Agenda item

Report of the Strategic Director, Resources and Digital

The Committee were asked to review the effectiveness of internal audit within the Council for 2022/23.

The Accounts and Audit Regulations 2015 require all authorities to “conduct an annual review of the effectiveness if internal audit for a committee of the body to consider its findings” and that this process should be part of the annual review of the effectiveness of the system of internal control, which results in the production of the Annual Governance Statement.

Best practice highlights that “internal audit”, in this context, includes not only the internal Audit Service Service but also the Audit and Standards Committee in 2022/23.

The review ensures that the opinion of the Chief Internal Auditor given in the Internal Audit Annual Report, included as a separate report on this agenda, can be relied upon as a key source of evidence in the Annual Governance Statement.

The review of the effectiveness of the system of Internal Audit for 2022/23 has been undertaken by the Council’s Internal Control Group, which includes the Strategic Directors of Resources & Digital and Corporate Services & Governance. The Committee were advised that the basis of the review was as follows:

·         Self-assessment against Public Sector Internal Audit Standards (PSIAS):

·         Self-assessment against the CIPFA Statement of the Role of the Head of Internal Audit;

·         Reliance placed upon Internal Audit by the Council’s external auditor;

·         Assessment of the effectiveness of the Audit and Standards Committee; and

·         Relevant performance information

Performance monitoring of the work carried out by the Internal Audit Service provides further assurance that the system of Internal Audit is operating effectively and adding value to the Council as a whole. During 2022/23 the following key performance indicators are relevant:

·         99% of audits were completed within budgeted time against a target of 90%

·         Productive or chargeable time was recorded at 71.5% of overall time against as annual target of 72% of overall time

·         The average score of the customer satisfaction questionnaires returned is 3.73 out of 4 (93%) against a target of 3.4 (85%)

·         The target for implementation of audit recommendations was 100% for high priority recommendations and 90% for medium priority and best practice recommendations. The rate of implementation of all recommendations was 99.7% with 100% of all medium and high priority recommendations having been implemented.

The Committee were advised that CIPFA benchmarking has been suspended since 2020/21 and as yet have not restarted. As previously reported to the Audit and Standards Committee on 28 October 2019, benchmarking for 2019/20 highlighted the Internal Audit Service as being low cost with high productivity in comparison with other local authorities. The Service has continued to be low cost and high productivity demonstrating that the Council is receiving value for money from its Internal Audit Service.

The Committee queried the parameters of the scoring mechanism for the customer satisfaction questionnaires and were advised that the level of scoring was based on industry standard.

The Committee asked when benchmarking would be re-started and were advised that corporate benchmarking was underway and Tyne and Wear Treasurers would be undertaking their own.