Agenda item

Th Director: Governance and Partnerships submitted a report that provided an opinion on the adequacy and effectiveness of the council’s internal control environment based upon work carried out by Internal Audit in accordance with the approved 2020/21 audit plan.  The report also considered the effectiveness of the audit service. This provides the Audit Committee with an important source of assurance when considering the Annual Governance Statement.

The requirement for Internal Audit was supported by statute in the Accounts and Audit Regulations 2015 and the Local Government Act 1972.  The Accounts and Audit Regulations stated that a “relevant body must undertake an effective internal audit to evaluate the effectiveness of its risk management, control and governance processes, taking into public sector internal audit standards for guidance”.

Internal Audit operated in accordance with the Public Sector Internal Audit Standards (PSIAS) which defined the way in which the Internal Audit Service should be established and undertake its functions.  The PSIAS defined internal audit as: “an independent, objective assurance and consulting activity designed to add value and improve an organisation's operations.  It helped an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”

Members were informed that set out in the standards there was a requirement under PSIAS 2450 that the Chief Audit Executive must provide an annual report to the Audit and Governance Committee, timed to support the Annual Governance Statement.  This must include:

Ø an annual internal audit opinion on the overall adequacy and effectiveness of the organisation’s governance, risk, and control framework (i.e. the control environment).

Ø a summary of the audit work from which the opinion is derived (including reliance placed on work by other assurance bodies); and

Ø a statement on conformance with the PSIAS and the results of the internal audit Quality Assurance and Improvement Programme.

A copy of the Annual Report and Opinion was attached to the report as an appendix.  The main findings from the Annual Report and Opinion were as follows –

Ø Section 2 of the Annual Report referred to the work carried out from which the audit opinion was derived, and showed the work carried out compared to the original Audit Plan.  Due to the continued impact of COVID-19 the audit plan was subject to regular re-prioritisation including particular focus on the impact of it on the control environment. Appendix 2 of the report provided a summary of the work completed by internal audit, whilst the body of the report also referred to how the Council manged the risks to the control environment as a result of the pandemic.

Ø Section 3 of the report was based on the work carried out by internal audit.  Members heard that satisfactory assurance could be provided on the Council’s governance, risk, and control framework.

Ø Section 4 of the report evidenced that the council complied with the standards in all material respects and had effective arrangements in place for monitoring quality. Working with clients to improve the timeliness of audit reporting had again been highlighted as an area for further development.

Following the Director’s verbal presentation, a discussion ensued on the Annual Report and opinion for 2020-21.

Resolved - That the Internal Audit Annual Report for 2020-21 provided satisfactory assurance provided on the adequacy and effectiveness of the council’s internal control environment.