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					                 Hertfordshire County Council




                     INTERNAL AUDIT
                          PLAN

                          2006/07




Chris Kay
Internal Audit
March 2006
                           Hertfordshire County Council


                                   INTERNAL AUDIT
                                        PLAN

                                         2006/07


                                        Contents


                                                                           Page

               Introduction                                                 3

               Developing the Plan                                          4
               Key elements                                                 5
               Glossary                                                     8

               Work in departments

               Adult Care Services                                          10
               Children, Schools and Families                               11

               Corporate Services                                           17
                   Chief Executive                                          17
                   Commercial Services & Information                        17
                   Corporate Finance                                        19
                   County Secretary‟s                                       21
                   People & Property                                        21

               Environment                                                  23
               External clients & voluntary bodies                          25
               Fire and Rescue                                              26




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07


INTRODUCTION

This Plan sets out Internal Audit‟s projected work for 2006/07. It is aimed at:

   the Audit Panel
   Chief Officers
   other senior officers and managers throughout HCC
   the Audit Commission
   Internal Audit staff.

I am grateful for the input from all of the above to our planning process.

For each Department, the Plan once again groups our work into two categories,
namely:

   regular audits – those reviews which we carry out on a predetermined
    frequency, derived from our annual risk assessment exercise; and

   developments and audit issues – our input to new developments, or work
    resulting from concerns about possible control weaknesses or other audit
    matters.

A Glossary on page 7 provides definitions of some of the audit jargon used in this
plan. The relevant Group Auditor or I will be glad to provide any further
explanations, or further copies of this document, which will also be available on
Connect at <http://connect.hertscc.gov.uk/connect/organisation/cs/connaud>.


Chris Kay
Chief Internal Auditor
March 2006




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07


DEVELOPING THE PLAN

In planning our work for the coming year, we have taken into account a number of
influences and processes, including:

          contacts in               discussions with managers and others in order
          services                  to assess the impact of change on the control
                                    environment

          risk assessment           our annual detailed analysis of risk factors
                                    applying to all auditable activities of the
                                    authority, to derive our audit priorities

          Audit                     co-ordination of our plans with those of the
          Commission                external auditor (the Audit Commission’s local
                                    audit team), and incorporation where possible
                                    of their priorities and recommendations

          Chief Officers            presentations to each Chief Officer of our draft
                                    Plan for their service, and adjustments where
                                    possible to accommodate their priorities and
                                    concerns

          Audit Panel               presentation of the draft Plan to the Panel for
                                    their endorsement, and incorporation where
                                    possible of their concerns.




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07


KEY ELEMENTS

Corporate Governance

Our work leading to the annual Statement on Internal Control (SIC) will be aimed at
further embedding this review within the authority‟s corporate management
arrangements. Each Chief Officer will sign an assurance statement covering their
area of responsibility, and we will review evidence that actions anticipated in
previous SICs have been implemented (for example, in the updating of schemes of
sub-delegation). Other planned audits covering broader corporate governance
issues include:

       financial management arrangements in all departments
       the risk management process (including corporate responsibilities)
       business continuity plans
       budget management audits (following through lessons from previous years‟
        work, and with a focus on reorganised functions).

We will keep closely involved in the continuing development of the Local Area
Agreement and other significant partnerships, and will contribute to proposed
governance arrangements as appropriate.

Contracts, partnerships and projects

We will focus on the project management of major initiatives that cut across more
than one department. These will include:

       The Way We Work (office rationalisation programme)
       centralisation of departmental property functions
       possible centralisation of support services, and the use of shared service
        centres
       the Future of Finance project.

We will follow up earlier initiatives, including the Public Finance Initiative scheme in
CSF and major partnerships such as Health, Herts Highways and the SHARP
project, to ensure that the subsequent contracts and arrangements are being
robustly embedded, actively monitored, and managed to ensure effective outcomes.
We will also develop our audit approach in response to developments such as the
Financial Management Standard in Schools and the Children‟s Trust Partnership.

We will review the efficiency of purchasing arrangements by auditing key elements of
the procurement project, as well as central commissioning for schools, emergency
procurement, and related IT systems. Progress in implementing improvements in
the operation of Contract Regulations will be followed up. We will also contribute to
or review a wide range of significant new or re-tendered contracts.




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07


Anti-fraud and corruption work

We will undertake analytical review of the information within SAP to extract volume
data, assess levels of amendments, voids etc., to identify where procedures are not
being followed. We will investigate exceptionally large or unusual transactions in the
core financial systems (payroll, creditors, debtors and the ledger).

All our core system reviews, through both financial and computer audit work, will
include a component of anti-fraud detection and prevention work - through the audit
objective of evaluating the continuing adequacy and effectiveness of the systems
and access controls, ensuring that the risk of errors or irregularities occurring and
remaining undetected is minimal.

We will collect data for submission to the Audit Commission for the National Fraud
Initiative 2006, which will have a wider scope than previously, to include information
on payments to creditors and on clients in residential care.

We will undertake data-matching of invoices to detect any duplicate payments, and
will review the cheque control & cancellation procedures. We will also continue to
liaise with the Police and the Council‟s bank if cheque frauds occur.

We will investigate unexplained shortfalls in key local income systems, such as for
school meals income.

Many of our audits of contracting arrangements will test for controls to minimise the
risk of corruption, particularly looking for the operation of transparent and proper
contract letting processes. We will also follow up to ensure corrective action has
been taken in areas where we have previously undertaken irregularity investigations.

We will further promote awareness of the risk of fraud or corruption, including the
Council‟s arrangements for reporting suspicions through the Whistleblowing
procedure.

Information and Communications Technology

With the success of The Way We Work initiative having a dependency on new
approaches to the use of ICT, we will be reviewing the arrangements at the Apsley
site to ensure that the methods employed still allow for good levels of security and
control.

We will also concentrate on new developments, which include improvements in
departmental computer systems to allow for the streamlining of existing processes,
and the adoption of new approaches to existing working practices, which will
contribute to the provision of a more effective service.

In addition to our continuing work looking at the key corporate systems, we will audit
a number of areas which have a County-wide effect, including communications links
and the Authority‟s arrangements for the management of IT Business Continuity.


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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07



The broader Internal Audit role

We will continue to fulfil a broader role within the authority, including:

   as necessary, any special investigations into suspected fraud, corruption or other
    irregularity
   projects and consultancy work at the request of senior managers
   corporate work, including chairing the Finance Board and helping to take forward
    the Future of Finance project
   support for the Audit Panel, and related member functions
   liaison with the Audit Commission‟s external audit team
   work related to the authority‟s Comprehensive Performance Assessment
   audits for external clients, ranging from the Police Authority to the Board for the
    Chilterns Area of Outstanding Natural Beauty.




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07


GLOSSARY

The following definitions cover some of the audit and other terms used most
frequently in this Plan.

Application                       A computer system which exists to directly
                                  support a user activity

Compliance test                   An audit check of a small number of transactions
                                  or records, to test whether controls are operating
                                  as intended by management

Core financial system             A computerised or other process fundamental to
                                  the operation of the authority’s financial affairs

Corruption                        The offering, giving, soliciting or acceptance of
                                  an inducement or reward which may influence
                                  the actions of the Council, its Members or its
                                  officers

Data matching                     Comparison using computer techniques of
                                  different sets of information, from within the
                                  Council or from other bodies, designed to detect
                                  possible fraud

Fraud                             The intentional distortion of financial records,
                                  carried out to conceal the misappropriation of
                                  assets or otherwise for gain

Information and                   A term covering all computer, telephone, network
Communications                    and related technology
Technology (ICT)

Internal control                  A procedure which ensures that an
                                  organisation’s objectives are properly and
                                  efficiently achieved

Irregularity                      An improper or erroneous use of resources

Key controls                      Those processes most likely to prevent or detect
                                  material errors or other irregularities




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07



Regularity audit                  The cyclical review and testing of a system or
                                  establishment, aimed at providing an opinion of
                                  the reliability and propriety of the financial
                                  arrangements

Risk assessment                   A systematic process, preceding or following
                                  detailed audit, to assess the probability of
                                  material error, loss or irregularity in an activity

SAP                               HCC’s comprehensive computer system, known
                                  as an enterprise resource planning package, for
                                  managing finance and other key resources.

SHARP                             A major HCC project aimed at Simplifying
                                  Hertfordshire’s Accounting and Resource
                                  Processes




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07



                                    Work in Departments

ADULT CARE SERVICES

Regular audits


Towards the end of the year, we will again undertake our annual audit of Service
Financial Management to confirm that recommendations made previously have
been agreed, that issues concerning budget management have been addressed,
and that controls continue to operate effectively.

 We will carry out testing on SAP for the appropriate cost centre codes prior to our
site visits to Residential Homes and Day Centres. Our local testing will then focus
on following through queries raised centrally and examining financial records only
accessible on site.

We will continue to carry out our cyclical reviews of the following functions:

Elderly
 EPD (Elderly/Physical Disability) Day Service Provision
Adults
 Domiciliary Provision for people with Learning Disabilities
 Residential Provision for people with Physical Disabilities
 Day Service Provision.

We will also carry out the following routine systems reviews, evaluating the
arrangements for minimising loss:

   Asylum seekers (follow up of grant applications)
   Travel expenses.

Our Computer Audit group will review the controls over the interfaces that connect
IRIS (client database) to other applications.

Developments and audit issues


Reflecting the outcomes of the Business Process Review of the finance function
within the department, we will review the effectiveness of the revised financial
arrangements within the Elderly & Physical Disability and Learning Disability
Services, particularly focusing on budget monitoring. We will adapt our audit
coverage to reflect new responsibilities and authorisation arrangements in the
finance section and within the four Service Solutions Teams.

We will also review the following newly centralised functions:
   ACS charging and financial assessments

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                                                                              Internal Audit Plan
                                                                                         2006/07


       Payment procedures
       Strategic centre - financial processes.

Our Computer Audit group will also carry out a post-implementation review of the
Abacus Charging System, which processes data from IRIS relating to service
provision, and produces charging data resulting in a payment or collection
transaction within SAP. We will audit the introduction of Digital Pens, used by front
line staff for the recording and transfer of key client data.

We have allowed time to support the department in revising its financial
procedures.

We will contribute to the following work:
   the Care Home Capacity Project, which is geared to ensuring that a contract
      purchasing strategy is in place for the elderly service - we will audit one of the
      constituent projects
   Quantum Care contract re-organisation, including the property aspects.
   Community Hospitals - joint projects with Health.

We will also carry out the following audits:
   preparation for re-letting of the Home Care Contracts. This is carried over
      from 2005/06, and will also involve reworking of the Leonard Cheshire Home
      Care contract
   the re-agreement of the Runwood Residential and Nursing block contract
   the Meals on Wheels new partnership arrangements
   the department‟s commissioning procedures for capacity analysis and
      forward planning.

We will follow up our review of the financial administration of the Partnership
arrangements with the Health Sector, and will audit the monitoring and
management of the Mental Health Drugs and Alcohol contracts.


CHILDREN, SCHOOLS AND FAMILIES

Schools and other CSF establishments

Developments and audit issues


The coming year sees the introduction of the Department for Education and Skills‟
“Financial Management in Schools” standard (FMSiS). The Department (DfES)
had developed this standard a couple of years ago, together with an extensive
„toolkit‟ of reference material. This provides a means by which schools can self
assess their financial management against the standard, and identify ways to
improve it where this was found to be needed. Until now the standard and schools‟
use of the „toolkit‟ has been voluntary, and we are not aware of any Hertfordshire
school that has adopted it.

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                                                                              Internal Audit Plan
                                                                                         2006/07



The DfES has now stated that meeting the standard will be a requirement for all
schools, and that the Finance Director will be required to sign an annual statement
that identifies the number of schools that he judges meet the standard, and the
number that do not. In the case of the latter, the Finance Director is expected to give
an undertaking that those schools will have met the standard in no more than twelve
months.

Currently, we understand that the requirement to meet the standard will apply only to
secondary schools in 2006/07. The DfES is in the process of determining the
timetable for the phased „roll-out‟ of this requirement to all other schools.

The DfES has also proposed arrangements by which schools can be formally
assessed against the standard and receive formal accreditation of having met it, but
currently this is a matter of choice for schools.

The standard defines schools‟ financial management in terms that are broader in
some respects than the current scope of our internal audits. This fact, together with
the need to provide the Finance Director with a means of determining whether every
secondary school will have met the standard by the end of the year, presents a
significant potential demand on our resources.

We will consult further with CSF, and with schools, regarding our proposed approach
to meeting this requirement. Our proposal involves:

       all secondary schools being required to submit a self-assessment by a given
        date and to produce a specified „evidence pack‟ to support this

       a review of these self-assessments by us (possibly with input from CSF or
        other officers)

       the extension of the 29 secondary school audits due in the year to review the
        self-assessments carried out by these schools and their compliance with the
        standard

       visits to a 20% sample of the remaining secondary schools to determine
        whether the self-assessments are robust and reliable (the sample will be
        skewed towards schools judged to present higher risks).

We will have to postpone the audit of secondary schools until later in the year to
allow them time to complete their self assessment against the FMSiS standard. To
meet the demand, we will also have to reduce the number of audits of all non-
secondary schools, with the exception of those currently in our two highest risk
categories. This effect is shown in the table below.


Regular audits


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                                                                              Internal Audit Plan
                                                                                         2006/07



Table showing planned visits to schools, with the impact of FMSiS

                                              No FMSiS                 FMSiS
                                             requirement            assessment
                                                                      required
Type of establishment        Interval           Number of              Number of
                             (months)       establishments         establishments
Schools
Nursery                        40-48                       6                     0
Primary                        40-48                     134                    96
Middle                         40-48                       4                     4
Special                        40-48                      13                    10
Secondary                      27-36                      26                    26
Education Support              40-48                       5                     2
Centres

Secondary schools –              15                         3                     3
above average risk
Secondary schools –            6 -12                        0                     0
high risk

Other schools - above            18                         8                     8
average risk
Other schools – high           6 - 12                       2                     2
risk
             Sub total                                   201                   151
Other
establishments
Community Homes                  18                         6                     6

                 TOTAL                                   207                   157


Our coverage of schools‟ financial management will continue to focus on the
examination of schools‟ financial planning and the achievement of sustainable
budgets, and the avoidance of deficit balances or large surplus balances. This will
take account of the relevant changes in school funding that the DfES has introduced,
notably the requirement for schools to receive notification of their likely budgets for
the next two years.

Audits carried out in 2005/06, together with other information we have received,
indicate that there continues to be a significant lack of awareness on the part of
many schools of their obligation to comply with the County Council‟s Contract
Regulations, European Procurement Directives, and restrictions on the types of
leasing arrangements that they are permitted to enter. Accordingly, we will
continue to review schools‟ practices in this area as a matter of priority.


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                                                                              Internal Audit Plan
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The DfES has now clarified when „extended activities‟ can be supported from a
school‟s budget share. We intend to review the consortia arrangements that have
been put in place to promote such activities, and the use of funding attached to this.

We will continue to work with the School Funding Unit (SFU) to review and monitor
the financial administration of schools scheduled for merger or closure during the
„winding-up‟ period. We will undertake an audit visit where a change of Head
occurs, if we assess that the risk attached to a particular school and the interval
since its last audit warrant this.

We will also continue to tackle queries and issues thrown up by the audits of
particular schools, and to respond to such queries when raised with us by schools,
SFU and CSF department generally, and occasionally other sources.

We will continue to require schools to submit summary details of any private
accounts at the end of the current financial year, or confirmation that these have
been independently audited, in order to derive an assurance that these accounts are
being properly kept.

School-related audits

Regular audits


Our annual review of the transfer of the Schools‟ Budget Share Allocations, at the
beginning of the financial year, will continue.

Once again, we will allocate some time to respond to any request from SFU to
review school Annual Returns, where these are judged to be of questionable
reliability or accuracy. The deadline for the closedown of school accounts has been
further shortened, in order to enable the County Council‟s overall timetable to be
achieved.

As in previous years, we will vet the proposed arrangements of any schools that
opt to leave the Serco payroll contract in favour of another payroll bureau, or
operation of the payroll in house.

Developments and audit issues


We will continue to look into any unexplained shortfalls in primary school meal
income reported to us by Hertfordshire Business Services.

Our examination of contract arrangements for cash collection from schools will
focus on the management of the contractor – Securitas.

We will also review:



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                                                                              Internal Audit Plan
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       the process relating to the recovery of schools‟ payroll costs via SAP

       the impact of the centralisation of property management functions upon the
        schools‟ property landlord obligations

       schools‟ security arrangements (taking into account the centralisation of
        property management functions)

       the tender, award and contract management and monitoring arrangements for
        the schools‟ Admission System Contract

       central commissioning on behalf of schools (centralised buying of items
        for schools).

We will continue our input into the schools‟ Management Information System
procurement process. When this process has been completed and the new
system(s) introduced, we will carry out an ICT post-implementation review.

Other audits

Regular audits


We will undertake our annual audit of Service Financial Management to confirm
that recommendations made previously have been implemented as agreed, and that
controls continue to operate effectively.

As in the last year, we intend to visit a sample of providers of nursery education in
the private, voluntary and independent sectors, as collectively these sectors receive
funding from the County Council totalling about £10m p.a.

We will also conduct audits of:

       the administration of free school meals, necessitous clothing vouchers
        and any other „benefits‟ provided by CSF on a means tested basis

       controls over the additional teaching and welfare allocations to pupils with
        Special Educational Needs (and over this budget)

       dual use arrangements between schools and District Councils or other
        bodies for the use of swimming pools, sports halls and other shared facilities

       the provision of hospital and home education

       the two Children‟s Area Services Teams.

Developments and audit issues


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                                                                              Internal Audit Plan
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To meet the requirements of the Children‟s Act and the associated guidance
document Every Child Matters, a Hertfordshire Children and Young People‟s
Strategic Partnership has been established, and the Hertfordshire Children‟s Trust
Partnership Framework is in place in preparation for the launch of the Trust from 1st
April 2006. However, we understand that developments in pooled budgets and joint
commissioning are not expected to materialise before 2007/08. Accordingly during
2006/07 we will review the financial control aspects of the pilot Trust arrangement
running in Stevenage, and more generally track, monitor and potentially input to the
development of the full-blown Trust Partnership.

As part of Central Government‟s Sure Start initiative to introduce Children‟s
Centres, the Authority is to receive substantial funding to promote the establishment
and operation of Centres over the next few years. During the coming year we will
input to the processes for awarding „Lead Agency‟ status to run Centres, the contract
arrangements with these Agencies, the controls over the associated funding and
their governance arrangements. The extent to which we can achieve this will be
dependent on the progress made in the year to meet the target of creating 44
Centres.

We will undertake an audit of the procurement process for the Integrated Children‟s
System and, in due course, carry out a post-implementation ICT review of this
system.

We will review the controls around ensuring the quality of data within the IRIS
system, with particular emphasis on duplicate entries.

We will carry out a post-implementation ICT review of the software package being
introduced for the processing of foster payments.

We will continue our ongoing audit of the PFI procurement process for children‟s
homes and family centres.

Libraries, Heritage and Arts

Developments and audit issues


We will audit:

       the monitoring and management of ALS software maintenance contracts,
        including the documentation of the process for their renewal

       the process for procuring mobile libraries

       the financial controls within the Hertfordshire Archives and Local Studies
        Service.



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                                                                              Internal Audit Plan
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CORPORATE SERVICES

CHIEF EXECUTIVE

Regular audits


We will undertake an assessment of the policies and procedures for internal controls
operating throughout all departments when we prepare the Statement on Internal
Controls required under the Account and Audit Regulations 2003.

Developments and audit issues


We will continue to audit the project management of The Way We Work project, with
particular reference to Apsley2, and if appropriate the A1 corridor and County Hall
sites.

We will also undertake a brief audit of the performance measures within the Local
Area Agreement, and will contribute to the governance arrangements of this and
other significant partnerships.

Our Computer Audit group will continue to monitor the Authority‟s arrangements with
regard to Business Continuity Planning.

Performance Monitoring

We will continue to provide an audit review of the Best Value Performance
Indicators and work with Service Departments to improve their quality assurance
processes for the production of all performance information. The reporting and
monitoring of good quality, timely and accurate performance information is vital to
our Comprehensive Performance Assessment (CPA) scoring. We will provide
consultancy advice on and assistance with the CPA judgements on Use of
Resources and value for money, and the CPA Improvement plan.


COMMERCIAL SERVICES & INFORMATION

Regular audits


We will carry out the annual review of the key Service Financial Management
arrangements, including confirmation that recommendations made previously have
been implemented as agreed.

In addition to auditing the contract management arrangements of the Managed
Financial Services Contract with SERCO, our Technical & Commercial group will


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                                                                              Internal Audit Plan
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also follow up progress made in implementing the findings of last year‟s report to
Procurement Board on the operation within HCC of Contract Regulations and the
Contract Register System.

Developments and audit issues


We will review the project management arrangements and progress in relation to the
Procurement Project including:

       savings
       e-procurement
       collaborative buying
       consultancy contracts
       purchasing cards.

Information & Communication Technology

Regular audits


Our ICT Audit work in relation to SAP will concentrate on the key areas of how staff
are given access at the appropriate level and the „housekeeping‟ arrangements such
as the application of service patches etc. We will also review the controls around the
production of management information. Our planned work on the financial aspects
of SAP is set out under Corporate Finance.

Developments and audit issues


In relation to The Way We Work (TW3) initiative, we will review the ICT
infrastructure arrangements, including the control of hardware & software at Apsley
that are now in operation. Our Technical & Commercial Group will audit the controls
which govern the paper records Storage Contract. Our audit of the TW3 project is
referred to under Chief Executive‟s.

Beyond this, we will also carry out ICT audit reviews of the following:

       SAP - Communications Links
       BACS payment system – the new Internet Protocol arrangements
       development of the Hyperwave electronic document management system.




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                                                                              Internal Audit Plan
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Hertfordshire Business Services

Regular audits


We will carry out ICT audit reviews of the following:

       On line Catalogue/Gateway
       The Compass System used for the administration of internal and external
        trading.

Developments and audit issues


We will carry out contract audit reviews of the following:

       Energy Management Strategy
       Mundells Warehouse
       Milk Contract.


CORPORATE FINANCE

Developments and audit issues


We will look in more depth at, and contribute to, the development of improved
financial guidance provided for Service Departments. We will provide an audit
perspective to the developing project for the potential centralisation of, and possible
use of a shared service centre for, financial and HR transactions.

We will participate in a national review of the effective audit of pension funds, under
the aegis of the Society of County Treasurers.

We will carry out a review of the procedures for administering the Authority‟s newly
implemented insurance system.

SAP

We will contribute towards the changes in procedures and responsibilities for
financial transactions within the managed services contract with SERCO and monitor
compliance with expected key controls. We will also review and validate the
SERCO performance reporting and participate in further financial systems
developments, including financial information and reporting, through the SHARP
Project.




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                                                                              Internal Audit Plan
                                                                                         2006/07




Regular audits


We will undertake reviews of functions within SAP relating to income including debt
monitoring and collection:-

   Debtors – including the Home Care and Education Billing system
   Cash Processing
   Income Monitoring
   Recoverable charges.

We will review a number of aspects of banking and related transactions:-
 Bank Reconciliations
 Procurement Cards
 Cashiers (Imprest A/C)
 Imprest Account Monitoring
 Crouchfield Trust.

We will undertake compliance and regularity audits of the processes for creditors
payments including the increased use of BACS payments.

Within our audits of employee related expenditure and accounting we will review
the procedures for setting up new employees on the SAP system and concentrate on
the verification of personal data and contracted hours. We will also review the
payroll related accounting processes and reconciliations. Our coverage will include:
 Payments to employees
 Payroll - Control Accounts

Our ledger and other SAP related financial systems reviews will include:-
 Budgetary Control,
 General Ledger accounting procedures and reconciliations,
 Capital Accounting/Asset Register; in particular budget monitoring and reporting.

Pensions

We will undertake compliance and regularity testing of the pensions payroll and on
behalf of the Society of County Treasurers (SCT) we will undertake an interim audit
review of Capital International, one of our Fund Managers. We will also review the
controls of our Pension Fund Custodian ABN Amro Mellon who hold the certificates
and documentation for the assets of the Fund. We will implement any best practice
guidance resulting from the national review of the effective audit of pension funds.
We will evaluate the controls relating to the SERCO contract for pensions
administration and payments.




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07


COUNTY SECRETARY’S

Regular audits


We will carry out the following systems reviews:

       Registration Service
       Members‟ Allowances.

Developments and audit issues


We will contribute to:

       the Contract Law group
       legal and contracting issues in respect of the evolving agreement with Vertex,
        our shared services partner (referred to under People and Property).


PEOPLE & PROPERTY

Developments and audit issues


Herts Property

We will monitor and evaluate the introduction, bedding in and operation of
arrangements for Centralised Property. This will include not only budgets and
structures, but also any impact on the three main property partners, i.e. Mace,
Mouchel and Lambert Smith Hampton.

Property Care

We will audit the operation, monitoring and management of the Maintenance
Contracts which commenced in December 2005. The audit will cover all areas of
specialism, including general maintenance, electrical, roofing etc as well as the
supply chain and use of sub-contractors.

Quality and Asset Management

We will follow up our brief review of EU Capital Tendering on major projects above
the EU threshold values by a full audit of the Turnford and Goffs School projects.

We will audit the system for carrying out condition surveys and its relationship to
the service property priorities, vision and objectives and corporate asset
management plan (CAMP). We will review developments in the documentation of
the processes.

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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07



We will follow up earlier work on security, including the role of Lambert Smith
Hampton.

The impact on controls of changes resulting from Property Service Contracts –
Extensions will be evaluated.

We will continue to contribute advice as appropriate to the Integrated Asset
Management System project.

Facilities

We will audit:

       procedures for managing Education Workshops (EWS) and Herts Media
        following property centralisation

       MACE progress monitoring of contract performance and project
        management controls.

Corporate Estate

The disposal programme will be audited - this will be co-ordinated with other
related audits.

If appropriate, we will review development of the proposed contract for legal
services property disposals (conveyancing), including negotiation, tendering and
monitoring.

We will audit the contract implications of the increase in the number of properties
under management by Aldwycke Housing Association, following the transfer from
Adult Care Services of the management of Houses and Group Homes for learning
disability Clients. This will include the adequacy of financial controls following
transfer.

Property Records

Our Computer Audit group will review the controls around management of the
Corporate Property Database.

Development Services Team

We intend to follow up our earlier report on Planning Obligations.




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                                                                    Hertfordshire County Council
                                                                              Internal Audit Plan
                                                                                         2006/07


Safety Emergency and Risk Management

We will review:

       emergency procurement
       the Risk Management process and associated monitoring, to assess
        corporate responsibilities and actions to mitigate identified risks.

Personnel

We will carry out the following audits:

       the contract management, monitoring and business continuity of the
        Recruitment Centre Contract which was re-tendered last year

       project management of the Transformation Team carrying out work on the
        proposed centralisation of support services, and the use of shared service
        centres – we will also contribute, as appropriate, to the Shared Service
        Centre project itself

       a follow up of the 2005/6 planned work on the controls relating to the
        Criminal Records Bureau submissions process, including Computer Audit
        input to the project to review the suitability of the system currently used for
        monitoring submissions.

Our planned work on the Human Resources system is covered under Corporate
Finance above.


ENVIRONMENT

Regular audits


In our annual Financial Management audit, we will pay particular attention to the
action taken in response to budgetary issues in Hertfordshire Highways.

We will also carry out an audit of the department‟s Health and Safety Unit.

Developments and audit issues


Integrated Transport Services

We will include a full follow up of our audit report arising from irregularity work in the
Passenger Transport Unit (PTU) on the letting and enforcement of bus contracts.
The initial follow up was carried out last year and we now seek to ensure that the
corrective action is effective. We will evaluate:

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                                                                              Internal Audit Plan
                                                                                         2006/07




       any related restructuring
       compliance with contract regulations.

We will also verify that proper arrangements are in place regarding “de minimis”
tendering for bus contracts allowed by the Department of Transport, and evidencing
of competition when letting taxi contracts. We will evaluate the arrangements for
Dial-a-Ride, now that it is operated in-house.

Computer Audit will carry out an IT audit review of the Hertfordshire Advanced
Passenger System.

Transport Management

We will review the contract letting and monitoring arrangements for the provision of
Enhanced Highway Maintenance within the context of the Highways Asset
Management approach to highways maintenance, which we will also evaluate.

Hertfordshire Highways

We will carry out an audit with the objective of following up on the developmental
problems, identified in earlier audits, in establishing Hertfordshire Highways as a new
style partnership in South West Herts. A full Area Office audit will be undertaken,
including:
     section 106 procedures
     quality control audit arrangements in respect of Category 1 and 2 work
     highways schemes including Target Cost Schemes and use of the Integrated
       Management System
     utilities
     snagging
     inputs to the Key Performance Indicators (KPI) system
     procedure for rejected and changed invoices.

We will also follow up progress made in implementing earlier findings at the other
three Area Offices: East Herts, North Herts, Mid-West Herts.

We will audit:

       the HERMIS replacement project, taking account of SAP and its contribution
        to financial management and monitoring

       the control over work in progress payments and in particular any backlog

       Amey Lafarge Financial procedures, particularly invoicing

       Hertfordshire Highways project management and Consultation procedures
        using a sample of identified high risk projects from the Integrated Works
        Programme (IWP)

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                                                                              Internal Audit Plan
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       the system for collecting and providing Contract KPIs for Hertfordshire
        Highways

       audits of the arrangements for the section 106 financial management
        system at Highways House, and the financial aspects of the section 106
        register

       logging of good practice in respect of the Baldock By-Pass project.

We will review progress in developing the Business Continuity Plan for Highways
House.

Transportation Planning and Policy

We intend to:

       audit the local transport plan process including consultation and reporting of
        outcomes to establish learning points.

       evaluate the operation and control of the new development control section.

Environmental Management

We will comment on controls following integration of the environmental land
management services.

We will review:

       the implementation of the waste management strategy

       progress with implementing the rural estates improvement plan, (we will
        report on this under our work on the disposal programme, included under
        People and Property).


EXTERNAL CLIENTS AND VOLUNTARY BODIES

Coverage of our largest external client, the Hertfordshire Police Authority, is set
out in a separate plan agreed by that Authority (via its Audit Working Group),
following consultation with its Treasurer, Executive Director, and the Chief
Constable‟s senior managers.

We will carry out an audit of Connexions, the consortium (of which HCC is a
member) for the provision to young Hertfordshire people of access to information,
advice, guidance and support.



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                                                                              Internal Audit Plan
                                                                                         2006/07


We will also continue to provide an audit service to a number of charities and
voluntary organisations, and the Chilterns Area of Outstanding Natural Beauty,
which have links with the County Council.

We also expect to undertake work on verification of school sixth form funding for the
Learning and Skills Council, and may be commissioned by another local authority
to carry out further such work on their behalf.


FIRE AND RESCUE

Regular audits


We will continue to undertake an annual audit of Service Financial Management.

Depending upon the findings of the organisation-wide audit of payroll processes
being carried out at the end of 2005/06, we may carry out further work to focus on
the processes within the Service, including the level of payroll errors.

If we do not consider this work to be necessary, we will review the financial controls
in one or two of the Area operational units.

Developments and audit issues


We will continue to audit the project/contract arrangements in respect of the new fire
station at Watford, including use of the management information available from the
Buildings Information Warehouse (BIW) - a property management database
maintained by MACE.

We will keep abreast of and evaluate developments in regional Fire and Rescue
procurement.

Our Computer Audit team will carry out a review of the service‟s ICT Network, which
was, with the agreement of management, deferred from 2005/06.




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