Christine Parker introduced the report and made the following comments:
· The purposes of the report were very important for the committee to note when discussing this item. These were to:
§ Provide an opinion on the overall adequacy and effectiveness of the Council’s internal control environment;
§ Present a summary of the internal audit work undertaken to formulate the opinion, including reliance placed on work by other assurance bodies,
§ Draw attention to any issues the Head of the Audit Partnership judges particularly relevant to the preparation of the Annual Governance Statement;
§ Compare actual audit activity with that planned, and summarise the performance of Internal Audit against its performance criteria;
§ Comment on compliance with the Public Sector Internal Audit Standards (PSIAS), and report the results of the Internal Audit quality assurance programme;
§ Confirm annually that EKAP is organisationally independent, whether there have been any resource limitations or instances of restricted access.
· The report also records how well the audit team had performed in relation to the work they set out to accomplish;
· The report comments on how well the council management responded to comments raised by the Audit team;
· How much assurance the report provides for the committee as a result of the audit work;
· Twenty two projects were planned. Twelve were put back for various reasons. Five from 2018-19 were also completed;
· Eighty seven recommendations had been made by Audit. Three were critical, thirty seven were high risk and twenty six were medium risk;
· Sixty four percent of the reviews complete were either substantial or reasonable assurance;
· One review which had a partially limited assurance after follow up and three risks that were outstanding at that time were escalated to the committee during the year;
· With regards to overall control, there were five new areas with partially limited assurance. These would be followed up in due course;
· A matter where there was alleged dishonesty, the officer subsequently resigned prior to disciplinary proceedings;
· There were some lengthy delays in management responses to audit comments. This was due in part to the covid-19 pandemic and the report notes that as well;
· The overall opinion of the East Kent Services Annual Report provides a reasonable assurance;
· The annual EKH report that was presented to the EKH Board concluded a limited assurance. This is the last annual report before the service is brought in-house;
· It was worth noting that the quarterly audit report used new definitions from CIPFA that came into use as from April, 2020, whilst this annual one used the older definitions;
· The overall comment in the report concludes a reasonable assurance. This was based on the internal audit work completed and reported to the committee throughout the year;
· However it should be noted that Audit have raised some concerns with the three statutory officers, Grant Thornton, chairman and vice chairman of the committee regarding some matters that Audit have been involved during the year, which were still to be resolved. The matters would be resolved and reported in the next annual audit or governance report.
Members made comments and asked questions as follows:
· A whistle blowing fact finding matter was not fully concluded. Did Audit consider this to be a serious matter? When would the fact finding be completed? What was stopping Audit from completing it? Was this issue appropriately prioritised by the council?
· What was meant by the comment in the report that referred to the emergence of management override?
· Members thanked the Audit team for the work they had done throughout the year;
· Why wasn’t an investigation followed through regarding officer dishonesty, because resignation was an admission of guilt?
· What are the weaknesses in the current anti fraud and whistleblowing arrangements?
Ms Parker responded as follows:
· Yes the matters were very serious and there have been a full and thorough commissioning of work undertaken to understand what those issues were and to get them resolved;
· Council functions are directed by procedures, controls and processes. That is what good governance encourages. Grant Thornton would normally be testing for Management Override of controls and how often this occurs;
· The breaches being referred to in the report were of financial procedure rules, where one officer prepares the work and the other authorises the expenditure. These were the controls that had failed;
· The matter was not concluded as the matter did not reach the hearing stage because the officer had resigned;
· With regards to the whistle blowing matter, the council had received an outcome report following on from an investigation;
· It was difficult to give absolute assurances because the comments were a snap shot at the time and situations could change at any time;
· Reasonable assurance gives recognition to the fact that management responds to audit observations and took corrective action were appropriate;
· Resignation was not an admission of guilt. However once an officer left the organisation, they would not be bound by council employment policies. The involvement of the Police in the matter was not viewed as appropriate in this particular set of circumstances.
Councillor Campbell proposed, Councillor Dexter seconded and Member agreed that the report be received by Members. The committee also agreed Option 2 at 2.2 of the covering report seeking to register their comments with Cabinet in respect any areas of the corporate governance, risks or controls they have ongoing comments on after considering the work of IA.