The report of the Deputy Chief Executive andCity Treasurer and the Head of Internal Audit and Risk Management is enclosed.

The Committee considered the report of the Deputy Chief Executive and City Treasurer and the Head of Internal Audit and Risk Management that provided an update of progress on the agreed audit plan 2020/21, additional work assigned to the audit service and copies of the audit opinions issued in the period August to December 2020. The Committee was advised that audit work had been impacted during the year due to additional work taken on by Internal Audit. This included the provision of key support for the covid19 grant schemes to provide ongoing support

to local businesses and the winter support for children and vulnerable families. The availability of resources has also affected the service and a ‘reach out’ had been undertaken to provide three additional posts and the subsequent recruitment to permanent posts following completion of a service and savings review. Members were informed that even with additional resources it will remain a challenge to complete all planned audit work by year end as a consequence of client availability due to the continued focus on the covid response and recovery which is acute across all areas of the Council and particularly within front line services in adults, health

and care, children’s services and schools.

The Chair invited members of the Committee to ask questions.

Members referred to work being done on fraud checks on business grants and the impact the involvement of audit staff in this work has had on the audit team for the reason that staff are running the checks rather than providing a consultancy and facilitating role. Also, what arrangements will there be if the grants system is extended past financial year end as it is likely that the pandemic would continue. Reference was made to resources available to the Audit team and the involvement of Salford Council to undertake audit work on the Council’s ICT function in view of potential deletion of vacancies from the team structure. The Head of Risk and Internal Audit was asked to comment on the comparison of work undertaken in the previous year to this year and was it mandatory to provide an opinion if a sufficient amount of work had not been completed.

It was reported that there is not a mandatory requirement to provide an audit opinion, however there is a requirement under the current procedures to provide an opinion to those charged with responsibility for governance such as the Audit Committee. The Committee was advised that heads of audit across the country were using outcomes from planned audits and other sources of assurance to inform the production of an opinion. Head of Internal Audit stated that other forms of assurance will include his own role and engagement in various governance and recovery groups. In providing the opinion it was important for the Audit Committee and stakeholders that there is clarity on the basis in which the opinion is taken. The CIPFA guidance would be used to inform the opinion on potential limitations and/or qualifications required and referenced. In noting that the amount of audit work had reduced it was reported that audit staff would still be obtaining assurances from planned audits and other work such as emergency grants and business recovery work undertaken during the year. The issue of using another authority to examine the Council’s ICT work is a routine arrangement that is done as a matter of course to involve an outside authority to undertake a review. This work was not as a result of the availability of resources. The process of appointing staff from the outreach process would begin next week to help address the current resource shortfall within the Audit Team for the final quarter and into the following year. It was reported that due to the current working arrangements, there may be challenges in working with clients during audits in Adults and Children’s Services and a degree of flexibility would be required to work with those clients to obtain assurances. The new improvement plan would help to obtain those assurances following discussions with the areas of services concerned. In response to the question on fraud checks it was reported that from the checks being undertaken, the majority of the work on business grants is system and process based and it was considered the work is valuable in gaining assurance for that area. The resource allocated to grant work will not be at the same level as it was previously because of confidence in the systems in place and the introduction of a post payment assurance plan and the provision of regular updates on their delivery. Further discussions will take place on the investigation of potential largescale fraud through the business grant scheme and this may impact on the fraud team’s resources. Discussions would be held with the Committee on the way forward to priorities work. It was reported that in view of the current circumstances the Council faces, it will be necessary to decide on priorities for audit work to be undertaken and identifying other sources of information.

Members referred to the pressures on the Audit Team in particular, the additional responsibilities as a result of Covid19 and the importance of prioritising work to ensure that the audit of Children’s and Adults Services and Mental Health Services were maintained. Officers were asked for an update on the PSN and what strategy is in place to prioritise what audit work will take place and what the issues are in accessing clients and if there were other means in obtaining information. Members also asked what the Committee could do to support the service to ensure work is completed in view that audit work is still a necessary and important function within the Council.

The City Treasurer responded and advised the Committee that the peak of the pandemic is now being faced by health and social care services and all non-essential work needed to stop to allow resources to be focused on maintaining hospital capacity and discharges. This relates, in particular to the point made on the capacity of clients to take part in audits of their service. In addition, it is necessary to balance core business as usual work with the new responsibilities associated with COVID-19.  Internal Audit expertise has been required for the Business Rates grants assurance to ensure fraudulent claims are not paid and to satisfy government assurance requirements.  The workload associated with the grants programme for example has been shared across Revenues and Benefits, the Work and Skills Team, Finance and Internal Audit.  With regard to Financial Management the monthly returns provided to  MHCLG have been time consuming but an important part of the evidence used to secure Government funding for the impact of COVID-19. These examples demonstrate that there is a very fine line on the decisions taken on how to prioritise capacity.  The pandemic has provided a good demonstration of the strengths within the Council services. Reference was also made the administering of the school voucher scheme for school children in Manchester and the benefit and level of assurance this has provided. 

The Committee was informed that issue of capacity also related to auditor’s ability to physically access documents to complete a sign off and the priorities of officers on more pressing issues such as vaccination work and testing. Internal Audit is not the only source of assurance and forms part of the annual opinion. Officers are working to obtain information through other sources within the organisation.

It was confirmed that discussions will take place on the priorities to focus on areas such as Mental Health Casework and Homelessness due to the level of urgency in progressing this work.

The Committee was advised that to best support officers it should continue to discharge its function in obtaining assurances and ensuring that audit work is completed. It was reported that senior officers are aware of the need to complete audit work to maintain and improve the work of the Council services and that the findings will be submitted to the Audit Committee.  [CC1] 

A member referred to outstanding audit work and asked if it was possible to collaborate with other officer colleagues to work smart to complete the work and if this was good practice.

It was reported that as an example of collaborative working, work in Adult Services would be monitored by audit staff and would involve sitting in on meetings rather than just receiving copies of minutes and be at a higher level to take part in checking and testing to gain assurance. 

A member referred to changes within the staffing structure and what processes are in place to ensure that the level of senior management support for the City Treasurer will be in place.

It was reported that a suitably qualified member of staff is currently in place for the Deputy Treasurer position on an interim basis and interviews would be taking place for the permanent replacement in the following week. Whilst there will be reduced capacity within Corporate Services, work will continue to ensure the best use of existing resources. This will enable the City Treasurer to maintain an overview of the work of the department.

Decision

The Committee noted the report and the comments received.