The purpose of this report is to provide those charged with governance an opinion on the overall adequacy and effectiveness of the organisation’s governance, risk management and internal control environment. The report provides independent assurance to the committee and enables the committee to determine any potential items for inclusion in its future work programme.

The head of internal audit, SWAP, presented the report and highlighted the following:

·         the annual opinion was an overall opinion in light of the work undertaken.  

·         Pages 31 to 33 of the agenda pack set out an assessment of the annual opinion. 

·         57 audits had been completed.

·         54% of audits completed were either substantial or reasonable.

·         There were no issues of key financial controls.

·         There was management acceptance of the findings. 

·         Details of removed or deferred audits were set out in the report.

·         There had been no identified fraud during the year and there had been no fraud investigations in the year. 

·         There was a good relationship between SWAP and senior management.   Senior management approach the team to seek advice on issues which showed an open approach to audits.

·         Where there have been findings in connection with governance processes in connection with compliance, management is responsible for ensuring compliance with existing policies / processes in place.  The council have recognised that this is an area for improvement.

·         Having considered the balance of work, SWAP were able to offer a reasonable assurance.

During the discussion of the item, the following points were highlighted:

·         The advisory audits were requested by the chief finance officer and did not have any actions because they were areas where there were already concerns.   It was noted that the advisory audits were the ones of most interest for members of the public.   It was confirmed that if there were any priority 1 or 2 recommendations from these audits, they would be reported to the committee.   The chief finance officer was requested to consider in future including within the report the reasons why he had requested the advisory audits.  

·         The treasury management audit was advisory and it was to ensure that the controls identified had been put in place. 

·         That as part of any audit SWAP will ask if there is any additional work which could be undertaken, e.g. benchmarking and the outcome of the benchmarking exercise would be shared with all councils who engage SWAP.   It was noted that it would be important that the benchmarking councils would need to be correct to ensure accurate information for Herefordshire. 

·         It was confirmed that in auditing terms, a reasonable assurance was a good reflection on the council. 

·         It was confirmed that the annual governance statement provided details of the systems and processes in place which would assist the committee with regard to assurance.  The annual governance statement was a live document and did form part of suite of documents used to manage performance within the council.   The solicitor to the council and chief finance officer agreed to look at the advice to report writers with regard to cross referencing in reports to other documents.  

The advisory audits in connection with NMiTE were discussed by the committee.  It was noted that the council had agreed to be the accountable body for NMiTE in connection with the annual Section 31 grant award.   This was a government grant and it was normal process for an accountable body to oversee the process and report back to relevant government department with progress reports.   It was part of the Section 151 Officer’s (chief finance officer) role to check that the money had been spent appropriately.   For NMiTE, the S151 officer had chosen to have regular SWAP audits as it was a fast growing organisation.    These audits assisted with determining that the money was being spent appropriately and it was noted that the money was not council money.    It was further noted that there had been progress by NMiTE but there was still work to do.   The S151 officer had regular contact with the Department for Education (DfE) and NMiTE and as it was government grant funding it would be for the DfE to determine how NMiTE act.    If there were issues, it would not necessarily be reported to the committee but there would be a notification to the DfE.  However, if the issue was significant, then it would be reported to the committee.  

That:

The report be noted.