Apologies were received from Joint Head of Internal Audit and Risk Management, Alix Wilson.

Members are asked to declare any interests in matters for consideration at the meeting.

No declarations of interest were received.

To approve the minutes of the meeting held on 10 April 2012.

The minutes of the meeting held on 10 April 2012 were agreed as a correct record and the Chairman authorised to sign them.

No representations from members of the public had been received.

The Committee received an update report of the External Auditors, The Audit Commission, containing a progress update on the Audit plan and an update on the externalisation of the Audit Practice.

Sarah Ironmonger, Audit Manager for the Audit Commission and Paul Grady, District Auditor for the Audit Commission were both in attendance to present the report to the Committee. Mr Grady updated the Committee on the externalisation of the Audit Practice and in particular he highlighted the following information:

(i)                  The Audit Commission would complete all 2011/2012 audits.

(ii)                Following a tender process, Grant Thornton had won the Audit Practice commission for South London, Surrey and Kent. Grant Thornton had won four contracts including the one which covered Richmond.

(iii)               That The Audit Commission / Local Government Association joint report on managing workforce costs had been put to the HR shared service. However as the report covered such a wide area the shared service report in response had not been completed. There was a separate report on absence management going to Finance and Performance O&S Committee later this year.

(iv)              The fees for external Audit Practice in 2012/2013 would be set by the Audit Commission and would reflect reductions in fees with an estimated cost reduction of 40 percent. This would make the fees approximately £120 000 with no inflation for five years, meaning the fee would be fixed until the end of the contract with Grant Thornton subject to Richmond continuing with current standards.

In response to questions raised and comments made the Committee received the following information from Officers:

(i)                  The legislation surrounding the transfer of contracts was thought to pass in July 2012. It was unclear whether The Audit Commission would remain as a monitoring body for the duration of the five year contract and when the responsibility for awarding contracts would transfer to councils.

(ii)                Grant Thornton had been awarded the contract through a tendering process based on price and quality.

Ms Ironmonger went on to introduce the rest of the report – the progress update of The Audit Commission. In particular she highlighted that post-statements work was due to commence on 2 July 2012. The certification of grant claims was due to be completed by October 2012 with testing commencing in June; this would normally have been done in Autumn, however the work programme had been brought forward to allow for completion before the transfer to Grant Thornton.

In response to questions raised and comments made following the presentation of key considerations for the Audit Committee from Ms Ironmonger, the Committee received the following information from the Director of Finance and Corporate Services:

(i)                  That the council had completed The Audit Commission’s annual fraud and corruption survey.

(ii)                That there were no significant implications for Richmond following amendments to the capital financing regulations.

(iii)               That The Audit Commission / Local Government Association joint report on managing workforce costs had been put to the shared service. However as the report covered such a  ...  view the full minutes text for item 94.

To receive a report of the Joint Heads of Internal Audit and Risk Management summarising the annual internal audit report for 2011/12.

The Committee received a report of the Joint Heads of Internal Audit and Risk Management the purpose of which was to provide a summary of the annual internal audit report for 2011/2012.

Simon White, Audit Manager was in attendance to present the report. He drew the Committee’s attention to the following information:

(i)                  That 100 percent of the plan had been completed. Completion had been achieved in 1827 days against an agreed 1800 days.

(ii)                That 56 audit reports had been issued or were near completion and only a few reports had been moved forward into the new year.

(iii)               That there was 88 percent client satisfaction in internal audit work.

In response to questions raised and comments made the Committee heard the following information:

(i)                  Client satisfaction had decreased from 100 percent last year to 88 percent this year. However, less than ten responses had been received the previous year and this year responses had been chased and more responses had been received.

(ii)                The amount of overpayments following 38 sanctions for Benefit investigations in 2011/2012 had been £290, 000. This was higher than the £201, 000 in 2010/2011 because larger payments had been targeted following a risk analysis had been introduced and work targeted to those cases where higher overpayments were more likely to be identified.

(iii)               That the risk identified in the last Audit Committee pertaining to financial assessments and non-compliance with PCI DSS regulations had been actioned. A new business case had been approved and was going to Cabinet on 21 June 2012.

(iv)              That the street lighting contract had now been signed.

(v)                That the single person discount for Council tax had historically been an area where fraud occurred. The data matching information for single person discount cases is usually received later than other data matching information and consequently later being dealt with.

It was RESOLVED:

1.      That a more detailed report on absence management be brought to the next Audit Committee or go to the Finance and Performance Overview and Scrutiny Committee.

2.   That the information from the report be NOTED.

To receive a report of the Joint Heads of Internal Audit and Risk Management summarising the self assessment review of the effectiveness of Internal Audit against the CIPFA Code of Practice for Internal Audit in Local Government in the UK 2006.

The Committee received a report of the Joint Heads of Internal Audit and Risk Management the purpose of which was to provide a summary of the self assessment review of the effectiveness of Internal Audit against the CIPFA Code of Practice for Internal Audit in Local Government in the UK 2006.

Joint Head of Internal Audit and Risk Management, Diana Neaves was in attendance to present the report. Ms Neaves introduced the report and following questions raised and comments made the Committee received the following information from Officers:

(i)                  That the reason there was a section for planned action but no timescales to accompany this was because there was a separate implementation plan for the shared service. There were also two independent reviews; one for fraud and one for internal audit. Therefore a larger implementation plan would be informed from a number of sources and this did include target completion dates.

(ii)                CIPFA and the IIA had joined together to create a combined set of standards which will be subject to consultation over the summer and issued later in the year for implementation from April 2013. The new standards were not thought to be substantially different to the current standards; they would probably be less detailed but include guidance.

(iii)               It was too soon to measure the effectiveness of the shared service. However, performance was being measured with quarterly reports to the joint shared service board which would be closely monitoring the shared service.

(iv)              The key performance indicators for the shared service are yet to be finally agreed but would likely be:

·         Delivery of audit plan in days

·         Tracking turn around of reports to ensure relevance at the time of publication

·         Follow ups and more reporting to Members

It was RESOLVED:

1.                                          That the implementation plan be brought to the next Audit Committee meeting.

2.   That the report be NOTED.

To receive a report of the Director of Finance and Corporate Services setting out details of the officer level review process undertaken in order to produce the draft Annual Governance Statement (AGS) and seeking a recommendation for its signature by the Leader and the Chief Executive, for publication together with the Statement of Accounts for 2011/12.

The Committee received a report of the Director of Finance and Corporate Services the purpose of which was to detail the Officer level review process undertaken in order to produce the draft Annual Governance Statement (AGS).

Mark Maidment, the Director of Finance and Corporate Services was in attendance to present the report to the Committee. In particular he drew the attention of the Committee to the following information:

(i)                  The AGS draws assurances from across the Authority.

(ii)                The controls put in place in 2011/2012 were kept under review.

(iii)               At the end of the Municipal Year, Heads of Service produced Control of Effectiveness statements which fed into Directors’ Control Assurance Statements.

(iv)              The role of the Chief Financial Officer was measured for the first time in the AGS as prescribed by CIPFA.

Following questions raised and comments made the Committee received the following information from Officers:

(i)                  The investment made in parking meters had a positive impact on reducing thefts from meters

(ii)                That with the West London Waste Authority, there were always significant local concerns about releasing sites to be sold for potential waste facilities. The WLWA was in the process of tendering a multi million pound contract for new waste disposal facilities. As building and running waste facilities was expensive and takes year to return investment the contract had to be lengthy.

(iii)               The case of a staff member being dismissed for gross misconduct was an issue of individual non-compliance with contractual standing orders. The case was in the process of going through legal proceedings and therefore could not be discussed further at that time.

It was RESOLVED:

1.      That an exempt report on the issue of a staff member being dismissed for gross misconduct be brought to the next Audit Committee meeting.

2.   That the review of internal control and AGS be approved and the AGS be recommended for signature by the Leader of the Council and Chief Executive.

To receive a report of the Joint Heads of Internal Audit and Risk Management summarising the proposed Internal Audit Plan for 2012/13.

The Committee received a report of the Joint Heads of Internal Audit and Risk Management, the purpose of which was to summarise the proposed Internal Audit Plan for 2012/2013.

Diana Neaves, Joint Head of Internal Audit and Risk Management was in attendance to present the report to the Committee. Ms Neaves drew the attention of the Committee to the following information:

(i)                  The key areas of work in the plan were:

·         ICT Audits – Working on outstanding priority one recommendations

·         Information Audit – This was identified following a data breach

·         Schools – some of these audits would be carried out using Control Risk Self Assessment

·         Fraud Work

(ii)                The Audit Plan included 45 additional days over and above the 1800 days agreed which was more days than could be resourced. However, it was accepted that, as in previous years, a number of audits were likely to drop out or change.

Following questions raised and comments made, the Committee received the following information from Officers:

(i)                  There were significant differences in the fraud category due to the diversion of resources to deal with a data breach.

(ii)                Schools would continue to be audited for as long as they continued to have a devolved budget; Academies are not obliged to be audited by the shared service, however they are able to buy in services if they so wish.

(iii)               The shared service would allow for audits to run side by side in each authority to ensure consistency of approach.

It was RESOLVED:

1.   That the report be NOTED.

To receive a report of the Joint Heads of Internal Audit and Risk Management summarising the work carried out by internal audit since April 2012.

The Committee received a report of the Joint Heads of Internal Audit and Risk Management the purpose of which was to summarise the work carried out by internal audit since April 2012.

The Audit Manager, Simon White was in attendance to present the report to the Committee. In particular he drew the attention of the Committee to the following information:

(i)                  This report would have ordinarily been produced every April and November. However, due to the move to a shared service this report had been published in June. It was also done to bring issues to the Committee on a more timely basis.

(ii)                The risk based audit review of the planning application process resulted in a priority one recommendation which related to personal information being included within a bundle of forms sent out as part of a planning application. This was a small incident, however the purpose of making this a priority one recommendation was so that a reminder could be sent to all staff that personal information must be redacted.

It was RESOLVED:

1.   That the report be NOTED.

To receive a report of the Joint Heads of Internal Audit and Risk Management providing an update on the shared service with the Royal Borough of Kingston (RBK) for the delivery of an Internal Audit and Investigations service (IAIS).

The Committee received a report of the Joint Heads of Internal Audit and Risk Management, the purpose of which was to provide an update on the shared service with the Royal Borough of Kingston for the delivery of an Internal Audit and Investigations service.

Diana Neaves, Joint Head of Internal Audit and Risk Management was in attendance to present the report to the Committee. She introduced the shared service update report and in particular she drew the attention of the Committee to the following information:

(i)                  The shared service had gone live on 1 June 2012.

(ii)                There were three vacancies remaining and they had been advertised and it was thought that interviews would take place within a timescale of two weeks. However, the shared service was still working with contract staff at Deloitte so it would be possible to employ these staff for longer if needed.

(iii)               There was a detailed implementation plan and Managers had been meeting fortnightly to get fully up to speed as soon as possible to cause minimal disruption.

Following questions raised and comments made the Committee received the following information:

(i)                  Most staff were based in Richmond with the Audit team based in Richmond and a fraud team in each borough. Hot-desking was to be used when necessary.

(ii)                The fraud teams continued to work separately until an integration plan could be agreed.  Some fraud work would be carried out across both boroughs where possible, and the shared service would also look at other areas where the audit and fraud staff can work together more.

(iii)               The audit team had integrated with the one audit team member from Kingston now working in Richmond.

It was RESOLVED:

1.   That the information from the report be NOTED.