The report of the Head of Policy and Governance is attached.

Contact: Barry Hanson 07990 086409

The Committee received the report of the Head of Policy and Governance which provided Members with a summary of work undertaken by Internal Audit for the year ended 31 March 2025, it reported on the delivery against the approved internal audit plan and included the Chief Audit Executive’s opinion on the Council’s internal controls as required by the Public Sector Internal Audit Standards (PSIAS).

The Head of Policy and Governance explained that the plan had provided for a total of 1136 days, any revisions throughout the year were reported to the Committee, with the plan being revised to 1266 days.  He explained the matters that he had taken into account when arriving at his opinion, as set out in paragraphs 8.18 to 8.20 and also Appendix A, table 2.

The Head of Policy and Governance informed the meeting that there had been 35 good and reasonable assurances made in the year, accounting for 58% of the overall opinions delivered which was a 2% decrease in the higher levels of assurance compared to the previous year, which was offset by a 2% increase in the limited and unsatisfactory opinions.  There had been 8 unsatisfactory and 17 limited assurance opinions issued, and whilst the percentage of unsatisfactory audits had reduced from 18% to 13%, there had been an increase in the number of limited assurance opinions, increasing from 18% to 22%.  A total of 431 recommendations were contained within the 60 final audit reports, 47% of which were significant and fundamental compared to 45% last year.  There had been a corresponding decrease in the number of requires attention and best practice recommendations.

On this basis, and based on the management responses received, the Head of Policy and Governance was only able to offer limited assurance on the 2024/25 financial year on the Council’s framework of governance, risk management and internal control for the sixth consecutive year (see paragraph 8.22).

The Head of Policy and Governance drew attention to the feedback from the customer satisfaction surveys (set out in paragraph 8.23 of the report) which signified an increase in customer satisfaction with the work of the Internal audit team and he praised the team for their performance in a challenging environment which was a testament to their professionalism under the leadership of the Internal Audit Manager.  Members echoed these sentiments.

A brief discussion ensued, and concern was raised that this was the sixth consecutive limited assurance received.  It was proposed that the Chief Executive and Senior Members of the Council be invited to a future meeting to discuss the current situation and the changes that would be implemented in order to move away from a limited assurance level.

In response to a query about when the reorganisation would be completed, the Section 151 Officer reported that the senior structure had been in place since March, following which there had been a reconfiguration of the organisation, with the new structures now being in place.  However, he stressed that that was only the starting point around the complete reconfiguration of the organisation, which would be undertaken over the next few years. 

He went on to say that the change to the senior team and the reconfiguration was partly to help address these issues, and that would be assessed over this year to see how things were improving within the internal control environment, including reviewing all of the risks across the organisation to ensure they were on top of these as a senior team so that the wider team were fully versed and aware of them, and were acting to actively improve them.  Also, an Action Plan was being drawn up with himself, the Head of Policy and Governance and the Internal Audit Manager, looking at how to target some of those key areas within the limited assurance to help the organisation bring it up to more reasonable level over the next 12-18 months.  He was therefore confident that the Council was moving in the right direction and would see improvements throughout the year.

In response to concerns, it was confirmed that if all of the posts in the internal audit structure were filled, there would be approximately an additional 800 days added into the plan.  However, it was not just the number of days that needed to be considered, they needed to look at whether they were doing the right audits and whether they were giving the Committee the right assurances etc. The Head of Policy and Governance explained that being fully resourced may not have an impact on the status of the internal control environment.

Whilst welcoming the Section 151 Officers’ comments that the authority was moving in the right direction, the Chairman felt that there must be some level of risk due to the unprecedented financial challenge of the Council along with a new structure, new Councillors and a new administration, and he therefore felt it appropriate to invite the Chief Executive and the Leader to a future meeting of the Committee to discuss how the organisation was planning to address the limited assurance level.

A brief discussion ensued in relation to the structure of the Audit Committee and the possibility of increasing it’s membership.

RESOLVED:

To note the performance of Internal Audit against the 2024/25 Audit Plan;

To note that Internal Audit have evaluated the effectiveness of the Council’s risk

management, control and governance processes, considering public sector

internal auditing standards or guidance, the results of which can be used when

considering the internal control environment and the Annual Governance

Statement for 2024/25;

To note the Chief Audit Executive’s Limited assurance, year-end opinion, that the

Council’s framework for governance, risk management and internal control is

sound and working effectively for 2024/25 based on the work undertaken and

management responses received;

To invite the Chief Executive and Senior Members of the Council to a future meeting of the Audit Committee to discuss the current situation and the changes that would be implemented in order to move away from a limited assurance level; and

To request that the structure of the Audit Committee be reviewed with consideration being given to increase the number of Members.