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Report to the Audit Committee Internal Audit Annual Report & Opinion

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					                                                                                             ITEM NO   9

                                     Report to the Audit Committee

                                    DATE                           26th June 2008
                                    PORTFOLIO                      Resources
                                    REPORT AUTHOR                  Nadeem Ukadia
                                    TEL NO                         01282 425011 Ext 2154
                                    EMAIL                          nukadia@burnley.gov.uk



                              Internal Audit Annual Report & Opinion


PURPOSE

1.     To provide members with the Head of Finance’s opinion on the Internal Controls of the
       Council for 2007/08


RECOMMENDATION

2.   That the Committee considers the report.


REASONS FOR RECOMMENDATION

3.   To comply with the terms of reference for the Audit Committee through review of the scope
     and results of work completed by Internal Audit, and, to support and maintain the
     independence and objectivity of the Internal Audit function.

     To meet the requirements set out in the CIPFA Code of Practise for Internal Audit in Local
     Government in the United Kingdom 2006, paragraph 10.4. The Annual Audit Opinion
     supports and complements the Annual Governance Statement which is required under
     regulation 4 of the Accounts and Audit Regulations 2003 (amended 2006).


SUMMARY OF KEY POINTS

     Limitation of Opinion

     This opinion on the Internal Controls of the council is based on the work undertaken by
     Internal Audit both during 2007/08 and that relates to 2007/08. It provides reasonable but
     not complete assurance concerning the Council’s internal control system.

     This also takes account of actions that have been agreed with Managers to address
     weaknesses identified.

     Overall Opinion

     The controls of the Council continue to operate effectively. These include separation of

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    duties, authorisation, monitoring and internal checks. Where during the course of audits
    control weaknesses have been identified, these have been addressed as part of an agreed
    Action Plan. Compliance with Action Plans is monitored and where these have not been
    implemented, further assurances have been provided by management that these issues
    will be addressed.

    In providing this opinion the Head of Finance has had regard for the Accounts and Audit
    Regulations and CIPFA’s Code of Practice for Internal Audit in Local Government in the
    United Kingdom.

    Work Completed

    Internal Audit has provided to the Audit Committee summaries of the work completed
    during the course of 2007/08 and these should be considered in relation to this section.

    Core Systems
    Audits covered in this area were – Debt Levels and Debt Recovery, Asset Register,
    Electronic Funds Transfer, Sundry Debts, Corporate Governance, Accountancy &
    Budgetary Control, Payroll, Council Tax Administration & Collection, and Creditors. Any
    key issues identified have been addressed through agreed action plans.

    Operational Audits
    These include audits of Policy & Plan Development, Charities, Procurement, Staff
    Recharges, and St Peter’s Centre. Any key issues identified have been addressed through
    agreed action plans.

    Technical & Special Audits
    This included a review of Corporate Governance, Fraud & Corruption Policy, Demolition
    Contract, Environmental Schemes, Data Quality & Performance Indicators, Revenue
    Outturn, Value For Money Review, Final Accounts 06/07, Statement of Internal Control and
    SRB funded projects. Any key issues identified have been addressed through agreed
    action plans.

    Technical & Special Audits – European Funded Projects
    Burnley Borough Council, as accountable body for the North West Objective 2 programme
    is responsible for undertaking Article 4 monitoring visits to European Funding projects in
    line with EC regulation 438/2001 - Management and Control Systems.

    The purpose of these visits is to ensure that the project is being conducted in accordance
    with the terms of the offer letter and all relevant EU Regulations and that adequate system
    and procedures are in place to ensure successful delivery of the project.

    There were no major issues but recommendations were given to improve maintenance of
    project record keeping and strengthening the documenting of outputs.

    Performance
    The Internal Audit Plan for 2007/08 provided for the delivery of 690 audit days whereas the
    actual audit days delivered was 573. As stated the service was planned on the basis of 6
    auditors, but vacancies occurred in July and November, which remained unfilled through
    the year. Nevertheless the Audit Coverage for the year was 83%, this was above the target
    of 82%. This should improve further with the appointment of new audit support officers
    during quarter 1 of 2008/09.

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     We have reported the performance of the Service in comparison with its targets to the
     Audit Committee and Management during the course of the year, the year end 2007/08
     actual performance to targets is covered in Appendix A.

     During the year a quality assurance programme has been maintained. This involves both
     an internal review of the audit work and an external management questionnaire. The
     results of the internal review of work are provided to auditors as are the actions undertaken
     during the audit process to correct issues. The results of the management questionnaire
     are reports in Appendix A (L5).

     Internal Audits compliance with the CIPFA code of practice for internal audit remains high.
     Out of the 191 points of compliance, only 2 points require further work. These relate to
     independence and feedback on internal audit as a whole.

     Investigations
     Four investigations were completed: -
          a.       Office security
          b.       Claims Handling
          c.       Property Ownership
          d.       Re-housing Grant
     In total 71 days were spent on investigations during 2007/08.


FINANCIAL IMPLICATIONS AND BUDGET PROVISION

5.   None


POLICY IMPLICATIONS

6.    None


DETAILS OF CONSULTATION

7.   Nick Aves (Director of Resources), Phil Moore (Head of Finance), David Wilcock (Head of
     Law and People), and Councillor Peter Doyle


BACKGROUND PAPERS

8.   Audit Files, Reports and Working Papers held in the Internal Audit Office
     Reports to the Audit Committee during 2007/08 on Internal Audit Progress, Management
     Information Reports on Performance during 2007/08.


FURTHER INFORMATION
                                                            Nadeem Ukadia Ext 2154
PLEASE CONTACT:
                                                            Ian Evenett Ext 2231
ALSO:                                                       Phil Moore Ext 2231

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Description: Report to the Audit Committee Internal Audit Annual Report & Opinion