The report of the Head of Audit and Risk Management is attached.

The Committee considered a report of the Head of Audit and Risk Management  which presented the annual programme of audit work designed to raise standards of governance, risk management and internal control across the Council which would culminate in the Annual Head of Internal Audit Opinion and an Annual Assurance report. The report provided an update on progress of the agreed audit plan 2021/22; additional work assigned to the audit service and copies of the audit opinions issued in the period May to October 2021. It was highlighted that progress on the previous period had been included in the Annual Audit Opinion paper presented to the Committee in June 2021.

The report discussed:

• The delivery of the Audit Programme
• Resourcing and Plan
• An overview of  activity in Children’s Services and Education  including School Financial Health Checks, Supporting Families, Client Financial Services – Appointeeships
• An overview of activity in the Corporate Core, including Information Governance, ICT, Core Systems, Estate Services Review, Grant Certifications, Our Town Hall – Management of Work Package Delivery and Payments and Capital Programmes
• An overview of activity in Neighbourhoods; including Growth and Development, Highways Compensation Events Review and  Avro Hollows
• An overview of activity in Procurement, Contracts and Commissioning (PCC) Waivers and Contract Extensions, Supplier Relief and Supplier Due Diligence
• Counter-Fraud and Investigations audit activity, including Proactive and Reactive Corporate Cases
• Information concerning Investigations relating to Business Grants, Council Tax Reduction Scheme and Housing Tenancy

There was a discussion about the limited assurance rating reported in relation to Schools Financial Health Checks and the challenges these presented in terms of segregation of duties, given that there is no requirement to prescribe financial or business management roles across the schools sector. The report indicated that COVID related pressures had likely contributed to instances of lapse and non-compliance in key areas, acknowledging that segregation of duties could present a significant challenge for smaller entities.  The Committee discussed the importance of robust governance processes and the crucial role of governing bodies in maintaining oversight of School Financial Value assessments.  The Head of Audit and Risk Management advised that whilst the exercise had highlighted areas of focus the matter was predominantly confined to smaller schools in response to COVID pressures.  In addition to ongoing dialogue and sessions on how to identify and reduce fraud and irregularity, best practice in data handling and data protection with schools sector representatives, an exercise was being considered in conjunction with the Schools Finance team to develop a framework to strengthen governance processes around procurement activity where the greatest risk was felt to exist.  Discussions turned to the role of Section 151 Officer and the Director of Education concerning powers to intervene where necessary.  There was emphasis on the importance of early detection, help and support to raise awareness about the requirements as a preferred course of action in light of the disruption caused by removal of delegations where serious governance concerns exist.  The outsourcing of HR services (including payroll services) was also discussed as an available route for federations and clusters of schools. A member suggested that this topic could also be included in the training support offered by the School Governor’s team.

There was a discussion about the delivery of the annual programme of internal audit activity. A member commented that whilst COVID grant assurance activity remained a pressure on resources, the 2021/22 plan had been cognisant of the anticipated impact of this in the programme’s planning stage. The Head of Audit and Risk Management explained that requirements around COVID grants had exceeded initial expectations, with activity concluding in June 2022 but reported a good level of confidence in the team’s ability to complete planned activity, adding that some of the work was not scheduled to commence until the last two quarters of the year.

In response to questions about progress on specific areas of assurance outlined in the report, the Head of Audit and Risk Management confirmed that the final report on the waivers review would be included as an appendix of a future assurance report, as would the Executive Summary on mental health casework and social value audit activity.

In response to a question related to fire risk  associated with Avro Hollows TMO, the Head of Audit and Risk management described the nature of activity the Audit team had been asked to undertake.  He commented that whilst areas of improvement had been identified in certain areas, no concerns had been highlighted as result of the assessment of fire risk arrangements.  Further information on that particular aspect would be included in the final report.  He agreed to liaise with Housing partners to ensure that ward members were appropriately briefed on the fire risk assurance in this instance.

There was a discussion about procedures  for joiner / mover / leaver processes as discussed under Information and ICT within the Corporate Core.  The Head of Audit and Risk Management referred to wider retention and disposal policies in response to data management  as well as Project Manager roles and responsibilities. He referred to the complexities such gaps in information can present when Project Managers are externally contracted and stressed the importance of robust procedures where Project Managers themselves have been externally contracted and are due to leave.

A member requested a report which focussed on obtaining assurance around payment activity in the Children and Adult Directorates, noting that it had been asserted that  earlier concerns around incorrect fosters payments would be addressed by subsequently implemented systems of control. An update on mental health casework compliance (Adults Services) was also requested. The Chair agreed to this.

In response to a question about an error in VCSE Grant Expenditure, the Head of Audit and Risk Management explained that this had been uncovered by a piece of work that was requested as a result of prominent complexities around consolidation processes across the Directorates.

In response to a comment about governance of the overall work costs in the Our Town Hall project, the Head of Audit and Risk Management described a good level of confidence in the general management and oversight by the Council’s team including infrastructure. He however stressed the importance of demonstrable governance practices that underpin the audit opinion, adding that this would be an area of regular review given its value and impact.

A member asked about the role of the Audit Committee in respect of assurance around the Council’s commitment to zero Carbon 2038.  The Head of Audit and Risk Management acknowledged the committee’s role in terms of oversight of governance of the overall programme, and made reference to the Environmment and Climate Change Scrutiny Committee, which included the Climate Change Strategy in its scope and remit. He suggested that any reports that discussed aspects of governance through this forum ought to be made available to the committee. The Chair acknowledged the role of the Council’s specifically constituted scrutiny committee in overseeing delivery and highlighted the strategic role of Greater Manchester Combined Authority as well as the Council’s ward / neighbourhood level oversight on carbon reduction activity.

Decision

1.         To note the report.

2.         To request that the Head of Audit and Risk Management liaises with the School Governors team to discuss the inclusion of oversight of School Financial Value assessments as part of its wider delivery of training for School Governors.

3.         To request that a future update on Internal Audit Assurance, includes information about payment activity in Children Services and the Directorate for Adults is provided to a future meeting of the Committee.

4.         To request that the Head of Audit and Risk Management liaises with Housing partners in Avro Hollows  to ensure that ward members were suitably briefed on the outcome of  audit activity around fire risk arrangements.