STROUD DISTRICT COUNCIL AGENDA
25 June 2009 8
Report Title INTERNAL AUDIT ANNUAL REPORT 2008/09
Purpose of Report To report to the Council the annual report and opinion of
the Head of Internal Audit for 2008/09.
Decision(s) That the report be accepted.
Consultation and Consultation with the individual officers of the Strategic
Financial Implications There is adequate budget provision for the Internal Audit
Sandra Cowley, Head of Finance
Tel: 01453 754136
Legal Implications There is a requirement to report the annual report and
opinion of the Head of Internal Audit in line with the
Accounts and Audit Regulations 2003 and the 2006
Patricia Adley, Interim Head of Legal Services
Tel: 01453 754369
Report Author David Shelmerdine, Audit Manager
Tel: 01453 754399
Portfolio Holder Councillor Nigel Cooper, Cabinet Member for Finance
Tel : 01453 813870
E-mail : email@example.com
Performance Further report on progress for 2009/10 to the Audit
Management Follow Up Committee meeting on 7 January 2010.
Background Papers / • Code of Practice for Internal Audit in Local
Appendices Government 2006
• Local Government Audit Manual 2004
• A file of supporting documents has also been placed
in the Members’ Lounge.
Council 1 Agenda Item No 8
25 June 2009
HEAD OF INTERNAL AUDIT ANNUAL REPORT AND OPINION 2008/09
The Council’s Internal Audit Manager is required to produce a formal annual report
and opinion under the CIPFA Code of Practice for Internal Audit in Local Government
2006 (the ‘CIPFA Code’). This forms an integral part of the formulation of the
Council’s Annual Governance Statement, as required under the Accounts and Audit
Regulations 2003 and the CIPFA “Framework for Delivering Good Governance in
This report encompasses the reporting requirements specified in Standard 10.4 of
the CIPFA Code for Internal Audit.
1. Opinion on the Overall Adequacy and Effectiveness of the Council’s
Internal Control Environment
My overall opinion is that significant assurance can be given that there is a
generally sound system of internal control, designed to meet the Council’s
objectives, and that controls are generally being applied consistently.
2. Qualifications to the Opinion
My opinion is based upon, and limited to, the work performed during the year.
The opinion does not imply that Internal Audit has reviewed all risks and
assurances relating to the Council, but is based upon the range of individual
opinions arising from risk based audit assignments completed during 2008/09.
These individual opinions are summarised below:
2007/08 (Plan) In 2008/09
No. % No. %
Full assurance 0 0 0 0
Significant assurance 19 79 33 83
Limited assurance 5 21 7 17
No assurance 0 0 0 0
Total 24 100 40 100
The limited opinions mainly related to specific aspects of controls in relation to
elections, contracts, debtors, IT, parking and Careline. In addition a joint
review, which was undertaken by two of the Gloucestershire Districts on behalf
of all six, commented on the weak financial control arrangements in relation to
the County-wide Concessionary Travel scheme.
No operational constraints have been placed upon Internal Audit, apart from
agreed budgetary control provisions.
3. Issues Relevant to the Preparation of the Annual Governance Statement
From the risk-based Internal Audit assignment work undertaken during
2008/09, there are no issues of which I am aware which I regard as sufficiently
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significant to be considered in relation to the preparation of the Council’s
Annual Governance Statement.
4. Summary of Audit Work Undertaken
4.1 Strategic Plan
2008/09 represented the third year of the 4-year Strategic Audit Plan prepared
by Deloitte, under which we aim to review all of the Council’s major areas of
operation and systems on a rolling cycle. The audit plan was drawn up
following a risk assessment, which determined the frequency (within the 4 year
cycle) and the depth for each area to be reviewed. Areas and systems which
are considered to be fundamental to the Council’s operations, or which are
determined to be high risk, are normally audited on an annual basis.
During 2008/09, the audit team was staffed by 1.6 whole time equivalent (WTE)
members, supplemented at the rate of 0.8 WTE contract staff.
4.3 Progress against Plans
The Internal Audit Plan for 2008/09 anticipated a resource of 550 days. During
the year 93% of the planned work was completed. A summary of progress
against the 49 discrete projects as at 31 March 2009 is given below.
Stage No. of Project Areas
At draft report stage 6
Field work in progress 1
Deferred into 2009/10 4
Total number of areas 49
By 31 March 2009 we had issued 40 Final Reports (including some carried
forward from 2007/08), which are listed in Appendix 1. A summary is provided
below of the number recommendations made within these reports, together
with the extent of management agreement.
Grade Number of Recommendations
Total Agreed Partially Superseded Not
A 21 21 0 0 0
B 169 166 1 1 1
Total No 190 187 1 1 1
Total % 100 98 1 1 1
Note: Grade A recommendations are of higher significance than Grade B.
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The Council’s Internal Audit Service is operated in accordance with the CIPFA
Code 2006 and the Local Government Audit Manual 2004.
In June 2008, following their independent review, the Council’s external
auditors (KPMG) concluded that the Internal Audit function was compliant with
the CIPFA Code.
During the year, we continued to work closely with other local government
Internal Auditors within Gloucestershire, with the aim of improving the overall
effectiveness of service provision.
We also undertook a review of the effectiveness of the Council’s system of
Internal Audit against the CIPFA Code, the results of which have been made
available for Members, with minor areas identified for further development.
6. Implementation of Recommendations
Internal Audit followed up 166 agreed recommendations due for
implementation, to assess whether they had in fact been implemented as
Of these there was just one Grade A and four Grade B recommendations
which had not been implemented.
These results show a very high level of positive action being taken across the
Council, leading to the continued strengthening of the Council’s internal control
systems. They also reflect positively on the performance of the services and
the audit team.
7. EMAS – Eco Management and Audit Scheme and ISO 14001
Stroud District Council has held both these international standards for the past
10 years. In order to achieve these accreditations Stroud District Council’s
environmental improvement is audited annually by both an internal audit
process and by an independent UKAS accredited external verifier. Since 2006
the internal audit process has been carried out by an external contractor -
Global to Local, as the Council does not currently have a qualified
8. Opinion Survey
On completion of each assignment, we consult management formally as to
their opinion on the approach and value of the audit work. 41 replies were
received, expressing 164 constituent opinions as follows:
Opinion 2007/08 2008/09
No. % No. %
Very satisfied 37 71 98 60
Satisfied 13 25 64 39
Just adequate 2 4 2 1
Unsatisfactory 0 0 0 0
Total 52 100 164 100
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8. External Benchmarking
Benchmarking work is undertaken each year to compare the performance and
unit cost of the service with comparable Shire District Councils on an
equivalent basis. Whilst we can report that this year, at 93%, we have
exceeded the local target of 90% for “Audit Plan Achieved”, the remaining
information may not be available from CIPFA until later in the summer, and will
be provided to the January meeting of the Audit Committee.
Local PI 2004/05 2005/06 2006/07 2007/08 2008/09
Actual Actual Actual Actual Target
% of Audit
Plan Achieved 69% 74% 92% 90% 90%
Cost Per Audit £290 £305 £250 £246 *
Audit Days Per na na 9.19 8.05 *
9. Audit Plan 2009/10
The Council’s Internal Audit Plan for 2009/10 was approved by the
Performance and Audit Overview and Scrutiny Committee on 2 April 2009.
In terms of staffing resources, it is anticipated that a mixed provision of in-
house staff and contractors will remain in place throughout 2009/10.
However, an agreement has been reached for Gloucester City Council to fulfil
the role of Audit Manager for Stroud for the period from 1 June 2009 to 31
Furthermore, Stroud is leading a project for three authorities – Stroud,
Gloucester and Tewkesbury - to work together with the aim of establishing an
audit shared service consortium to be effective from 1 April 2010.
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FINAL ASSURANCE REPORTS ISSUED IN 2008/09
Private Housing & Improvement Grants
Sundry Debtors 2007/08
Recruitment & Retention of Staff
Staff Disciplinary & Grievance Procedures
IT FMS System
Refuse & Recycling
National Non-Domestic Rates
Housing Benefits 2007/08
Dursley Pool Sundry Debtors
Sundry Debtors 2008/09
Care, Repair & Gardening Schemes
Payroll & Expenses
Litter & Street Cleansing
Planned Housing Maintenance
Commercial & Industrial Properties
Health & Safety
Housing Benefits 2008/09
Total Number of Final Reports = 40.
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25 June 2009