Agenda item

To provide the Audit Committee with a summary of the work completed by Risk Services in quarter three of the 2020/2021 financial year.

Mrs Tracy Greenhalgh, Head of Audit and Risk presented a report summarising the work of Risk Services, including the overall assurance statements for all audit reviews completed in quarter three. She drew the Committee’s attention to the inclusion of the findings of the Chartered Institute of Internal Auditors’ Risk in Focus report for 2021 which had horizon scanned for emerging key risks to be considered as part of the internal audit planning and risk assessment process. In addition, Mrs Greenhalgh had included the results from the recently completed National Fraud Initiative 2020, along with a comparison of findings from the same exercise undertaken two years previously, which she advised provided a good indication of fraud risks in the public sector.

In presenting the Risk Services key performance indicators, Mrs Greenhalgh noted the positive increase in fraud awareness training undertaken by the Communication and Regeneration Directorate and by Children’s Services.

The Committee sought assurance around performance in relation to the completion of the internal audit plan, noting only 47 per cent had been reported as being completed of the 90 per cent annual target. Mrs Greenhalgh reported that due to the continued efforts of the Risk Services team, 78 per cent of the internal audit plan had now been completed. She assured the Committee that in any cases whereby planned audits had not been undertaken within the current year, all would be carried forward on to the new internal audit plan for the following year.

The Committee noted the reported completion rate of the percentage of property risk audits completed as zero and sought further information in relation to the performance indicator. Mrs Greenhalgh reported that the property risk audits were undertaken externally by Zurich Municipal and that they had been unable to carry out work onsite due to Covid-19 restrictions. She informed the Committee that Zurich Municipal had advised that they would be recommencing site visits from mid-April 2021 with the intention of catching up on the number of property risk audits completed over the next few months.

With regards to the reported fraud statistics data, the Committee questioned whether the data included and recognised the activities of the informal economy or if there were any plans to start including such data. Mrs Greenhalgh confirmed that the National Fraud Initiative findings did not include any data relating to the informal economy due to its ‘cash in hand’ nature and which therefore would not be captured within the systems used to undertake data matching. She advised that other sources of information were relied upon with regards to capturing data generated by the informal economy, such as referrals from colleagues across the Council and from members of the public via the Council’s online facility for reporting concerns. Any such referrals would be investigated and recorded and would be included within the Blackpool data reported to the Committee. The Committee noted the importance of identifying and recognising the size and impact of the informal economy, as well as the need to create a strategy to deal with it going forward.

Clarification was sought around the number of risk and resilience training exercises undertaken, with none of the proposed six sessions as yet having taken place. Mrs Greenhalgh advised that the majority of the Council’s risk and resilience training was provided externally and that the recent focus for the sessions had been on providing necessary training to the Council’s wholly owned companies to ensure effective risk management processes were in place. Mrs Greenhalgh identified a further provider of training as the Lancashire Resilience Forum who had been focused more recently on the response to the pandemic, but she reported that one training exercise had taken place the previous week which would be reported as part of the quarter four data. In addition, Mrs Greenhalgh outlined the online courses available via the Council’s I-Pool learning facility, with one live course on Risk Management currently being available and a further course on Business Continuity awaiting launch.

On considering the summary of internal audits undertaken during quarter three, Mrs Greenhalgh noted a positive overall picture, with the exception of the review of vehicle operators’ licence compliance within the Community and Environmental Services Directorate which had received inadequate assurance and had resulted in a total of 12 recommendations, one being Priority One and nine being Priority Two. The Committee requested that the Transport Manager be invited to attend a future meeting of the Audit Committee in order to provide an update on progress in relation to the recommendations. In addition, the Committee noted that within the 2019/2020 accounts included for consideration at the meeting, a section on variances within Children’s Services had reported a £739,000 overspend due to a historical, unmet target saving on the Special Educational Needs transport Service, with part of this overspend having been offset by staffing savings and the release of one-off funding in other areas of the service. The Committee questioned whether these actions to save on staff costs had impacted negatively on the ability of the Transport Service to comply with Vehicle Operators’ Licence requirements and whether an impact assessment had been undertaken before the cost savings had been implemented. Mr Neil Jack, Chief Executive confirmed this not to be case, informing the Committee that the number of new pupils eligible for transport had been impacted not the management of the transport service and that this was managed by the Special Educational Needs and Disability Service.

With regards to the review of the Business Loans Fund, the Committee questioned what the anticipated impact of the resulting recommendations would be. Mrs Greenhalgh advised that whilst the Business Loans Fund had demonstrated robust processes to be in place for due diligence, the audit had highlighted a lack of an equally robust audit trail to adequately reflect this. The recommendations therefore were aimed at helping the service work towards a clearer recording of processes undertaken.

Resolved:

1.      To note the Risk Services quarter three report;

2.      That the Transport Manager be invited to attend a future meeting of the Audit Committee in order to provide an update on progress in relation to the recommendations arising from the review of vehicle operators’ licence compliance.