Agenda item

The Committee received a report of the Corporate Director of Resources which provided the Chief Internal Auditor and Corporate Fraud Manager’s assurance opinion on the adequacy and effectiveness of the Council’s internal control environment, risk management and corporate governance arrangements and presented the Annual Internal Audit Report for 2021/22 (for copy see file of minutes).

The Chief Internal Auditor and Corporate Fraud Manager advised that based on the work undertaken, Internal Audit provided a moderate overall assurance opinion on the adequacy and effectiveness of the governance, risk management and internal control operating across the Council for 2021/2022.

In response to concerns from Councillor B Kellett regarding the moderate assurance opinion, the Chief Internal Auditor and Corporate Fraud Manager provided the definition of the rankings and explained that the moderate assurance opinion was positive and provided assurance that a sound system of control was in place, however, there was evidence of non-compliance with controls or ineffective controls which were identified in individual activity reports carried out during the year. It was noted that 95% of the improvement recommendations had already been implemented. The Corporate Director of Resources added that he was unaware of any Authorities in the region with an overall substantial Audit opinion as there would always be systems that could be improved, however he confirmed that the vast majority of major key systems had received a substantial assurance opinion. It was highlighted that the Audit opinion was in line with previous years’ assessments.

It was noted that legacy audit work was still required in relation to the Covid Grant regimes which has had an impact on the Internal Audit Team in terms of capacity.

Councillor T Smith referred to the impact of inflation and queried if this would jeopardise or delay progress in relation to regeneration capital projects. The Corporate Director of Resources advised that costing would be affected in relation to construction price inflation, however contingencies and risk management was built into the capital programme schemes. He added that scheme managers would be looking to see if further budget provision was required or whether schemes could be scaled back to accommodate any escalating costs due to inflation.

Responding to a query from Mr I Rudd regarding the reduction of audits carried out since 2018/19, the Chief Internal Auditor and Corporate Fraud Manager advised that the main reason was due to Covid, however there were a number of other factors that contributed to the reduced number of audits. She explained that Internal Audit were not required to provide an opinion rating for Covid Grants schemes so that information was not captured in the assurance level table, however Internal Audit were still required to sign them off. The planned reviews timeframes differ due to the nature and scope of the review conducted in line with the risk-based approach. It was confirmed that planned audits were back to pre-Covid levels. The Corporate Director of Resources added that changes have been made to the way Audit Plans were conducted. Previously individual elements of an audit would provide separate assurances, where now they were pulled together in one assurance opinion.

Resolved:

(i)     That the content of the Annual Internal Audit Report for 2021/2022 at Appendix 2 be noted;

(ii) That the overall ‘moderate’ opinion provided on the adequacy and effectiveness of the Council’s governance, risk management and internal control environment for 2021/2022 be noted.