This report presents the annual assurance report of the Chief Auditor required by the Accounts and Audit Regulations and the Public Sector Internal Audit Standards.

Paul Harrington, Chief Auditor, submitted a report setting out at Appendix 1 the Internal Audit Annual Assurance Report of the Chief Auditor, as required by the Accounts and Audit regulations and the Public Sector Internal Audit Standards.  The report gave the Chief Auditor’s opinion on the overall adequacy and effectiveness of the organisation’s governance arrangements, risk management and internal control environment, drawing attention to any issues particularly relevant to the preparation of the Annual Governance Statement.  It also set out key themes arising from the work of the Audit Team during the 2019/2020 financial year, and compared the audit work undertaken with that planned, summarising the performance of the Internal Audit function against its performance measures and targets.

The report explained that, on the basis of work completed during the course of the year, which was set out in more detail in the attached report, the Chief Auditor had concluded, that whilst no assurance could ever be absolute, he could only give limited assurance that arrangements to secure governance, risk management and internal control within those areas audited in 2019/20, were suitably designed and applied effectively.  The basis for the assurance opinion was set out in section 2 of the attached report and the key areas for improvement identified during the audit work were set out in section 4.

The report emphasised that the important issues in determining the limited opinion were the weaknesses identified within some of the Council’s financial systems, which had remained unresolved and, in some instances, had deteriorated.  Basic financial controls had not worked as expected, for example bank reconciliations had not been kept up-to-date and historic audit recommendations relating to both ‘accounts payable’ and ‘accounts receivable’ had not been implemented. Daily bank reconciliations had been undertaken throughout the financial year to check that all receipts in the bank account were processed by the cash system, so it was known that cash had been allocated.  However, monthly reconciliations, dating back to September 2019, providing a cumulative oversight had not been performed at the time of the audit in February 2020. 

The Chief Auditor concluded, whilst a reasonable assurance opinion had been given in 2018/2019, there had been insufficient improvement in the control environment within some of the Council’s key financial systems during 2019/2020 and some of the actions previously agreed had not been implemented.  The Finance Department’s response to the findings would be presented in a separate report on the agenda (see Minute 4 below) for your consideration.

Resolved:     That the assurance opinion given by the Chief Auditor and the issues raised in the annual report be noted.