Agenda item

Consider a report by Chief Officer Audit & Risk on findings from recent work carried out by Internal Audit to complete the Internal Audit Annual Plan 2017/18, including the recommended audit actions agreed by Management to improve internal controls and governance arrangements.   (Copy attached)

5.1       With reference to paragraph 4 of the Minute of 19 March 2018, 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 24 February to 31 March 2018 was detailed in the report.  During the period a total of three final Internal Audit reports were issued. There were eighteen recommendations made relating to one of the reports which related to the Business World ERP (Enterprise Resource Planning) System Key Internal Controls review which integrated four separate audits as part of the Financial Governance work undertaken by Internal Audit.  The implementation of the ERP system had been significant and complex, with the Legacy systems for HR, Payroll, Procurement and Financial Management going live in April 2017.  A further eight Legacy feeder systems remained live and this had required additional resources by external consultants to supply specialist technical assistance and from existing Council staff in order to provide an operational workaround and manual reconciliation as required.  The recommendations 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.

5.2       Ms Stacey explained that the assurance audit on Community Safety was to evaluate partnership working to ensure that responsibilities and accountability of partners were clearly defined and that funds were used effectively to support local priorities, specifically relating to Domestic Abuse services.  The report advised of the anticipated changes to the arrangements for Community Safety which would leave a potential funding shortfall as from 2020 and the work being undertaken to look at options for future funding.  Internal Audit was able to provide substantial assurance in relation to risk, control and governance systems and no recommendations were made.

5.3       During discussion, Members raised a number of questions relating to Business World and ERP.  Mr Robertson advised that there had been no fundamental failures in the system.  A rectification plan for improvement was being taken forward and funded by CGI and a number of solutions had been already been implemented eg manual bank reconciliation and manual VAT input.  Changes to the system configuration documentation would be up to date by the end of September 2018 and Mr Robertson considered that the Business World ERP modules were operating effectively at this time.  Internal Audit would continue to monitor progress and a further audit would be reported in due course.  The Chairman thanked officers for their input.

DECISION:

NOTED:

(i)        the final assurance reports issued in the period from 24 February 20 31 March 2018 associated with delivery of the approved Internal                            Audit Annual Plan 2017/18;

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