay increases mid-way through the
year the labour rate needs to be amended
accordingly
Recommendation 9:
The Parks Department Labour rates should be independently reviewed annually and when there
are any changes to pay scales so that the costings are as accurate and as up to date as possible.
Risk exposure if not addressed:
Unnecessary financial costs to the Council
Budget position is compromised
Inaccurate information/advice given to customers
Responsible manager for implementing:
Parks Manager
Date to be implemented:
December 2015
5.4 Outstanding Actions from Previous Audit Review
5.4.1 There were 4 actions agreed as part of the previous reviews of Parks and Crematorium. The Acting Head of Copeland Services confirmed during
the audit that these had either been implemented or were no longer relevant (in the case of the Book of Remembrance) and these will be updated
3. Summary of Recommendations, Audit Findings and Report Distribution
3.1. There is one audit recommendation arising from this audit review and this can be summarised as follows:
Comment from the Interim Director of Resources and Strategic Commissioning
This has been a very useful piece of work and linking to the Customer Services Strategy is critical. It would be helpful to revisit the ICT Strategy once it
has been implemented and is up and running.
No. of recommendations
Control Objective High Medium Advisory
1. Management - achievement of the organisation’s strategic objectives achieved - - -
2. Regulatory - compliance with laws, regulations, policies, procedures and contracts (see section 5.1) - - 1
3. Information - reliability and integrity of financial and operational information - - -
4. Security - safeguarding of assets - - -
5. Value - effectiveness and efficiency of operations and programmes - - -
1.1. This report summarises the findings from the audit of Leisure, Contract Management. This was a planned audit assignment which was undertaken
in accordance with the 2014/15 Audit Plan.
1.2. This audit is linked to Copeland Council’s Corporate Plan 2013-15 mission statement to provide “An effective Council that works with partners and
communities to arrange services for residents in Copeland” and the priority to be an effective public service partner so we can get the best deal
for Copeland.
1.3. The Council’s contract with North Country Leisure (NCL) provides a key service to residents of Copeland. This audit is to ensure that the contract
is effectively managed and that service standards are met and value for money obtained.
2. Assurance Opinion
2.1. From the areas examined and tested as part of this audit review, we consider the current controls operating within Leisure – Contract
Management provide REASONABLE assurance. All issues identified related to Property matters rather than the management of the leisure
contract.
Note: as audit work is restricted by the areas identified in the Audit Scope and is primarily sample based, full coverage of the system and
complete assurance cannot be given to an audit area.
Copeland Borough Council | Audit of Leisure, Contract Management
Terms of Reference / Partnership Agreements for all the strategic partnerships should be held
centrally for reference.
Agreed management action:
1. A task will be given to obtain signed copies of
all the partnership documents which have been
through the Council’s Executive for approval.
2. Copies shall be obtained for those partnerships
for which we do not currently hold terms of
reference centrally. These will be held centrally
electronically and in a paper file.
Risk exposure if not addressed:
The Council will not be able to fully assess its commitment to external partners.
Responsible manager for implementing:
Head of Customer and Community Services
Date to be implemented:
30 June 2014
Current status:
The Policy and Scrutiny Officer led on a project to review partnerships and compiled the Terms of Reference / Partnership Agreements for each of the
Strategic Partnerships into a central register.
Internal Audit has confirmed that TOR, etc. are held on file except for 4/29 – North Country Leisure Board (contract in place but no details held on file),
Copeland Housing Partnership, Cumbria LEP and Cumbria Tourism Partnership (32 Partnerships detailed on the register - 3 partnerships are new to the
register as of January 2015 and so TOR’s are being developed for these partnerships. These are Cumbria Resilience Forum, Public Health Alliance and
Nuclear New Build LA Group).
Conclusion:
Terms of Reference / Partnership Agreements for the majority of strategic partnerships are now held centrally
for reference; however, remain outstanding for 3 partnerships.
Further action required?
Yes – Terms of Reference /
Partnership Agreements remain
outstanding for 3 partnerships.
APPENDIX B AUDIT & GOVERNANCE COMMITTEE 14 April 2015
INTERNAL AUDIT PERFORMANCE MEASURES (Q4 2014/15)
KPI Measure of Assessment Target Actual performance data
Output Measures
Planned audits completed
To enable an annual opinion to be provided on the overall systems of risk management, governance and internal control.
% of planned audit reviews (or approved amendments to the plan) completed in respect of the financial year.
95% (annual per shared service agreement, 95% target reflects need for audit plans to be dynamic and respond to emerging risks).
This indicator will be monitored and reported quarterly to ensure the plan is on track to be delivered.
12 out of 18 reports in the revised plan have been finalised.
The remaining reviews are work in progress at 31 March but will be finalised in time for annual report on 2014/15.
In addition, 2 follow up reports have been completed in 2014/15.
Cumulative planned days to end Q4 – 460 Actual days – 430 (this does not include 20 days completing 13/14 work in 14/15)
480 days in revised 14/15 plan following agreement to not undertake contract management audit of RBSS.
Estimate that approximately 50 audit days will need to be in Q1 of 15/16 to enable completion of 2014/15 plan.
Audit scopes agreed % of audit scopes agreed with management and issued before commencement of the audit fieldwork
100%
Reported quarterly
Actual – 100%
APPENDIX B AUDIT & GOVERNANCE COMMITTEE 14 April 2015
INTERNAL AUDIT PERFORMANCE MEASURES (Q4 2014/15)
KPI Measure of Assessment Target Actual performance data
Draft reports issued by agreed deadline
% of draft internal audit reports issued by the agreed deadline or formally approved revised deadline agreed by Audit Manager and client.
80% (target is a reflection that this is a new way of working and deadlines may be impacted by several factors including client availability)
Reported quarterly
Actual -100%
Timeliness of final reports
% of final internal audit reports issued for senior manager comments within 5 working days of management response or closeout.
90% (target recognises that there may on occasion be delays in finalising reports, eg where further work is required to resolve matters identified at closeout meeting)
Reported quarterly
Actual – 100%
Recommendations agreed
% of recommendations accepted by management
95% quarterly (target reflects that it is management’s responsibility to assess their risks and take final decision on whether risk may be accepted)
Actual – 100%
Follow up % of high priority audit recommendations implemented by target date
100% Quarterly Overdue actions are now included in a separate report from S 151 Officer.
Assignment completion
% individual reviews completed to required standard within target days or prior approved extension by Audit Manager
75% (target reflects that this is a new way of working for the audit service and systems for monitoring time spent on assignments may need to be further developed)
Actual – 100%
Time for individual audits has been adjusted either up or down to reflect work required and time to agree reports.
APPENDIX B AUDIT & GOVERNANCE COMMITTEE 14 April 2015
INTERNAL AUDIT PERFORMANCE MEASURES (Q4 2014/15)
KPI Measure of Assessment Target Actual performance data
Quality Assurance checks completed
% QA checks completed 100%.
Reported quarterly
Actual – 100%.
Customer Measures
Post audit customer satisfaction survey feedback
% of customer satisfaction surveys scoring the service as ‘good’
80% (target reflects the need for internal audit to strive to deliver a customer focused service, but that due to the nature of internal audit roles and responsibilities, may not always elicit positive feedback)
Reported quarterly
This will be reported in annual report once sufficient feedback forms have been returned.
People Measures
Efficiency % chargeable time 80% (target takes account of non-chargeable activities such as staff holidays, service development projects and team meetings.
Reported quarterly
Actual YTD – 79%
This percentage is for all staff across IA Shared Service.