Agenda item

This report details the work completed by Internal Audit so far during 2020/21 and the progress made in implementing recommendations from audits completed in previous years.

The Committee is asked to note the content of the report.

The Head of Internal Audit spoke to the internal audit report which was a regular interim update. The report covered the period following the annual report provided in the October 2020 meeting.

In summary, the contractor was behind in completing the audit work. In section five of the report it showed the progress against the plan. The principle reason was that because of COVID-19 very little audit work had been done at the start of the year as contractor staff were furloughed and thus work did not commence until July. The contractor had indicated that resource could be available to complete the audits by the year end, however, given the organisation’s capacity the plan would not be finished within the year. Nonetheless there should be enough work completed for an annual Head of Internal Audit opinion in the annual report.

The report showed progress on follow ups where improved progress had been made on the older tasks.

Further to the report there was more information available on individual audit reports, as they are published on the website and available for public to also review.

Members asked for clarity about where the original audit plan would not be completed due to capacity issues and requested for a document to indicate which of the planned programme would not be carried out. The Head of Internal Audit indicated that a slightly amended plan was attached to the back of the report and that all of that work would be completed, albeit not by the year end.

A question was raised on whether all the follow ups would be completed as scheduled, and whether officers compared this expectation at this stage in the cycle. The Head of Internal Audit explained that follow-ups and implementation of recommendations was largely where expected. Implementation of the most recent years was usually slightly behind target, but would always catch-up.

Other questions raised included whether there was any specific risks that was raised for the Council as a whole by the inability to conclude the internal audit programme this year or be entered on the risk register and the Head of Internal Audit confirmed again that the plan would be completed, just not by the year end.

There were also questions about the audit of the Fairfield Halls delivery audit, which reported in November 2020. Additionally, Members noted that work was awarded to Brick by Brick without a competitive process and without a formal contract, which led to a question on whether this was usual for a redevelopment of that size by the council. Officers informed Members that using a license instead of a contract was not a conventional way of working, though it was not known whether it had been done on any other large project as such. Further, there was a no assurance on the Fairfield Halls audit as mentioned in the report, and officers had recently commissioned a value for money review on the Fairfield Halls project governance, which was expected to take four to six weeks and would be feedback to Members upon completion.

There were further comments in regards to Fairfield Halls and the review relating to one of the Fairfield carparks where the lease was sold to NCP approximately ten or eleven years ago. Members queried the review and the history of the redevelopment or the refurbishment of Fairfield and whether that carpark had left ownership, or had been sold or could potentially be stopped in terms of value for money.

Members commented on Brick by Brick and Fairfield Halls and given some of the circumstances and the amount of money involved, questions were raised about the conflicts and how this was allowed to rise. With reference to the no assurance, Members asked of the first warning sign, and why issues with the Fairfield Halls redevelopment that were reported two to three years ago was only now being acknowledged. Officers informed that once concerns were raised effectively an audit at its earliest opportunity was construed, which was why it was included within the plan. There was no prior acknowledgment of any concerns in the past. Senior officers further informed that this was an audit after the delivery of the works of the Fairfield Halls, thus this was the first time the department were asked to audit and create this report.

Members discussed their concerns about the impact upon capacity which had given a 17% workload completion compared to 53% at the mid-year point the previous year, and raised a question relating to whether completing the internal audits was realistic and if it was not completed whether work would be carried forward, written off or just marked as not completed. Officers clarified that the information within the report was until the end of October 2020 where the completion rate was at 17%. As of January 2021, the service was up to 30%. Officers planned to finish the audits, with some being completed after the end of the year. All the work was valid due to their areas of concern or potential risk. It was also noted that fees were only paid for work received.

One of the Independent Co-optee Members noted that the Head of Internal Audit worked two days a week, and wondered how work was being managed, and further referred to an article last year from finance, reporting Council, which stated that Mazars’ quality of audits for the public sector required significant improvement, and queried whether this was acknowledged by officers and what was being done. Officers acknowledged the report and noted that it had referred to Mazars’ external audit work, which was different to the team for internal audits used in Croydon. Additionally, the internal auditors worked under a very experienced Head of Internal Audit and officers were happy with the quality of their work and any deficiencies found were corrected with no hesitation. Internal auditors would indeed be well supervised. In reference to working two days per week, it was noted that this provided the right level of supervision to the internal audit contractor. With Mazars supporting this arrangement it also highlighted that the council was delivering in a cost effective basis as it was gaining results through the organisation. The section 151 Officer acknowledged the arrangement were working well for Croydon Council, which was set up prior to her lead role, and confirmed that she was comfortable with the arrangements, which may change should there be a change within the Council. The internal audit annual report also reviewed the internal audit providers ensuring it was delivering what was required in the supervision of a very experienced head of internal audit.

Members raised questions in relation to processes, and in reviewing this year’s report prior to recommendations querying whether reviewing the report online would provide officer’s response to the recommendations. Officers confirmed that they would identify the issues and ask the relevant team to identify what they would do to mitigate the issues raised, which was found in the detailed reports. Supplementary, Members specifically queried the response for a park strategy. Officers received a response to the follow up to the parks audits where there were three priority one. A renewal plan had been put together taking into account these priorities and the direction of how they would manage the parks, which was exactly what officers wanted the policy to address. Though this plan was drafted and agreed, internally, in September/October 2020, the renewal policy was currently under continuous review, in line with the Council's changing staffing and budget arrangements. There were further comments from Members about the parks concerning the lack of risk assessment, which should have been a priority in house, particularly as parks were growing in importance throughout the pandemic and Members asked what stage the risk assessments was at with a shortage of money, to avoid seeing playgrounds decommissioned. Officers informed that this issue had been raised and officers were informed that there was an ongoing programme in place to take the remainder of the risk assessments, which were due to be finished by the summer. Furthermore, officers commented that there was a rolling basis of risk assessments in progress at the time of the audits, though they were progressing far too slowly. However this had now been resolved and the outstanding issue in terms of priority ones was the fire risk assessments, which was currently with facilities management for further update. The playground equipment was a separate issue and officers were happy with the playground equipment. Officers also clarified that the parks had three different parts of the Council looking after them, namely the parks maintenance service who was responsible for the lawn mowing, the gardens and pruning; the facilities management who had been responsible for the infrastructure; and another team that was more involved in other aspects.

The Chair thanked officers for the report and the questions and answer session.

The Committee RESOLVED to note the Internal Audit Report to October 2020 (Appendix 1).