Agenda item

To consider the report of the Audit Managers.

The Audit Manager (HK) presented the Annual Internal Audit Report which conformed to the Public Sector Internal Audit Standards (PSAIS) and informed the Council’s Annual Governance Statement.  It also included the quarterly update on the progress of Internal Audit work.

She advised that the evaluation of the control environment is informed by a number of sources including work undertaken by Internal Audit during the year, reports issued by the External Auditors and risks identified in the Council’s corporate risk register.

Progress against the annual audit plan was discussed.  Audit Manager (HK) advised that some audits had been deferred as policies, procedures and processes were not yet in place, however these would be completed during 2017-18. She discussed the summary of investigations highlighting that there had been an increase of reports from the public, which were mostly anonymous and explained the housing benefit fraud and right to buy fraud reported in 2016/17.

 Audit Manager (HK) advised that the Council was also required to report on the use of The Regulation of Investigatory Powers (RIPA) to the Audit and Governance Committee and highlighted that, despite RIPA not being used during 2016/17, refresher courses had been provided to staff to improve their awareness and understanding of the legislation

The Audit Manager (HK) advised that no significant issues have been identified during 2016-17.  However, issues identified as part of the recent Corporate Governance audit would be subject to regular monitoring by the Audit and Governance Committee She updated Members on the areas of concern identified 2015-16.  She advised that the overall audit opinion was that systems were operating satisfactorily and that there were no fundamental breakdown of controls resulting in material discrepancy.  However, the Audit and Governance Committee should continue to monitor the weaknesses outstanding from 2015-16 to continue to improve the Council’s corporate governance arrangements.

In response to questions from Members, the Audit Manager (HK) responded:-

·         Over the last couple of years the audit resource had reduced by one full time equivalent staff throughout the Council faced many challenges with reduced resources, however despite this, the control environment remained at a good level. It depended on the type of fraud committed, as to whether it was possible to reclaim the money. If single occupier fraud was discovered, the discount would be stopped, but the money taken would not be paid back;

·         All local authority councils were required to partake in the Cabinet Office national fraud initiative, which undertakes data matching in order to identify potential fraud.  The cases identified are then passed back to the Council to investigate;

·         An exercise run by the Council to investigate single occupancy discount fraud had been undertaken by a private company. The cost was £20,000 which was a saving when offset against how much was lost;

·         It was difficult to reclaim fraud arrears money from single occupier discount. Cases were passed to the Council Tax team, but without specific details and dates, it was difficult to reclaim back;

·         Whether the Council prosecutes the perpetrators of fraud was dependent on the type of fraud. The first right to buy fraud case in the city had happened recently. Right to buy fraud was increasing nationally and in many cases is thought to be organised crime. The council doesn’t have a dedicated counter fraud team and is reliant on the audit team to conduct investigations ;

·         A report on the Council’s counter fraud capability was due to be submitted to the Senior Management Board (SMB) shortly.

The Chief Finance Officer discussed the options of working with and sharing expertise with other Local Authorities on countering fraud. He emphasised that one of the responsibilities of the Audit and Governance Committee was to counter fraud.

The Audit and Governance Committee noted the Annual Audit Report for the year ended 31 March 2017