The purpose of this report is to enable the committee to provide independent assurance on the adequacy of the risk management framework together with the internal control of the financial reporting and annual governance processes by considering the head of internal audit’s annual report and opinion, and the level of assurance it gives over the council’s corporate governance arrangements.

South West Audit Partnership presented the report and highlighted that:

·         The annual opinion was to support the annual governance statement. 

·         The sources used to inform the opinion were contained within the report. .

·         The senior management team were supportive of SWAP’s recommendations and that there was a good relationship with senior management. 

·         There had been a significant increase in advisory audits. 

·         There had been a decrease in partial assurance audits (10.5% down from 18% in the previous year).

·         The number of priority findings had increased.  

·         There were findings that the governance processes were not being followed in capital projects and record of officer decisions.   This was an area for improvement which the council had identified and there were revised arrangements in place.   A member of the committee commented that it was good to see that these areas were still being raised but they believed there had been an improvement.

In discussion of the item, the following points were discussed:

·         That there had been some areas of duplication and fraudulent activity with regard to the small business grants.   An update on the work in connection with counter fraud would be provided to the committee at its next meeting.   

·         An advisory audit was undertaken as there was perceived to be a weakness or risk in the service area.   This then supported the manager in their understanding of the weakness and the recommendations in place to improve the service area.

·         The annual audit opinion took into account all audits.

·         Priority 1 and 2 findings of all audits were reported to the committee.

·         Advisory audits were equally as important as substantive audits as they potentially targeted higher risk areas.

·         The number of advisory audits was closely monitored.  

·         As the financial year progressed, there will be changes to the internal audit plan due to a request to look at a particular area.   At this stage, there would be a discussion about whether it would be undertaken as an opinion or advisory audit.

·         An opinion audit could change into an advisory audit.  SWAP would prefer to provide an opinion, but they would not wish to discourage officers from approaching them to undertake audits where they thought there may be weaknesses.   An audit opinion gave the committee better assurance and understanding of what was going on irrespective of whether an officer had highlighted concerns.   Advisory audits did not provide an opinion as to the level of assurance.

·         The members expenses audit was briefly discussed and SWAP confirmed that there had been a number of findings which had been reported to the committee.   It was agreed that a copy of the report would be circulated to committee members.

·         The HomePoint award of system contract was discussed.   This was an allocation system which displayed available social housing operated by the various housing association trusts operating within Herefordshire.   The committee were grateful for the audit raising points which required more scrutiny in the decision making process.  

·         SWAP did try to highlight where there had been similar recommendations from past audits.

·         It was agreed that the review date of the next service level agreement with SWAP would be provided to the clerk so that an agenda item could be added to the appropriate committee year and / or date.

·         If an audit had been deferred and replaced by other work in the year, it would be considered in the following year’s plan.

RESOLVED that:

(a)  The members expenses audit to be shared with the audit and governance committee members.

(b)  Officers consider and bring back to the committee a process of advising the audit and governance committee of a change from an audit opinion report to an advisory audit.  

(c)  Officers to include details of similar recommendations from previous internal audit recommendations in the summary provided by South West Audit Partnership

(d)  Officers to let the clerk to the committee know when the SLA with SWAP is to be reviewed so that an item can be included in the work programme for the relevant municipal year.

(e)  SWAP to provide details of the number of responses received from officers in relation to internal audits with regard to the audits undertaken.