Agenda item

The Committee considered the Internal Audit Progress Report.

In the ensuing debate, the following points were raised:

·         In response to a query, Jenni Morris explained that a three year rolling audit plan had been developed which replaced the existing annual audit plan process

·         There was no indication in the report of the recurring themes associated with the audit of maintained schools. Jenni Morris responded that it had been intended to undertake a rolling programme of school audits but in discussions with Worcestershire Children First (WCF), the internal audit approach shifted to the provision of support to those schools that were in particular difficulty. Key themes associated with school audits related to deficit recovery plans, procurement and declarations/conflicts of interest. Internal Audit had made sure that relevant information was accessible to support schools for example via termly newsletters

·         In response a request, Jenni Morris undertook to provide a breakdown of the deficits carried forward by individual local authority maintained schools to members of the Committee. It was complicated process because some schools appeared to have a large deficit but on closer inspection the sums involved only represented a small amount of the school’s overall budget. Overall, it was recognised that on occasion, schools could go into deficit during the school year but the key issue for schools was to have a plan to manage their finances. Internal Audit worked closely with the school team within WCF to address these issues. Steph Simcox added that at the end of period 9, 34 maintained schools were in deficit and 82 were in surplus

·         It was queried how Internal Audit were made aware that a maintained school had gone into a deficit, and whether schools were provided with the necessary support to help them create an audit plan and address their deficit. Jenni Morris explained that Internal Audit would be notified by the WCF finance team. Schools in deficit were actively managed with regular meetings held with key Council officers to identify the necessary support for that particular school

·         How were school deficits funded? Steph Simcox advised that at present, the totality of deficits and surpluses were merged together. This had not been a problem to date because surpluses had exceeded deficits but this was not a suitable long-term approach for managing the problem. A notional deficit/surplus was carried forward and linked to the deficit recovery plan for each school

·         Did the Council have a clear understanding of the direction of travel of school deficits? Steph Simcox commented that there were individual and collective quarterly monitoring reporting arrangements in place for schools. As the year progressed, a clearer picture would emerge of an individual school’s financial performance. It was important to identify trends and the reasoning behind the deficit, for example, a decrease in the number of children on roll which could have a significant impact on finances

·         It was queried why an action related to legacy systems had remained open for 6-12 months. Jenni Morris advised that this action related to data ownership when a system was closed down. Work was ongoing with data managers to resolve this action and she anticipated that it would be completed by the end of the year

·         In relation to a query about the outstanding actions for debt management of 3-6 months, Jenni Morris indicated that there had been significant improvements to the debt management systems since the service had returned in-house. It had been assessed as a limited assurance and therefore a follow-up audit was planned

·         In response to a query, Jenni Morris confirmed that the volume of grant certifications had increased during Covid as the Government increased the number of grants to councils. It was difficult to assess the future levels of certification  

·         In response to a query about the progress of the audit of the Ringway contract, Jenni Morris stated that the terms of reference of the audit had been agreed and work had begun with operational managers to accumulate the necessary data. The operational team were under considerable pressure at the moment and therefore had been given more time to complete the audit work

·         In response to a query about the Council’s policies in relation to staff in multiple jobs, Jenni Morris advised that the Council had very clear policies for employees with second and multiple jobs. In line with those procedures, managers would take the appropriate action in consultation with human resources and the appropriate Assistant Director dependent on the grade of the employee and the type of alternative employment. The key aspect was to ensure that managers had the appropriate tools to effectively manage the situation and that any action taken was proportionate

·         Did the Council have the option available to it to take litigation against employees who abused the multiple employment procedures? Jenni Morris responded that different approaches were applicable in different cases and the action taken needed to be commensurate. The option to take litigation was available to the Council but was expensive relative to the financial benefit to the Council. In all circumstances, managers would seek professional advice from officers in the human resources and legal teams

·         Had staff ‘working from home’ been added as a risk on the Risk Register? Jenni Morris advised that the topic of ‘working practices’ was a standard category on the Register. The Council had been operating a limited practice of working from home for some time prior to the pandemic. Employment policies were kept under constant review.

RESOLVED that:

a)  the Internal Audit progress report be noted; and

b) A report on the schools auditing processes be brought to the meeting of the Committee on 2 December 2022.