Members were informed that Under the Public Sector Internal Audit Standards, the Head of Internal is required to provide the Section 151 Officer and the Standards and Audit Committee 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.

In total 24 reports with a positive assurance opinion and 4 reports with an Amber/Red assurance opinion were issued. The overall opinion on controls remains Green.

Following discussions with members and the Director of Finance & IT, Amber/Red assurance opinions are no longer given a positive assurance opinion to reflect that there are either high risk recommendations or a number of medium recommendations which indicate weaknesses across the service area.

Councillor Rice questioned what determined the assurance ratings. The Head of Internal Audit explained that to determine the assurance ratings meetings were held with service directors to discuss the risks, the internal audit team then focus on them risks depending on recommendation. The results are then discussed and challenged with external Audit, if there is found confidence the risk is changed slightly.

Councillor Collins questioned the work which was carried out around consultants and the termination of two contractors due to the rolling nature of their employment.  The Director of Finance and IT informed members that when a consultant moved from one project to another within the same directorate, without any competitive procurement process being undertaken they were terminated.

Members discussed procurement cards. Members were informed that Internal Audit acted as a facilitator to set up a working group involving Corporate Finance and Procurement, to review the processes around the administration and use of the cards, with input around controls from Internal Audit. Councillor Hamilton asked for Clarification on the new system being developed. The Committee were enlightened that a new system was currently being developed which will enhance the controls, improve the administration and monitoring processes and will add additional safeguards around the application process and lockdown the use of the cards based on business need.

The Chair of Committee queried if the new system would detect purchases made to a company which was not listed as a supplier within the policy. It was questioned further by Councillor Rice if it would be perceived as misuse if an employee purchased the same item from a different supplier due to the reduction in cost. The Director of Finance and IT explained that the system would detect these types of purchases although members were informed that the wording of the contract would be checked.

Members requested a follow up report at the September Standards and Audit Committee on the outstanding recommendations to be implemented.

RESOLVED:

That the Standards & Audit Committee considers and comments on the Head of Internal Audit Annual Report – Year ended 31^st March 2016.