Agenda item

Consider a report by Chief Officer Audit & Risk on findings from recent work carried out by Internal Audit, including the recommended audit actions agreed by Management to improve internal controls and governance arrangements, and Internal Audit work currently in progress.   (Copy attached)

With reference to paragraph 5 of the Minute of 13 November 2017, there had been circulated copies of a report by the Chief Officer Audit and Risk which provided details of the recent work carried out by Internal Audit and the recommended audit actions agreed by Management to improve internal controls and governance arrangements.   The work Internal Audit had carried out during the period 28 October to 22 December 2017 was detailed in the report attached to the Agenda.  During the period a total of eight, final Internal Audit reports were issued. There were four recommendations made relating to two of the reports which had been accepted by Management for implementation. An Executive Summary of the final Internal Audit reports issued, including audit objective, findings, good practice, recommendations (where appropriate) and the Chief Officer Audit and Risk’s independent and objective opinion on the adequacy of the control environment and governance arrangements within each audit area, was included in Appendix 1 to the report.  The SBC Internal Audit function conformed to the professional standards as set out in Public Sector Internal Audit Standards (PSIAS) effective 1 April 2013 including the production of the report to communicate the results of the reviews.

7.2       Reference was made to the Internal Audit Final Assurance Reports detailed in the Appendix to the report.  Ms Stacey highlighted that there had been no recommendations in respect of the six schools, providing positive assurance.  However, there had been a discussion with staff around minor improvements.  The Service Director Children & Young People and the Chief Officer Education have asked for these audits to continue in future years’ plans, with a sample of primary and secondary schools.  With regard to the Industrial and Business Premises Assurance Report, one recommendation had been made to enhance governance.    The report detailed that there should be clearer linkages between the development of the industrial property and business property estate, and the requirements of the Economic Strategy should be established.  The approach to increasing the supply of immediately available land and business premises should also be set out; and the importance of securing external funding should be articulated.  Ms Stacey advised that the Chief Officer Economic Development had welcomed the report findings and a review of the Strategy was already underway.    Internal Audit had also made three recommendations in terms of Contract Management arrangements with third parties. The first recommendation was that the design and development of and effective Contract Management Framework should be progressed.  This would be led by the Executive Director (Commercial) with completion scheduled for 2019.   The second and third recommendations related to LIVE Borders and SB Cares.  Internal Audit recommended that contract monitoring arrangements should be enhanced to comply with best practice guidance, including the provision of assurance on managing risk by LIVE Borders. Ms Stacey concluded her report by advising that the planned review on ICT security was completed through work with the Interim Head of IT on cyber resilience.  The audit on the financial processes under payroll activity, sales to cash and procure to pay was also underway on which reliance would be placed by Audit Scotland which would be reflected in the External Audit Strategy 2017/18 presented to the March 2018 meeting.   The Chairman thanked Ms Stacey for her report and complemented the work of Internal Audit in respect of the schools’ Assurance Reports.

7.3       During discussion, it was noted that SB Cares and SB Contracts were monitored through the Major Contracts Governance Group.  The Committee were concerned that there were no monitoring arrangements in place for LIVE Borders. It was agreed to request that changes be made to the Scheme of Administration to include LIVE Borders within its monitoring role, and that a verbal update on progress should be given at the next meeting.               

DECISION:

(a)        NOTED:

            (i)         the final assurance reports issued in the period from 28 October to 22                       December 2017 associated with delivery of the approved Internal                          Audit Annual Plan 2017/18;

            (ii)        the Internal Audit consultancy and other work undertaken in this period; and

            (iii)       the assurance provided on internal controls and governance                                       arrangements in place for the areas covered by this Internal Audit                              work.

(b)       AGREED to request the Chief Executive consult with LIVE Borders regarding a possible amendment to the Scheme of Administration to include LIVE Borders within the monitoring role of the Major Contracts Governance Group and following this consultation that a report be submitted to Council to approve this amendment.