To consider and approve the plan.

Catherine Hickman, Lead Specialist for Audit and Investigation, explained that the 2020/21 financial year had been a period of uncertainty where councils had needed to respond to the Covid-19 pandemic and their changing risk profiles. There had been a significant impact on the way officers work with home working and more reliance placed on information technology, as well as there being changes to systems and processes in response to these changes. In addition, there had been the extent to which the internal audit team had been able to deliver planned activities due to the availability of auditees as they had responded to effects of pandemic within their services.

As such, a degree of flexibility had needed to be built into the current year’s audit and investigation plan. In previous years, an annual plan would be prepared in February for the forthcoming financial year which would have been brought to the Committee for consideration. After discussions with the Director of Resources and Head of Finance, it was agreed that a one-year plan was not practical due to the ongoing uncertainty of the pandemic. Instead for 2021/22, the audit and investigation plan would be prepared on a quarterly basis so that the team could be flexible, forward thinking and responsive to future uncertainties and events.

The 2021/22 internal audit strategy sets out the role, scope and responsibilities of internal audit, the audit planning process, resourcing and reporting, as well as internal audit’s requirements to comply with its service and professional standards, the ‘Public Sector Internal Audit Standards’. The main change to the strategy from last year was the reference to the change from an annual to quarterly planning and reporting process. Going forward, the Committee would be informed of audits undertaken in the previous quarter, along with work priorities for the audit team for the following quarter.

The second part of the report was the 2021/22 quarter one work programme. A similar process had been used to prepare the work programme as in previous years in terms of aligning audit activity with the Council’s Strategic/Operational Risks and Annual Governance Statement; knowledge of impact of pandemic on organisation; systems/processes affected by Covid-19; and external guidance. The subject areas set out in Appendix A(I) had also been agreed on consultation with the Director of Resources and the Head of Finance.

The audit on waste management had been suggested by the Communities Overview and Scrutiny Panel as it was a key strategic risk to the council. A piece of work had been requested by council management on direct payments to see if further work was needed and to seek assurance on system controls.

Mr Hill had registered to speak on the item as a member of the public. He said that in the paper it was stated that internal audit opinion must conclude that the organisations framework of governance was acceptable. Mr Hill asked if the internal audit team felt that they had enough resources to pick up some of the things that the external auditors had picked up. For example, Deloitte had picked up that the estimates and judgements paper was not submitted, Mr Hill asked if this would be something that the internal audit team would look at and investigate. In the report there was reference to the phrase ‘minimum effort necessary’, Mr Hill asked if cuts in the budget on internal audit meant that they could not deliver more than the minimum. Mr Hill asked if the internal audit team would be looking at auditor judgements as part of their audits, as this was something that featured in the CIPFA review. Mr Hill asked if the team reviewed the capital commitment disclosures as part of their work.

Catherine Hickman said that internal audit normally tried to avoid duplication of work with the external auditors and so was usually focussed on the controls within systems. It was explained that areas such as the capital commitment disclosures would be picked up by the external auditors.

Adele Taylor said that internal audit and external audit had different roles and responsibilities. Internal audit was used so that the council could consider whether it had the control framework in place and looked at not just the financial risk but also the strategic risk to the council. The external audit team were testing and challenging the statement of accounts and the processes in place. In terms of resource, it was up to the RBWM officers to determine if the right level of resource was in place. Adele Taylor felt confident that the resources were in place and that RBWM had the correct number of days required. It was important to make sure that resource was focussed in the right areas, especially where potential risks had been identified.

Councillor Price explained that she was on the Communities Overview and Scrutiny Panel where they had requested that there was an audit on Serco. However, she had noted that the company were now moving to fortnightly collections and asked if it was appropriate to have the internal audit when there would be a lot of upheaval again, like there was in the autumn when the Panel had originally requested the audit review.

Adele Taylor explained that due to other work last year there was no opportunity to free resources for internal audit to investigate. If the Audit and Governance Committee felt that it was no longer appropriate, they could remove it from the internal audit work programme and replace it with another audit area.

Councillor Bond thanked Catherine Hickman for answering a number of his questions in advance of the meeting and for providing comprehensive responses. He asked if the pension fund administration was usually included in the internal audit plan.

Catherine Hickman confirmed that internal audit did review the pension fund each year.

Councillor Sharpe asked if the service had improved or was improving and if RBWM was getting good quality from the service.

Catherine Hickman said that a self-assessment was carried out by the team each year against the Public Sector Internal Audit Standards to ensure compliance. It was explained that CIPFA had also undertaken an independent external assessment on the work of internal audit in 2017 against the standards. Every five years, an external independent review of the internal audit service against the professional standards was undertaken, as required by the standards.

Councillor Sharpe asked if the self-assessment was an ongoing exercise or if it was something carried out every 12 months at the end of the year.

Catherine Hickman explained that the self-assessment was an ongoing exercise and that a paragraph on the outcome of the self-assessment and any actions required to ensure full compliance would be included in the internal audit annual report. This was due to be considered by the Committee in May 2021.

A named vote was taken on the recommendation listed in the report.

RESOLVED UNANIMOUSLY: That the Audit and Governance Committee noted the contents of the report and:

i)             Approved the 2021/22 Internal Audit Strategy and Draft Internal Audit and Investigation (Quarter 1) Work Programme (1 April 2021 to 30 June 2021).