Agenda item

To consider the report of the Audit Managers.

The Audit Manager (HK) presented the Internal Audit Annual Report for the year ending 31 March 2019. The report conformed to the Public Sector Internal Audit Standards and was timed to inform the Council’s Annual Governance Statement.

She drew Members attention to key points with the report and advised on the overall opinion and assurance statement which showed key systems were operating satisfactorily and that there were no fundamental breakdowns of control resulting in material discrepancy. The report illustrated that as a comparison with the previous year there had been an increase in the overall percentage of excellent or good assurance ratings. The Chief Finance Officer highlighted to Members that Internal Audit work was not limited to systems with a high financial risk, but looked at the whole control environment within the Council.

The Audit Manager (HK) referred to the key issues identified in the report, which would be fed into the Annual Governance Statement. She highlighted the reduction in staff resources and that the next phase of the procurement cycle was to fully embed contract management effectively and consistently across the Council. She discussed delivery and outcomes of the 2018-19 Audit plan and stated that any feedback from Members would be welcomed.

She discussed the summary of investigations and highlighted that 42 reports of fraud had been reported, but most were submitted anonymously. She concluded by updating Members on the Quality Assurance and Improvement programmed which included the results of the performance indicators and customer satisfaction survey. The Audit Manager had also undertaken the required self-assessment for conformance with the Public Sector Internal Audit Standards and would be arranging for an external appraiser to undertake an external assessment which needs to be carried out every five years. It was hoped that the results will be presented to Members at next year’s Audit and Governance Committee meeting.

In response to questions, the Audit Manager (HK) and Chief Finance Officer explained:-

·         Housing Benefit Fraud was investigated by the Department for Work and Pensions (DWP), rather than Exeter City Council. The DWP subsidised Housing Benefit claims and therefore monitored the fraud themselves and they do not show on the Council books. Often errors could be from residents who had not provided updates and had consequently been overpaid. These amounts would show in the debt arrears;

·         The report showed a summary of risks and only provided details for the high risks and covered the whole year. At the request of members the next quarterly report in September would provide greater detail of any high risks identified and what remedial action has been agreed with management;

·         The audit report on Section 106 agreements was currently being followed up and the outcome of this work would be presented to Members at the next meeting in September;

·         The Audit Plan was presented to the Audit and Governance Committee at the March meeting of each year;

Whilst there were instances of repeated fraudulent allegations, all allegations are investigated as it is not always possible to identify whether they are malicious or not.

·         The two instances of Corporate Credit Card fraud referred to in the report, had been identified by the card holder and referred to the bank for further investigation.

The Audit and Governance Committee noted the Annual Audit Report for the year ended 31 March 2019.