To receive additional items that the Chair is of the opinion should be considered as a matter of urgency, in accordance with Section 100B (4) (b) of the Local Government Act 1972.

The Chair agreed to hear two internal audit reports as items of urgent business as they were scheduled for this meeting but had missed the deadline to be included in the published agenda. The reports had been circulated to members in advance of the meeting and were published online so they were available to the public.

Chief Internal Auditor’s Annual Report – Year ended 31^st March 2023 (including summarised report for Year ended 31^st March 2022)

The Chief Internal Auditor introduced the report and explained that under the Public Sector Internal Audit Standards, the Chief Internal Auditor is required to provide the Section 151 Officer and the Council with an opinion on the adequacy and effectiveness of the organisation’s governance, risk management and control arrangements. In giving this opinion it should be noted that assurance can never be absolute. The most that the internal audit service can provide is a reasonable assurance that there are no major weaknesses in the risk management, governance and control processes.

The Chief Internal Auditor confirmed that the report has been split into two sections. The first part of the report is a summary to cover off the 2021/22 audit opinion which did not get presented last year. The opinion for 2021/22 was delayed due to low resourcing of the Internal Audit team. The report was subsequently deferred to September 2022 but following Intervention of the Secretary of State, it was agreed that further work was required with the Commissioners in place. The second part is the 2022/23 opinion.

The Chief Internal Auditor confirmed that based on outcomes from the Intervention and BVI report his overall opinion on governance, risk management and internal control for 2021/22 isRed which is a No Assurance opinion.

For 2022/23, the Chief Internal Auditor was unable to give an opinion due to the resource issues, which resulted in very limited work being undertaken, and the Intervention and Best Value report.

The Chief Internal Auditor highlighted at paragraph 3.7 of the report what he plans to address and this will include the following: -

·               Improving communications, the supply of information and provision of training to members of the Standards & Audit Committee.

·               Meeting regularly with the Chair of the Standards & Audit Committee on a one-to-one basis to discuss any specific concerns around the governance, risk management controls of the Council.

Members were invited to ask questions, key points raised included:

-       The internal audit team recruited two internal auditors in September 2022, a senior auditor has also been recruited. There is still one vacant post in the team. The Chief Internal Auditor confirmed they are looking at utilising the APEX framework with Mazars. A meeting is taking place with Mazars on Friday to see how they can support the team. They are also considering the possibility of a shared service with another Local Authority.

-       The implications of the internal audit were discussed and it was confirmed there was no regulatory risk but the external audit cannot place much reliance on the internal audit’s work and this could mean external audit need to conduct more work at a cost.

-       The new staff are still being trained to use the system but once this is completed the auditors will be able to place more reliance on the internal audit as more documentation will be logged on the system.

-       The Chief Internal Auditor is commencing talks with Mazar to provide support to the Council. Mazar is being procured under the Croydon APEX framework.

ACTION 1-The Chief Internal Auditor will look into how Mazars support other Local Authorities such as Croydon and will report back to the Committee.

RESOLVED:

1.1          That the Standards & Audit Committee considers and comments on the Chief Internal Auditor’s Annual Report – Year ended 31^st March 2023 (including summarised report for Year ended 31^st March 2022).

Internal Audit Strategy and 6-month Plan 2023/24

The Chief Internal Auditor introduced the report and explained that between November and December 2022, a comprehensive Audit Needs Assessment (ANA) process was undertaken which involved attending meetings with each of the members of Directors Board (DB) to discuss the risks and priorities within their services. As a result, the Internal Audit Strategy and 6-month plan for 2023/24 was developed. Having the 6-month plan allows the service to react more quickly to changing priorities and risks associated with the Intervention processes and BVI report.

The Chief Internal Auditor confirmed that they will continually revisit the plan and any changes will be agreed by the Chief Internal Auditor and Chair of the Standards & Audit Committee following discussions with relevant officers. All changes will be reported to members of the Standards & Audit Committee at its next meeting.

The Chief Internal Auditor referred to page 7 of the appendix to the report and the declaration of the independent nature of the service. He also highlighted that on page 8 of the appendix a list of issues that might affect the Council is set out.

Members were invited to ask questions, key points raised included:

-       The Interim Director of Finance and S151 officer confirmed that the divestment of investments is underway and the audit to assure members that this has been conducted properly has to happen afterwards. The sale of the solar assets is run by the administrators and they are just concluding phase 1. The goal is to sell the investments by November 2023.

-       In completing the risk assessment and audit around divestment the Internal audit team will look at best practice and how other Local Authorities deal with asset disposal and via discussions with colleagues in the service and external audit colleagues too. Members will be updated at appropriate points and in the appropriate forums.

The Chief Internal Auditor confirmed since the BVI report and intervention the biggest changes have been around resources and the improvement in interaction between officers and members and the supply of information between them.

-       The Interim Director of Finance and S151 officer stated that the previous investment strategy was underpinned by borrowing. Debt costs going forward and the Council is trying to reach financial stability and to reduce its debts. The focus currently is on divesting current investments. A commercial strategy will then be looked at for the future.

RESOLVED:

1.1          That the Standards & Audit Committee:

Agree the Internal Audit Services’ 6-month Internal Audit Plan 2023/24 and acknowledge that it is likely to change significantly as a result of the work being undertaken as part of the BVI and Intervention processes.