Agenda item

The Committee considered the 2020/21 Internal Audit Final Report.

In the ensuing debate the following points were raised:

·         In response to a query about whether any lessons could be learned from the five allegations of fraud reported during the year, Jenni Morris, Chief Internal Auditor commented that there had been cases where policies and procedures were unclear or where more than one policy existed with contradictory information. It was very difficult to prove that fraudulent activity had taken place in those circumstances. The key elements for addressing fraud were to ensure that policies and procedures were clear and better understood and where necessary undertake an audit in the relevant area.

·         Jenni Morris confirmed that alongside the Anti-Fraud and Corruption Policy, Human Resources administered a separate Whistle-blowing policy

·         How did the audit assurance ratings compare with last year? Jenni Morris advised that the outcomes were similar. The number of completed audits had increased because a greater focus of the work had been on schools and therefore a large number of schools had been audited. It was reassuring that there had not been an increase in the number of limited audits but there was still room for improvement

·         There remained eight limited assurances last year. What plans were in place to improve assurance levels in these areas? Jenni Morris explained that the limited assurances related to:

o   Four school audits – School assurance levels were unique because the budget accounted for a significant part of the audit. Where a school was in deficit, Internal Audit (IA) would examine the ways in which the school managed its budget

o   Long-term agency placements – Human Resources had tightened up their procedures but there remained an issue with the level of use of consultancy staff where staff had been diverted to covid-related work. It was anticipated that this position would improve and IA would follow this up

o   Debt Management – It was found that processes were not being effectively managed. The service had come in-house and a new debt manager had been appointed. IA were checking the robustness of the policies

o   Capital and Business Case Development – It was clear that the necessary audit actions were being done but there was insufficient evidence to support the findings. IA were therefore working closely with staff to improve processes

o   Direct payments to social care clients – Changes had been made to the scheme at pace but the equivalent governance procedures had not altered at the same rate

·         What training and development opportunities were available to staff concerning anti-fraud and corruption? Jenni Morris advised that current training was undertaken at a low level but a course had been developed as part of the Council’s mandatory E-learning training programme which would be rolled out in quarter 3. However, it was recognised that e-learning was not always the most effective training approach and IA would work with the Chief Officers Group to find ways to embed learning. IA was focusing on understanding the key fraud areas and what activities existed to tackle it. IA were also working with teams to ensure that the most appropriate reporting and escalation mechanisms were in place

·         In response to a query, Jenni Morris indicated that the work associated with fraud investigation and  risk management was undertaken by two staff members including the Risk and Assurance Manager. She acknowledged that the staffing resources were limited for this type of work however, it was difficult to assess the staffing requirements without understanding the scale of the problem. A number of different approaches were being considered to address this issue

·         What further work was being undertaken with schools to raise their assurance levels? Jenni Morris indicated that all school were provided with an action plan to identify whether any governance support was necessary, particularly for schools that had reported a budget deficit. Very often the deficit was associated with falling rolls and IA worked with Worcestershire Children First and the school to assess staffing requirements

·         The Chairman welcomed the improvements made in Internal Audit over the last couple of years but recognised that there remained room for improvement.

RESOLVED that the Internal Audit 2020/21 Final Report and assurance level be noted.