Agenda item

Report from the Head of Fraud, Audit, Insurance and Risk (FAIR) is attached

The Head of FAIR presented the Internal Audit Annual Report.

The report summarised the work undertaken by Internal Audit throughout 2024/2025 and also provided an overall opinion of the Authority’s control environment.

The table at page 7 gave an overview of where the audit time has been spent throughout the year.

It was explained that there had been a couple of over-runs, with additional work than originally thought being rolled into the year from 2023/24 and additional work requests received from housing which were undertaken. 

There was an over run on schools, additional time was required to complete the reviews due to extra testing being required as the schools examined resulted in a limited assurances, additionally, the audits were undertaken by two team members whilst training a new member to the team. 

The number of allowable days per school has been increased for 2025/26 (primary 10 and secondary 14 days)

At the end of 2024/25 there were 17 audits still in progress which have been carried forward and will be finalised during 2025/26.

During the year, 27 audit reviews, making 165 recommendations were considered when forming the overall opinion. 67% of audit reviews had overall opinions falling in the lower quartiles, moderate and limited assurance.  48% gave limited assurance and 19% gave moderate assurance.

Of the 165 recommendations, 121 recommendations appeared in reports giving an overall limited assurance.

For reports with an overall opinion in the bottom two quartiles – 97 recommendations were made which were graded either fundamental or significant recommendations, therefore 59% of recommendations issued relate to reports with an overall opinion in the lower two quartiles.

Appendix B shows the first follow ups completed in the year and appendix C shows the second follow ups completed in the year.  23 first follow ups were completed, and of the 90 recommendations revisited, 43 (48%) were identified as either being outstanding or partially implemented. It was explained the report stated that 17 second follow ups were also completed and out of 39 recommendations followed up 17 (44%) were identified as either still being outstanding or partially implemented, this is incorrect, and the table in the appendix is accurate – the report should state that out of 39 recommendations, 26 were outstanding or partially implemented, which is 67% had not been implemented.

During the year a Governance and Assurance Board was established and all fundamental and significant recommendations outstanding after second follow up are reported to this Board. The Board reports to the Members Assurance Group, so all outstanding recommendations are scrutinised in depth, in addition to the scrutiny given by this Committee.  

The remainder of the report outlines other areas where audit work has been undertaken during the year, Persona, Schools, investigations and advice. The report also refers to the PSIAS review undertaken of the Internal Audit Service. 

Based upon the results of the audit work undertaken during the year, taking into account the findings reported in 27 audit reports, 23 first follow-ups and 17 second follow ups, the opinion of the Head of FAIR is that the Authority’s control environment provides limited assurance that the significant risks facing the Authority are addressed.

The concerns are that some fundamental and significant recommendations have not been fully implemented during the year. However, the recommendations made had been accepted by management and are in the sight of the Governance and Assurance Board (GAB) and the Members Assurance Group (MAG).

The Governance and Assurance Board have full oversight of all fundamental and significant recommendations made by Internal Audit which have not been implemented at the time a second follow up exercise has been undertaken. This process is highlighting areas where additional support is required across the Council and the Council is taking action to ensure all Internal Audit recommendations are addressed.

Towards the end of the 2024/25 year, whilst a number of Limited Assurance reports were still being issued, the Internal Audit Team were starting to see an improvement on numbers of recommendations being addressed by the time the second follow up has been completed, thus fewer recommendations being reported as outstanding to the Governance and Assurance Board. This suggests that the work of the Governance and Assurance Board is positively contributing to the improvement of Governance across the Council.

Those present were given the opportunity to ask questions and make comments and the following points were raised:

·         Councillor Gartside referred to the audits carried out in relation to Persona and schools and asked what lessons had been learned and how the process could be improved.

It was explained that a briefing note was being prepared for children’s services which will bring the issues together and include guidance on how recommendations can be completed.

·         Councillor Berry referred to the low response rates for the post audit questionnaire.

It was explained that the surveys were sent but there was no requirement for them to be completed. The audit team were looking at different ways of gathering post audit feedback to improve response rates.

·         David Webster referred to the 17 audits that had been carried forward and asked whether the number of days allocated would be sufficient to carry out the work required.

It was explained that there were 9 reviews ongoing from the previous year which had been allocated 79 days and work was progressing.

It was agreed:

That the contents of the report be noted.