Agenda item

This matter is the responsibility of Executive Councillor Benet Allen

Report Author: Alastair Woodland, Assistant Director, SWAP

The Internal Audit function plays a central role in corporate governance by providing assurance to the Audit, Governance and Standards Committee, looking over financial controls and checking on the probity of the organisation.

The 2021-22 Annual Internal Audit Plan is to provide independent and objective assurance on SWT Internal Control Environment. This work will support the Annual Governance Statement.

The Assistant Director for SWAP provided an introduction to the report: 

·        The report was to provide an update on the internal audit plan, to update on changes to that plan and to update on significant findings from the work conducted since the previous update. 

·        There were three reviews finalised since March. Those were two limited assurance reviews and one follow up review. 

·        There were some areas of good control which were given good assurance, such as housing rents.  

·        There was a significant risk in regard to Procurement Cards. This was due to the nature and extent of control weaknesses identified in this area and the potential risk regarding reputational damage to the authority if any inappropriate spending occurred.  

·        Progress against the Audit Plan was detailed in the repot. The changes to the plan were also included. There had been a minor change to the ICT Review since the last update in March. 

·        There was a breakdown of the recommendations from reviews throughout the year. There were two reviews ongoing on staff retention and regeneration project governance.  

During the debate the following points were raised:  

·        Concerns were raised about the risk with the Procurement Cards and a stop check not having been done for two years. Likewise, concerns were raised that VAT receipts had not been provided for all purchases given that the risk was listed as high. The SWAP Assistant Director responded that there was a significant value spent through purchase cards, around £400,000. The risk was high due to reputational damage but management were taking actions to address the risk.  

·        It was asked where purchase cards were used within the Council. The SWAP Assistant Director responded that they were used in departments throughout the Council. There were 26 cards within the authority but the audit had revealed that details were sometimes shared between officers which was problematic.  

·        It was asked who monitored purchase cards. The finance manager responded that officers were taking action following the review. A relaunch of the system for Purchase Cards was being undertaken, including a new policy which all staff who had a card would have to sign and agree to. Arrangements were going to be co-ordinated with the policies Somerset County Council had in place to improve efficiency down the line for the unitary transition. A review of who had a purchase card was being undertaken and officers would be provided with training. Whilst use of purchase cards could pose a risk, they also enabled services to respond quickly, decisively and effectively when needed.  

·        It was asked about spot checks being undertaken by the authority and concerns were raised that they were not occurring. The SWAP Assistant Director responded that in terms of checks it was important that the governance could stand up on its own and the plans of the council’s management team were intended to address this. The finance manager added that there were plans to have an administrative officer independent to the card holder in each department to check that spending was responsible and appropriate.  

·        Concerns were raised about the poor governance and monitoring of purchase cards and the lack of reassurance that members could obtain about how cards were being used and reassurance that cards had only been used for legitimate purchases. The SWAP Assistant Director responded that there would be a review of expenditure in quarter one so it was hoped that assurance could be given following the review.  

·        It was asked when the stricter policy around purchase cards would be in place and what would be done in the meantime. The Finance Manager responded that the policy was anticipated to be in place by the end of August. The SWAP Assistant Director responded that a recommendation was made to solidify the rules with officers immediately through communication with all card holders and this recommendation had been implemented by management as an interim arrangement ahead of the new policy and framework being implemented.  

·        It was asked how it was discovered that card details were being shared amongst officers. The SWAP Assistant Director responded that it had been uncovered from conversations with officers.  

The Committee resolved to note the recommendation in the report:  

2.1 Members are asked to note progress made in delivery of the 2021-22 internal audit plan and significant findings since the previous update in March 2022.