Agenda Item No. 5
The Vale of Glamorgan Council
Audit Committee: 1st May 2018
Report of the Operational Manager - Audit as the Head of Audit
Audit Committee - Proposed Internal Audit Shared Service Strategy and Draft Annual Risk-Based Audit Plan 2018/19
Purpose of the Report
- To present to Members the Council's proposed Internal Audit Shared Service Strategy and draft Annual Risk-Based Audit Plan for the year April 2018 to March 2019.
- THAT Members review, consider and approve the proposed Internal Audit Shared Service Strategy and draft Annual Risk - Based Audit Plan for 2018/19 as appended to this report.
Reason for the Recommendation
- To keep the Audit Committee informed and to approve the proposed Internal Audit Shared Service Strategy and draft Annual Risk-Based Audit Plan for 2018/19 to ensure compliance with the Public Sector Internal Audit Standards (PSIAS) and the Committee's Terms of Reference.
- It is important for Internal Audit to plan effectively to ensure that the service contributes to the Council's objectives at both strategic and operational levels. Planning enables Internal Audit to demonstrate both internally and externally that they are making best use of scarce resources. The Internal Audit service is delivered under a shared service agreement with Bridgend County Borough Council with the Vale of Glamorgan Council being the host authority and therefore the function is provided internally.
- Effective planning is one of the Standards contained within the Public Sector Internal Audit Standards (PSIAS) and against which our external auditors assess us. It is from this overall assessment of internal audit's programme of work and the contribution that this makes to the overall control environment of the Authority that our external auditors will draw the necessary assurances they need.
Relevant Issues and Options
- Internal Audit planning is not an exact science but it is felt that the proposed plan for 2018/19 strikes a good balance between the risks identified, the internal audit resources available and the assurance work being carried out by other agencies.
- Resource requirements are reviewed each year as part of the audit planning process and are discussed with the Internal Audit Shared Service Board (IASSB). The impacts of the financial pressures with the requirements to generate efficiencies and hard savings have seen internal audit resources reduce year on year. Following a restructure in 2017/18, the current establishment for 2018/19 is based on 14 full time equivalents. It should be noted that at the commencement of 2018/2019, the Section is carrying approximately 50% in vacant posts. Arrangements are in place to address the shortfall, however, with such a high level of vacancies, it is important to be prudent when determining the number of productive days that can be realistically achieved. The following is the assumptions that have been made for 2018/19.
- Quarter 1 and 2. Status remains the same at 50% of the establishment.
- Quarter 3 and 4. This will increase to a maximum of 70% of the establishment in post.
- In order to address the shortfall in resources it is envisaged that once again the services of the South West Audit Partnership will be commissioned to help bridge the gap. In addition, during 2018/19 work will be underway to further explore the proposal to extend the Internal Audit Shared Service and as a consequence, should this proceed, some latitude will be needed during this transitional year.
- Therefore, based on the above, the number of productive days that can realistically be delivered, having regards to the fact that a proportion of these days will need to be procured from the South West Audit Partnership, is a maximum of 1,350 productive days. As stated, it is envisaged that a proportion of these days will be bought in, in order to meet the commitment and this will be particularly relevant should there be any delays in filling the vacant posts and the impact of working towards a Regional Shared Service.
- Obviously the delivery of the 1,350 productive days will be wholly dependent on the above materialising. Should this not be the case, there is also the potential to buy in additional days in order to meet any service shortfall during the year. This will be contained within Internal Audit Shared Service's existing budget.
- Attached at Appendix A is the proposed Internal Audit Strategy document for 2018/19 and the draft annual risk-based Audit Plan 2018/19 is attached at Appendix B. It demonstrates how the Internal Audit Shared Service will be delivered and developed in accordance with our Terms of Reference and how it links to the Council's objectives and priorities. The Strategy will be reviewed and updated annually in consultation with stakeholders namely the Audit Committee, Corporate Management Team, External Auditors and senior management.
- The 2018/19 proposed draft Annual Risk Based Audit Plan of work has been formulated to ensure compliance with the Standards as contained within the PSIAS. In order to keep Members of the Audit Committee fully informed, and to ensure compliance with Standards for Internal Audit.
Resource Implications (Financial and Employment)
- The level of service outlined above is included within the base budgets for the Vale of Glamorgan and Bridgend Councils in 2018/2019.
Sustainability and Climate Change Implications
- None directly from this report
Legal Implications (to Include Human Rights Implications)
- Provision of an adequate and effective Internal Audit function is a legal requirement under the Accounts and Audit (Wales) Regulations 2014 as amended from time to time. The Public Sector Internal Audit Standards replaced the Code of Practice for Internal Audit in Local Government in the United Kingdom, last revised in 2006. In local government in Wales, the PSIAS is mandatory for all principal Local Authorities and other relevant bodies.
Crime and Disorder Implications
- Pursuing initiatives to prevent, detect and deter crime is encompassed within the terms of reference under which the audit function operates.
Equal Opportunities Implications (to include Welsh Language issues)
- None as a direct consequence of this report.
- The work of audit is intended to assist in the achievement of all corporate and service objectives.
Policy Framework and Budget
- The proposals in this report are in accordance with the policy framework and budget.
Consultation (including Ward Member Consultation)
- No further consultation is proposed.
Relevant Scrutiny Committee
- Corporate Performance and Resources.
Helen Smith - Operational Manager - Audit
External Auditors - Wales Audit Office
Carys Lord - Head of Finance / Section 151 Officer