To highlight the key internal control issues identified during the course of audit work and provide an update on the actions or the current position on key issues identified during 2003/04 that required attention.

The Committee considered the Annual Audit Assurance Report highlighting the key internal control issues identified during the course of audit work and providing an update on key issues identified during 2003/04 that required attention.

The report to Cabinet on 9th September, 2004 was appended to the report.

The County Treasurer informed the Committee that an important part of the audit process was to ensure that the recommendations in the annual assurance report were acted upon.  He noted that Cabinet had requested a further report on issues raised in the report, in particular: verification of performance indicator information, the security of the Council’s ICT provision; and the operation of the Council’s contract with Herefordshire Jarvis Services Ltd.

In the ensuing discussion the following principal points were made:

·         In relation to the verification of performance indicator information it was noted that verification errors persisted in relation to the data collected for certain Best Value performance Indicators.   This had resulted in unsatisfactory audit opinions in previous years.  It was suggested that relevant individual scrutiny committees might need to consider this issue to reinforce the work of the Principal Audit Manager.

·         The Director of Policy of Community was requested to comment on the position in respect of ICT provision.  She reported that major capital investment had been approved.  However, its application, for example to provide a second data centre to guard against an ICT disaster, depended on decisions made by the Council about its accommodation needs.  A more corporate approach was being implemented to procurement of IT systems and there was awareness of the need to invest in the skills base to manage their increasing complexity.  The Government’s requirements to implement e-government were highly prescriptive.  Progress was being made but there were many challenges to overcome.

There was further discussion of the importance of resolving the Authority’s accommodation needs and the interrelationship of the work of the Accommodation Board, charged with determining a final recommendation to Cabinet, and the work being undertaken as part of the Property Review.  The Chief Executive advised that the Property Review was expected to recommend the principles which should govern the Council’s approach to its Property holdings.  It had therefore been prudent for the Accommodation Board to await the Review’s findings before reaching any conclusions.  It therefore also had to be recognised that the delay in completing the Review had had an impact.

·         Some concern was expressed about the operation of the contract with Herefordshire Jarvis Services Ltd.  In response it was advised that whilst there might be pockets of concern about the new working arrangements the effectiveness of the contract needed to be assessed in its totality.  Action was being undertaken to address any concerns and there was a focus on achieving best value for money from the contract for the Council.

·         It was observed that the Council was currently not complying with the revised Code of Practice for Internal Audit in Local Government issued in 2003 in two particulars.  One related to the Audit Strategy, which it was noted was in preparation.  The other related to independence.   The Authority did not comply with the Code because the Principal Audit Manager did not report exclusively direct to the County Treasurer (as a member of the Chief Executive’s Management Team), instead reporting through the Assistant County Treasurer on some issues.  The County Treasurer expressed the view that the present arrangements were robust.  It was, however, recognised, that regard had to be had to the views of the external auditors.  The Committee was advised to revisit the matter following receipt of the Audit Commission’s annual management letter in December and the strength of the external auditors views on the Council’s present arrangements.

RESOLVED:   That the report on the Annual Assurance Report 2003/2004 be noted.