Agenda item

The purpose of this report is to give an opinion on the adequacy of Surrey County Council’s control environment as a contribution to the proper, economic, efficient and effective use of resources. The report covers the audit work completed in the year from 1 April 2022 to 31 March 2023 in accordance with the Internal Audit Strategy for 2022/23. A separate report on Counter Fraud work undertaken in 2022/23 forms part of this Committee agenda.

Witnesses:

Russell Banks - Orbis Chief Internal Auditor

David John - Audit Manager

Anna D’Alessandro - Director of Corporate Finance and Commercial

Key points raised during the discussion:

1.    The Orbis Chief Internal Auditor introduced the report and noted that it had three main purposes: firstly, to summarise all the internal audit work delivered over the 2022/23 audit year; secondly, to use that information to provide an overall internal audit annual opinion on the Council's governance, risk management and internal control arrangements, Reasonable Assurance had been provided; thirdly, to provide Members with detail on internal audit performance for the year. Seven audits received Partial Assurance, none received Minimal Assurance; there had been a general improvement on the previous two years. Follow-up audits were conducted and had shown an improvement in control. Details of the amendments made to the audit plan were included and reflected the Council’s changing risk profile. He noted the positive independent assessment of the Council’s internal audit performance by the Chartered Institute of Internal Auditors. The report set out the scores of Internal Audit Performance Indicators and other work including around the Digital Business and Insights Programme support.

2.    A Committee member noted that a substantial amount of resource had been dedicated to the LGPS Pension Administration audit, recognising its historical control weaknesses. She asked what improvement programme had been put in place including risk mitigation. The Audit Manager noted that there were 100 days dedicated within the audit plan for pension administration work and supporting the Pension Turnaround Programme, reviewing systems and addressing emerging risks. Recognising the historical control weaknesses, internal audit worked closely with the new management and restructured service. He noted a recent Substantial Assurance opinion provided to the LGPS Pension performance follow-up audit from Partial Assurance, findings were reported to the Surrey Local Pension Board.

3.    Adding to the above point the Director of Corporate Finance and Commercial noted that the Pension Administration Service had been on a substantial improvement journey since June 2020 when it restructured. The transformation system was not simple as Surrey disaggregated from other pension funds. She now received few cases of escalation from the Section 151 Officer. She praised the work of the team and noted that she had regular conversations with the Head of Change Management, an upcoming programme was around embracing digitalisation regarding the Surrey Pension Fund. The Vice-Chairman commended that improvement work and thanked the Director of Corporate Finance and Commercial, and her team for their work.

4.    A Committee member asked how Members and the public could access the additional audits that were undertaken in the year. The Orbis Chief Internal Auditor explained that every piece of work that internal audit produced was reported to the Committee in a summarised format including sufficient information. He noted that specific reports could be formally requested.

5.    Responding to a Committee Member’s query, the Orbis Chief Internal Auditor noted that the definitions of the four audit opinions were included on pages 37-38.

6.    The Chairman asked when the follow-up audits would start regarding the audits with Partial Assurance opinions and when those would be reported to the Committee. The Audit Manager clarified that those follow-up audits were scheduled in the current audit plan and would be reported to the Committee in due course. Work had started on Home to School Transport, Children's Management of Complaints Process - quarter 2, Social Value in Procurement - quarter 4 and Tree Management was planned to start soon following a catch up with the service.

7.    The Chairman requested a staffing update. The Orbis Chief Internal Auditor noted that recruitment remained a challenge, two new members of staff had recently been recruited and four posts were being advertised. It was difficult to recruit experienced qualified auditors from outside the organisation and therefore there was heavy investment on training up entry level staff. External support was also provided from contractors.

RESOLVED:

1.    Noted the work undertaken and the performance of Internal Audit in 2022/23 and the resultant annual opinion of the Chief Internal Auditor;

2.    Determined that there were no matters that the Committee wished to consider for inclusion in the Council’s Annual Governance Statement; and

3.    Considered that the Council’s arrangements for internal audit had proved effective during 2022/23.

Actions/further information to be provided:

None.