Audit Committee Progress Report

Hertfordshire County Council

22November 2012

Recommendation

Members are recommended to note the Internal Audit Progress Report.

Contents

1 Introduction and Background

1.1 Purpose

1.2 Background

2 Audit Plan Update

2.1 Delivery of Audit Plan and Key Findings

2.3High Priority Recommendations

2.5 Proposed Amendments to Audit Plan

2.6 Performance Management

Appendices

A Progress against the 2012-13 Audit Plan

B Implementation Status of High Priority Recommendations

C Final Audit Reports (‘Limited’ or ‘No’ Assurance only)

1. Introduction and Background

Purpose of Report

1.1To provide Members with information on the position as at 26 October 2012, relating to:

a)Progress made by the Shared Internal Audit Service (SIAS) in delivering the HCC Internal Audit Plan for 2012-13

b)Findings in full for any audits assessed as ‘Limited‘ or ‘No’ Assurance (there were none of these during this period)

c)Proposed amendments to the approved 2012-13Audit Plan

d)Implementation status of previously agreed high priority audit recommendations and to agree removal of completed actions

e)An update on performance management information.

Background

1.2The 2012 /13HCC Audit Plan was approved by the Audit Committeeon 30 March 2012.

1.3The AuditCommittee receive periodic updates against the Annual Internal Audit Plan, the most recent of which was brought to this Committee on 13 September 2012.

1.4The work of Internal Audit is required to be reported to a Member Body so that the Council has an opportunity to review and monitor an essential component of corporate governance and gain assurance that its internal audit provision is fulfilling its statutory obligations. It is considered good practice that progress reports also include proposed amendments to the agreed annual audit plan.

1.5This report is presented in the standard SIAS format which is used for all Audit Committees to which the service reports. The format is designed to draw attention to key matters including progress against implementation of high priority recommendations.

2. Audit Plan Update

Delivery of Audit Plan and Key Audit Findings

2.1As at 26October2012, 45% of the 2012-13 Audit Plan days had been delivered (calculation excludes unused contingency days). Appendix A provides a status update on each individual deliverable within the audit plan.

2.2The following reports and assignments have been issued in the period since 13September2012:

Audit Title / Assurance Level / Number of Recommendations
HCS Contract Management / Monitoring / Moderate Assurance / Seven medium priority
One merits attention

2.3At the cut-off date of this report (26 October)49 individual school reports relating to the Government’s Schools Financial Value Standard (SFVS), and a further 2 individual reports relating to our themed work looking at catering had been finalised.

Schools Audit Activity

2.4Based on our activity the Director of Resources and Performance was recently able to confirm to the Department for Education that all schools which had previously not met the Financial Management Standard in Schools (FMSiS) have now achieved the Schools Financial Value Standard, which replaces FMSIS.

2.5Since the last Audit Committee a further set of Schools Financial Value Standard (SFVS) reviewshave been finalised. We are pleased to report that the majority of schools we have visited demonstrated a good understanding of the SFVS requirements.

2.6Each year we carry out a number of ‘themed’ audits which focus on areas perceived to represent a risk to the achievement of HCC’s corporate objectives. Our specific objectives in undertaking this work are to provide both individual schools and HCC with assuranceon the school-based control arrangements.

2.7During the first half of the Autumn Term the audit theme has been the management of catering services,where the assurance areas we are covering include the annual calculation of the catering management fee and cash collection arrangements. In the second half of the autumn term the audittheme will be capital projects in schools.

High Priority Recommendations

2.8Members will be aware that a Final Audit Report is issued when it has been agreed by management; this includes an agreement to implement the recommendations that have been made. It is Internal Audit’s responsibility to bring to Members’ attention non-implementation of high priority recommendations; it is the responsibility of Officers to implement the recommendations by the agreed date.

2.9In order to help the Committee monitor progress in this areaa summary of progress with high priority recommendations is shown at Appendix B and includes a progress update in respect of implementation.

2.10We have excluded anyhigh priority recommendations relating to schools from this listing based upon both: the volume of schools within the County and the relative risk of the any single recommendation for the Authority as whole.

2.11Some management responses are still outstanding at the time of writing and therefore a verbal update on the status of recommendations will be given at committee.

Proposed Audit Plan Amendments

2.12None.

Performance Management

2.13Annual performance indicatorsand associated targets were approved by the SIAS Board in 2011 and updated in March 2012.

2.14The actual performance for HCCagainst thetargets that can be monitored in year is set out in the table below.

Performance Indicator / Performance Target / Actual to 26 October2012
1.Planned Days – percentage of actual billable days against planned chargeable days completed (excludes unused contingency) / 95% / 47%
2. Planned Projects – percentage of actual completed projects to draft report stage against planned completed projects / 95% / 53%*
3. Client Satisfaction–percentage of client satisfaction questionnaires returned at ‘satisfactory’ level / 100% / 100%
4. Number of High Priority Audit Recommendations agreed as % / 95% / 100%

* Based on audit plan ‘deliverables’ at draft, final and audit closed stage including schools audits and items carried forward from 2011/12.

2.15In addition, the performance targets listed below are annual in nature;members will be updated on the performance against these targets within the separate Head of Assurance’s Annual Report:

5.External Auditors’ Satisfaction – the Annual Audit Letter should formally record whether or not the External Auditors are able to rely upon the range and the quality of SIAS’ work.
6.Annual Plan – prepared in time to present to the March meeting of each Audit Committee. If there is no March meeting then the plan should be prepared for the first meeting of the financial year.
7.Head of Assurance’s Annual Report – presented at the March meeting of the Audit Committee.

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APPENDIX A PROGRESS AGAINST THE 2012-13 AUDIT PLAN AS AT 26 OCTOBER 2012

2012-13 SIAS Audit Plan

AUDITABLE AREA / LEVEL OF ASSURANCE / RECS / AUDIT PLAN
DAYS / LEAD
AUDITOR
ASSIGNED / BILLABLE DAYS COMPLETED / STATUS/COMMENT
H / M / MA
Corporate
AGS Work for 11/12 - Review against CIPFA rough guide and Code of Corporate Governance / N/A / 15 / Yes / 15 / Completed
AGS Work for 11/12 - Senior Management Assurances / N/A / 10 / Yes / 10 / Completed
AGS Work for 12/13 / 5 / Yes / 0 / Q4
Head of Assurance Annual Opinion and Annual Report / N/A / 15 / Yes / 15 / Completed
National Fraud Initiative / 30 / Yes / 30 / Data Download Completed
Pro-active anti-fraud work: fraud strategy, campaign / N/A / 30 / Yes / 15 / In Progress
Risk Management liaison / N/A / 5 / N/A / 2 / In Progress
Anti Bribery Policy - Implementation / N/A / 10 / Yes / 7 / In Progress
Whistleblowing / N/A / 10 / N/A / 1 / Ongoing
Resources & Performance
New Property Contracts - Contract Management / 15 / No / 0
Serco Contract Management / 10 / Yes / 1 / Terms of Reference Agreed
C4F Workstream 6 / 15 / Yes / 9 / In Progress
IT Risk Assessment / 15 / Yes / 3 / In Progress
ICT Asset Inventory & Virus Protection / 15 / Yes / 15 / Drafting Report
Disaster Recovery & Resilience / 15 / Yes / 0
Use of Social Media / 10 / Yes / 6 / In Progress
Academy Conversion / 15 / Yes / 4 / In Progress
Budgetary Control / 20 / Yes / 1 / Terms of Reference Agreed
Payment Cards / 15 / Yes / 1 / Terms of Reference Agreed
MFS - Debtors / 20 / Yes / 1 / Terms of Reference Agreed
MFS - Creditors / 15 / Yes / 1 / Terms of Reference Agreed
MFS - General Ledger / 15 / Yes / 1 / Terms of Reference Agreed
Council for the Future Financial Monitoring / 15 / Yes / 9 / In Progress
Insurance / 8 / Yes / 8 / Drafting Report
Pensions- Fund Investments with Equity Managers- Governance Arrangements, Investment strategy / 10 / Yes / 1 / Terms of Reference Agreed
Pensions - LGPS & Fire Fighters Membership & Payment Systems / 20 / Yes / 1 / Terms of Reference Agreed
Pensions - General Ledger LGPS & Police / 15 / Yes / 1 / Terms of Reference Agreed
MFS - Payroll / 15 / Yes / 2 / Terms of Reference Agreed
Safe Staffing - General / 10 / Yes / 0
Safe Staffing - CRB Bulk Submission / 4 / Yes / 1 / In Progress
Transforming Recruitment - Continuous Assurance / 10 / Yes / 7 / In Progress
Transforming Recruitment - Insourcing Arrangements / 10 / Yes / 7 / In Progress
Impact of Terms & Conditions Changes / & Performance Related Pay / 20 / Yes / 0
Data Protection / 15 / Yes / 8 / In Progress
AGS - Risk Management / 15 / Yes / 7 / In Progress
AGS - Corporate Governance / 10 / Yes / 1 / Terms of Reference Agreed
Members' Locality Budgets / 10 / Yes / 10 / Draft Report Issued
Health & Community Services
Serco ‘New Ways’ Project / 20 / Yes / 0
Fraud Risk / 10 / Yes / 7 / In Progress
Appointeeships / Deputyships / 10 / Yes / 0
E-Marketplace / 15 / Yes / 0
Debt Management (Non Residential) / 10 / Yes / 7 / In Progress
Contract management / monitoring / Moderate / 0 / 7 / 1 / 15 / Yes / 15 / Final Report Issued
Learning Disability / 15 / Yes / 0
Review of Transition Team / 20 / Yes / 0
Process for Following Up Recommendations / 5 / Yes / 3 / In Progress
Environment
HBS – Sure Care Limited Company / 10 / No / 0
Consultancy around Local EnterprisePartnership / 12 / Yes / 5 / In Progress
Croxley Rail Link - Assurance Strategy / 10 / Yes / 10 / Draft Report Issued
Croxley Rail Link - Initial Assurance Work / 15 / Yes / 0
Highways – New Contracts - Mobilisation / 20 / Yes / 15 / In Progress
Highways - New Contracts - Management / 15 / No / 0
Waste PFI - Follow Up of 11/12 Work / 5 / Yes / 2 / In Progress
Waste PFI - Risk Management of Current Phase / 5 / Yes / 2 / In Progress
Waste PFI - Assurance Strategy / 10 / Yes / 1 / In Progress
County Planning Matters - Development / 5 / Yes / 5 / Complete
Procurement / Contract Management Cycle - Baseline Assessment / 15 / Yes / 13 / In Progress
Childrens Services
Disabled Children’s Services - Personal Budgets / 15 / No / 0
Disabled Children’s Services - Commissioning / Contract Monitoring / 15 / Yes / 10 / In Progress
Payments to Care Leavers / 10 / Yes / 10 / Drafting Report
Contact Centre / 10 / Yes / 3 / In Progress
Fostering / Children Looked After Strategies - Harmonisation / 15 / No / 0
Interface between the Contact / Assessment service / 20 / Yes / 11 / In Progress
Community Budgets for Vulnerable Families / 10 / Yes / 1 / In Progress
Services for Young People - Trading / 10 / Yes / 1 / In Progress
Childrens Centres / 20 / Yes / 1 / In Progress
Implementation of Home to School Transport review / 15 / 0
SSE Trading / 10 / No / 1 / In Progress
Schools Audit Programme
SFVS & Payroll Reviews / 125 / Yes / 113 / In Progress
Themed Audits / 109 / Yes / 51 / In Progress
Other / 70 / Yes / 43 / In Progress
Community Protection
Training / 10 / Yes / 0
External Bodies
Various / 17 / Yes / 3
Strategic Support
Various / 234 / N/A / 114
Contingencies
Various – unused / 138 / N/A / N/A
Various – used / 142 / N/A / 88
Various - used
11/12 Projects
Various / 50 / N/A / 50
HCC Total / 1799 / 786

Key

H = High Priority

M = Medium Priority

MA = Merits Attention

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APPENDIX B IMPLEMENTATION STATUS OF HIGH PRIORITY RECOMMENDATIONS

No. / Report Title / Date of Issue / Recommendation / Management Response / Responsible Officer / Implemen-tation Due Date / History of Management Comments / SIAS Comment at 26 October 2012 / Status of Progress
1 / Control of Property Related Hazards / A reconciliation should be performed between the Corporate Property Database (CPD) and the properties for which an asbestos log is held. / The Council performed an audit of properties on the CPD in February 2012.
Where asbestos logs are available this has been recorded to ensure the status of asbestos data in premises can be reconciled with the CPD. / Head of Building Management / Complete / See Management Response column / Will be followed up in 13/14 year. / Complete
Control of Property Related Hazards (cont.) / Where no log is held confirmation should be sought as necessary to confirm responsibility and the findings should be clearly recorded in the CPD to provide a comprehensive record.
If there are any properties the Council is responsible for which asbestos logs are not held, these should be prioritised in the new programme of asbestos surveys currently underway. / Freehold-operational assets on the CPD without an asbestos survey have been assessed via a desktop study to assess survey requirements based on criteria such as age, occupied status, and planned use etc. or justifications have been made as to why a survey is not required i.e. land only. / Sept
2012
July 2012 / The implementation of a process for physically recording duty-holder status is still on target for September 2012
See Management Response column / Awaiting update from management
Will be followed up in 13/14 year / Outstanding
Complete
Control of Property Related Hazards (cont.) / As planned, the Council should formalise a plan for the updating of asbestos surveys in line with current good practice. / A process for physically recording duty-holder status, asbestos data available, and changes to said status is being implemented. This will ensure risk data stored outside of theCPD is reconciled with the CPD for auditing purposes.
A planned review and refresh of the HCC Asbestos Policy is scheduled. / November 2012 / The review of the. Legionella policy is completed and about to be published with the Asbestos review part completed and to be published no later than November 2012. / Awaiting update from management / Outstanding
2 / Schools Expansions Project / Improved risk strategies or the introduction of a process to manage risk from a programme perspective should be introduced.
This process would assist in addressing potential project issues at an early stage in the process and may prevent the delays created by them. / We will define an escalation route from the multi-professional task groups working on each project, to the Working Group and then through to New Executive Group. This would complement existing programme level risk management / Assistant Director -Education Access & Provison
/ March 2012 / Awaiting update from Management / Outstanding
3 / Changes to Staff Terms & Conditions / The forthcoming recalculations of expected savings should be presented in a form that includes both high and low end on-cost calculations. / Savings figures will be re-calculated based on actual figures as at April 2012 to give a more accurate picture of savings.
There will be quarterly monitoring of the new Terms and Conditions undertaken to provide a year on year comparison and give a clear picture on actual savings realised. / Head of Human Resources & Organisational Development / August 2012 / Management has advised this has been implemented.
Will be tested in forthcoming Terms and Conditions internal audit review. / Completed
4 / Safe Staffing / HCC’s policy for the retention of CRB Disclosure documents should be reviewed. / We will review of all safe staffing practices as part of strategic review of safe recruitment in line with implementation of Protection of Freedoms Bill. / Head of Human Resources & Organisational Development / October 2012 / Management has advised this has been completed.
Will be tested in forthcoming Terms and Conditions internal audit review. / Completed
5. / Direct Payments – Disabled Children / Notify claimants that when quarterly returns are not received by Finance, the Council will seek further evidence to demonstrate that expenditure has been incurred on permitted services/goods, or may seek to reclaim funds where such evidence is not received.
Staff should be instructed to ensure that this is applied in practice, and that if a decision is taken not to reclaim where there has been insufficient evidence, the rationale should be clearly documented and the decision subject to appropriate authorisation. / The Finance Officer/ Group Manager – Brokerage is developing new processes for the brokerage support team, which along with the introduction of Controcc at the end of July will ensure accurate tracking of quarterly returns. / Finance Officer/ Group Manager – Brokerage / August 2012 / Work continues on this with arevised implementation date of November 5thwhich aligns with the introduction of the new Service Support Team. / Awaiting update from management / Outstanding

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APPENDIX B DEFINITIONS OF ASSURANCE AND RECOMMENDATION PRIORITIES

None issued in the period

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