Agenda item - Internal audit and corporate fraud progress report

Report of the Executive Director, Finance & Resources

1)           That the Audit & Standards Committee notes the report.

80.1      The Committee considered a report of the Executive Director, Finance & Resources that summarised the progress made against the Internal Audit and Corporate Fraud Plan, the key issues identified and action being taken and progress made by management in implementing audit recommendations.

80.2      Dr Horne noted that a submission to the National Fraud Initiative (NFI) had returned data match reports of more than 21,000 potential cases of which 2,300 had been recommended for further investigation. Dr Horne asked how those matches were selected and by whom.

80.3      The Head of Internal Audit clarified that the matches were identified by the Cabinet Office.

80.4      Dr Horne asked if the matches were identified in the Corporate Fraud Plan.

80.5      The Head of Internal Audit answered that the matches were separated into categories and the Corporate Fraud team acted as co-ordinators in assigning to specific departments to investigate further.

80.6      In relation to council dwellings that were the subject of fraudulent activity, Councillor Sykes asked whether the 20 properties returned to stock was a year to date figure and for a reminder of why right to buy applications were occasionally rejected.

80.7      The Head of Internal Audit clarified that the figure was as year to date. The review of right to buy applications by the corporate fraud team related primarily to our duties in respect of money laundering. It included an assessment of whether an individual had sufficient funds to purchase properties under the right to buy scheme and was used as a deterrent to reduce loan shark activity.

80.8      Diane Bushell noted that on every occasion the report was considered by the committee, there were a certain number with no progress against the audit recommendations. Diane asked if this was a failure on the part of senior managers to effectively implement the recommendations or if the systems used were overly-onerous and complex.

80.9      The Executive Director, Finance & Resource stated that a key emphasis of work going forward would be a clearer system for accountability of senior managers to ensure that the council’s control environment was kept to a high standard. This comprised a tool called Data Insight that would track performance across a series of KPIs, thereby increasing accountability. One of the KPIs was to be progress in relation to audit reports. The Head of Internal Audit supplemented that whilst it was understood that the systems used were user-friendly, an individual member of the audit team was assigned to heads of service and were available to assist with any problems using the software.

80.10   In relation to the update requested by the committee in relation information governance issues, Diane Bushell enquired as to the expected timescale to resolve the issues, specifically buildings and system access and enquired as to any obstacles preventing progress.

80.11   The Chief Technology Officer answered that there would always a number of assurance related issues, however the emphasis was on improving and minimising risk. The most recent audits had acknowledged that work had been done in relation to systems and buildings access and there had been improvements in data management. The focus going forward would be on shifting the organisational culture and harmonising standards, and this would be aided by the introduction of clearer information governance framework.

80.12   Diane Bushell asked when it was estimated that the assurance rating would improve from limited.

80.13   The Chief Technology Officer stated that the aim was to improve to reasonable assurance at the point of the next audit. The Executive Director, Finance & Resources supplemented that there had been a heavy increase in scrutiny in this area at senior management level and the Information Governance Board had started to speed the work up, and it ‘had teeth’ through its accountability to  the Executive Leadership Team (ELT).

80.14   The Chair asked if any problems were anticipated in relation to the Orbis arrangement.

80.1      The Chief Technology Officer stated that joining the Orbis service would create a level of complexity and was being reviewed as part of the change work. There would be an opportunity to run tests in order to gain assurance that systems were resilient. Furthermore, the Orbis arrangement would give the opportunity to increase capacity and bring the benefit of collective knowledge.

80.15   Dr Horne asked what assurance could be given on improvements in relation to controls when staff left the organisation and asked when the work of the modernisation project was expected to be completed.

80.2      The Chief Technology Officer answered that effective controls on staff leavers were related to confirmation of termination of employment by the Payroll team and senior management completing the necessary actions when this occurred. In relation to the former, the Payroll and ICT processes were being streamlined to enhance performance and the latter action would be assisted by the recent introduction of new information governance policies. This specific modernisation project was expected to reach completion within one year.

80.16   RESOLVED- That the Audit & Standards Committee notes the report.