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 2018 to 31 March 2019 in accordance with the Internal Audit Strategy for 2018/19.

The Chairman considered Item 7 (this item) before Items 6 and 8.

Witnesses:

Russell Banks, Chief Internal Auditor

David John, Audit Manager

Key points raised during the discussion:

1. The Chief Internal Auditor introduced the report and summarised key points:

·         Areas of significant weaknesses had been highlighted by Internal Auditors. There was now a clear commitment and desire from management to improve internal control and governance through the transformation programme.

·         That the Committee had a key role in overseeing the Internal Audit function and would continue to ensure that the Internal Audit performance indicators were satisfied.

·         Reported the proactive approach with the Council’s Strategy on counter fraud.

2. In response to Member queries it was reported that:

a)    The Chief Internal Auditor recalled the case of the former employee of Surrey County Council who defrauded the Council of around £90,000 through the use of a pre-paid card scheme, which was discovered in May 2017. However, it was explained that Internal Audit had identified relatively small amounts of fraud considering the large size of Surrey County Council.

b)    The Chief Internal Auditor summarised examples of the three areas of minimal assurance identified and reported the specific weaknesses within the CFL Care Assessment audit with a detailed summary in Annex 2.

c)    The Audit Manager stated that work was in progress on the Looked After Children Initial Health Assessments and an update would be given at the next Committee in September. He was hopeful that verbal robust assurance could be given later this calendar year.

d)    The Audit Manager explained that high priority actions of partial and minimal assurance were being monitored in a management system with follow-up emails to managers and to the relevant auditor. Managers were required to report back to Internal Audit to explain any overdue actions and that compensating controls would be in place to mitigate any further and future delays. The system tracked performance and ensured more regular engagement between Internal Audit and the Corporate Leadership Team on a quarterly basis.

3. The Chairman noted positively that the culture within Surrey County Council had changed as a result of new leadership and the Corporate Leadership Team were operating effectively. As part of the governance role of the Committee, the Chairman and Vice-Chairman agreed to take the matter of assessing the performance of the management system to Cabinet.
4. The Chief Internal Auditor confirmed that there was a sufficient level of resources available to cover the planned and unplanned audit work in 2018/19.
5. The Audit Manager stated that Internal Audit carry out 60-70 audits a year and that more areas of minimal assurance had been identified. This was a result of the changed Council control environment with the audit planning process being more focussed and with greater intelligence on risk areas.
6. The Chairman reported that he had a positive discussion with the Select Committee Chairmen and Vice Chairmen’s Group over the insufficient amount of governance considered by the Committee. The Chairman suggested that Members should collect their views on the changes to the scrutiny arrangements. A pre-meeting before the next Committee in September was agreed.
7. The Audit Manager clarified the wording of CFL Care Assessments on page 21 on the meaning of the “financial sustainability of care packages not being robustly challenged”.It was explained that there was an inefficient control environment on the consideration of final care packages. However, the Council now considered more efficient alternative provisions such as the gateway process in East Sussex County Council in order to reduce costs. There would also be a CFL Care Assessments review in quarter 2 2019/20 since the last in September 2018.
8. The Vice-Chairman noted the Deprivation of Liberty Standards (DOLS) – Follow Up audit, the number of DOLS requests from Surrey County Council by early 2018 increased from 100 a year to 3,000 a year from the Supreme Court Ruling in 2014, which improved the control environment for Internal Audit to raise the level of assurance to reasonable from partial.

Actions/ further information to be provided:

1. A7/19 - A pre-meeting before the next Committee in September was agreed by the Committee as part of its governance function to discuss the change in scrutiny arrangements.
2. A8/19 - As part of the Committee’s governance role, the Chairman and Vice-Chairman in agreement with Members and officers will raise the issue of the performance of the management system which tracked high priority actions, to Cabinet.

RESOLVED:

That the Committee:

1. Noted the work undertaken and the performance of Internal Audit in 2018-19 and the resultant annual opinion of the Chief Internal Auditor; and
2. Determined matters to be drawn to the attention of Cabinet.
3. Considered that the Council’s arrangements for internal audit had been proved effective during 2018/2019.