Agenda item

FSD 18037

The Internal Audit Progress report was written by David Hogan, Head of Audit.

The report had been drafted to update Members of recent audit activity across the Council and provided an update on matters that had arisen since the last meeting of the Committee. The Committee was asked to note the report and to comment on matters arising, as well as noting the list of internal audit reports published on the Council’s web site. Members were also being asked to approve the nomination for Auditor of the Year and to note the latest position on the Council’s Departmental and Corporate Risk Registers.

The Head of Audit briefed Members around the Priority 1 (P1) update for document storage and retention. It had been mentioned previously that this matter was directly related to the Civic Centre Accommodation Strategy. It was noted that the brief for the Instruction and Intention to Tender for a Multi-Disciplinary Consultancy Evaluation for the Civic Centre Strategy referenced the need to move to a paper light environment, and it was expected that the consultants would be appointed in quarter 2 of 2018.

It was noted that 20 Bromley officers had been emailed and reminded to confirm the destruction of 904 boxes held by TNT. Some officers were planning to visit the storage site during the summer when work levels had decreased. It was clarified that the storage site was based in Essex. The Chairman enquired how the costs for the storage were apportioned, and the Head of Audit responded that he presumed that the costs would be recharged to the various departments. Ms Pilkington informed the Committee that the cost of storing the 904 boxes was in the region of £2k per annum. 

Members were told that going forward (and especially with the current GDPR initiatives) there would be a requirement for a twofold focus. One would be concerning the destruction of existing boxes, and the other focus would be on reducing the volume of stored data. The P1 recommendation remained outstanding.

With respect to the Review of Waivers, Members heard that both P1 recommendations were being progressed as part of the electronic authorisation process, and that this was connected to the development of the Contracts Database. (CDB).  In the meantime, paper authorisation forms were being used. Although the recommendations were in progress, they remained open. It was expected that the renewal reminders being generated from the Contracts Database would reduce the number of waivers requested.

Members were appraised concerning the Reablement Service. They were informed that as the service had remained in-house, the P1 recommendation relating to the use of the Outcome Management Tool had been re-instated. The P1 recommendation relating to key performance data had only been partially implemented. It was clarified that the ‘target of 65%’ related to time actually spent with clients.

A brief update was provided concerning the Contributions Policy. It had previously been the case that users of the Reablement Service were not being charged for cancelled calls where sufficient notice had not been provided. Charges were now being levied and this recommendation was regarded as implemented.

Members were reminded that 2 P1 recommendations had previously been suggested with respect to Contract Monitoring. This was particularly related to the storing of supporting documentation for contracts being stored in a single location for ease of access. The two P1 recommendations were now regarded as closed. 

An update was provided concerning the three P1 recommendations relating to Agency Staff. The first recommendation was in respect of governance arrangements, and this remained outstanding. The second recommendation was to review agency staff engagements which had exceeded six months. This recommendation was being progressed but was also still regarded as being outstanding. The final recommendation was with respect to the recovery of IT equipment when an agency worker left the employ of the Council; this recommendation was regarded as implemented. 

Members were reminded that they had previously been notified that Limited Assurance had been assigned to the Community Equipment Store (TCES) audit. There had been a P1 recommendation that related to a lack of clarity concerning the roles and responsibilities for contract monitoring. Evidence had now been provided that the various roles pertaining to TCES had been allocated, and that the relevant officers understood their roles. In view of this, the P1 recommendation had been signed off, and other less urgent recommendations would be reviewed in 2018-2019

Councillor Owen expressed concern at the apparent lack of management oversight in this case. The Head of Audit said that management had not considered all of the aspects of the previous Contract Manager’s role, and some aspects had been overlooked. It was debateable whether or not this could be classed as ‘bad management’ as it was the case that managers were attempting to accomplish more with fewer resources. The implementation of controls was also being affected. The Head of Audit felt that there were issues across the board caused by diminishing resources. It was not necessarily the quality of management.

Councillor Owen asked why PDS Committees were not finding out about problems, and perhaps it was the case that Members needed to structure themselves differently. The Vice Chairman stated that it was difficult for scrutiny committees to pick up the fine details, and that perhaps it was the case that PDS Committees should work differently. Contract variations were not being fed through to PDS Committees.

Councillor Allatt expressed the view that managers should be aware of the span of control and VFM issues.

Councillor Owen stated that LBB needed to be aware of the consequences and complications arising from cutting staff numbers. He expressed the view that Members were not being used effectively and that they needed a steer.

Councillor Allatt enquired as to how internal audit was viewed—was it respected and did it have ‘teeth’. Mr Hogan responded that Internal Audit was respected. Officers would be concerned if they were asked to appear before the Audit Sub-Committee, and that there were consequences for managers who were held to account.  Officers now wanted to get things right and avoid P1 recommendations. The Chairman confirmed this and stated that officers did not like having to appear before the Committee.

The Vice Chairman stated that in his view, the Audit Sub-Committee should not be seen as a place where officers should attend and be fearful. He felt that the objective was to improve services, efficiencies and VFM. In his view a climate of fear would not be conducive to this, and he didn’t want a situation developing where managers may be hiding things through fear. 

Mr Hogan acknowledged that the correct balance was required. Officers often asked Internal Audit for advice. It was important that people were held to account, but in a reasonable and constructive manner. 

Members were informed that the Audit of Children with Disabilities had resulted in the making of one P1 recommendation and seven P2 recommendations. The audit opinion was Limited.

Members were then briefed concerning the review of LBB’s compliance with Intermediaries Legislation (IR35). It was felt that good controls were in place. HR needed to check if LBB were dealing with personal service companies or not. Issues of non-compliance had to be reported to HR immediately. HMRC needed to see that LBB were taking the matter of compliance seriously. 

With respect to Treasury Management it was noted that controls had been put in place and were working effectively. These controls related to assessing the Council’s financial position on a regular basis, complying with investment processes, and the completion/accuracy of investment records. Three P3 recommendations had been suggested to improve controls. The Audit opinion with respect to Treasury Management was Substantial.

The Committee was apprised that the three audits concerning the contracts for the commissioning of Public Health Services had all resulted in audit opinions that were Substantial. 

Members were informed that LBB could claim funding from central government for work undertaken with ‘troubled families’ if it could be evidenced by Internal Audit that the criteria for claiming the funding had been achieved.  A random sample of claims checked by Internal Audit showed that the relevant criteria had been achieved, and so the claims had been validated. The Chairman enquired if the ‘Tacking Troubled Families’ program was working. Mr Hogan responded in the affirmative and said that the life chances of those benefiting from the programme had improved—this was evidence based.

Members were informed that internal audit had visited Southborough School on 27^th/28^th February, and found that in most areas controls were in place and working well. Several P2 and P3 recommendations had been suggested and had now been adopted. The audit opinion was therefore Substantial. 

Members noted that Barrie Cull had been nominated for the award of ‘Auditor of the Year’. Barrie had been nominated because he had played a key role in producing monitoring systems and working paper templates in house to replace the commercial IT system that had been in place for many years. Barrie was also Internal Audit’s lead for GDPR and had undertaken excellent audit work with respect to LBB’s Community Infrastructure Levy where P1 recommendations were identified with respect to uncollected income.

The Sub-Committee was happy to endorse Mr Cull’s nomination.

Mr Hogan briefed Members that it had been agreed that risk registers would be reviewed at least 6 monthly by Internal Audit and by PDS Committees. The Homeless Risk had been escalated to the Corporate Risk Register. It was noted that the Pension Fund had its own risk register and that the external auditors also reported on the Pension Fund.

Councillor Dunn praised the risk registers, and felt that they were now better and more vigorous than before. He queried why it was in some cases that both the gross and net risks scores were the same. Mr Hogan said that he would review the logic behind the scoring in those particular cases.

It was noted that the Corporate Risk Management Group had commissioned two pieces of work to be undertaken in 2018:

·  Information Governance and GDPR Health-Check

·  Business Continuity Plan testing.   

Councillor Allatt asked if the Audit Plan for 2018/19 had been finalised and it was confirmed that it was. Councillor Allatt asked for a copy of the Audit Plan. He said that he was particularly interested in the audit of Adult Social Care, and felt that there were possibly big savings that could be made in this area.

RESOLVED that

1- The Internal Audit Progress report is noted

2- The list of Internal Audit reports published on the Council’s website is noted

3- The nomination of Barrie Cull as Auditor of the year is approved

4- The latest position on the Council’s Departmental and Corporate Risk Registers is noted 

5- The list of waivers sought since October 2017 is noted