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Councillors and committees

Agenda item

Review of the Effectiveness of Internal Audit 2018/19

Report of the Strategic Director, Corporate Resources

Minutes:

The Committee received a report which asked the Committee to review the effectiveness of internal audit within the Council for 2018/19.

 

The review ensures of the effectiveness of the system of Internal Audit for 2018/19 has been undertaken by the Council’s Internal Control group, which includes the Strategic Directors of Corporate Resources and Corporate Services and Governance. This review is based upon the following:

 

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

·         Self-assessment against the CIPFA Statement on 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

·         Relevant performance information

 

The PSIAS require an external assessment of internal audit functions to be completed every five years. In compliance with PSIAS the Internal Audit Service was assessed against current Internal Audit practices and compliance with professional standards by external auditors, Mazars during 2014/15.

 

The outcome of the assessment was positive and found that the Internal Audit Service is substantially compliant with the standards in all significant aspects and that there are no areas of concern.

 

The Committee were advised that the self-assessment requires an evaluation of how the five principles of the statement are embedded within the Council and the Chief Internal Audit skills and personal experience. The statement has common themes with the PSIAS. The self-assessment found arrangements to be compliant with the statement.

 

The Committee were informed that a joint working protocol is in place between Internal Audit and the Council’s external auditors, Mazars. Wherever possible the external auditor will seek to rely upon the work of Internal Audit in discharging their own responsibilities. During 2018/19 Mazars did not place specific reliance on any of Internal Audit’s work but through regular monthly meetings work has been

co-ordinated wherever possible and intelligence shared.

 

The Committee were advised that CIPFA’s guidance “Audit Committees – Practical Guidance for Local Authorities (2013) includes a checklist for measuring the effectiveness of the Council’s Audit and Standards Committee. This assesses in more detail some of the areas examined in the assessment against PSIAS.

 

A review, based on this guidance, was carried out by the Council’s Internal Control Group on 14 May 2019. This covered the following areas:

 

·         Purpose and Governance

·         Functions of the Committee

·         Membership and Support

·         Effectiveness of the Committee

 

The Committee were pleased to note that the review found the Audit and Standards Committee to be operating effectively with some minor areas for action.

 

The Committee were also informed that 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 2018/19 the following key performance indicators are relevant:

 

·         100% of audits were completed within budgeted time against a target of 90%

·         Productive or chargeable time was recorded at 76% of overall time against an annual target of 73% of overall time.

·         The average score of the customer satisfaction questionnaires returned is 3.59 (90%) against a target of 3.4 (85%)

·         The target for implementation of audit recommendations is 100% for high priority recommendations and 90% for medium priority recommendations. The current rate of implementation of all recommendation is 100%, with 100% of all medium priority and 100% of all high priority recommendations having been implemented.

 

As previously reported to the Audit and Standards Committee on 1 October 2018, benchmarking continues to highlight the Internal Audit Service as being low cost with high productivity in comparison with other local authorities. The net cost per chargeable day for Gateshead Council was £184 compared to an average of £293, with 176 chargeable days compared to the average of 176 days demonstrating that the Council is receiving value for money from its Internal Audit Service.

 

Based on the review the Council’s Internal Control Group concluded that the Council’s System of Internal Audit is operating effectively.

 

RESOLVED -

i)

That the information be noted

 

ii)

That the opinion that the Council’s system of Internal Audit is operating effectively be endorsed.

 

 

 

 

Supporting documents:

 

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