Agenda item
Quarterly Internal Audit Assurance Report
To note the report and to take account of the assurance opinion assigned to the systems reviewed during the period.
Minutes:
The Head of Audit and Risk Management presented the report circulated agenda item 4.1. He offered his audit opinion based on work performed in the year-to-date and gave a substantial level of assurance on the systems and controls in place within the authority. He noted that performance against the indicators formulated at the beginning of the year to monitor the delivery of the internal audit service was lower than target in relation to ‘priority one recommendations implemented by auditees at 6-monthly follow up audit stage. He suggested that this had been because of staff absence and competing priorities. Therefore the Head of Service would ask Deloitte to delay its audit. He also advised that most delays had not been accepted, although some had been agreed because of other inspections or project implementations.
He noted the assurance rating of audits finalised in the period and discussed each of the three limited assurances that were returned during the quarter.
Management and Control of Probationary Tenancy - Follow Up Audit
The Interim Head of Neighbourhoods Tower Hamlets Holmes attend for the discussion of this item.
The Committee heard that four main areas of weakness were identified:
- No evidence to verify reported sales income
- Key performance indicators were not measured against targets
- No evidence of monthly complaints reports supplied by Veolia as required by Waste Management contract clause 43.3
- No evidence that the 2012-13 management fee of £717,500 was formally agreed by both parties (Note – subsequent to the publication of the minutes it has been identified that this comment pertains to the Waste Management Audit and not to the THH Management and Control of Probationary Tenancy Follow-up Audit)
The following were also noted:
- A high priority recommendation arising from the first follow-up audit had been fully implemented and there had been some implementation of the remaining four recommendations
- The follow-up audit identified that the controls were not effective because of non-compliance with procedures together with lack of good quality random checks
- Records management was weak
- A number of previous audits had returned a limited assurance therefore the follow-up was escalated and a visit carried out in November 2013. This date coincided with the estimated date when all recommendations were to have been implemented.
- The limited assurance did not relate to social housing frauds but was concerned with administrative processes
- The Service had addressed procedures relating to how documents were evidenced and administrative procedures had been reviewed
- IT had developed a new records management system which captures all controls recommended arising from the audit and there would be supporting documentary evidence
- Some random checks would be carried out personally by the Interim Head of Neighbourhoods Tower Hamlets Holmes
- Records would be fully inspected and training given to ensure that filing was undertaken appropriately.
The Interim Head of Neighbourhoods Tower Hamlets Holmes was confident that all issues would be resolved on schedule. She confirmed that procedures were now in place to ensure that the targets would be met and agreed to monitor these to ensure that future assurance levels were increased.
Management of the Commercial Waste Contract
The Head of Clean and Green attended for the discussion of this item.
The Committee heard that the main weaknesses identified from the audit were:
- There was no evidence to confirm that the Council verified sales income reports provided by Veolia
- Key performance indicators were not measured against targets
- There was no evidence available to confirm Veolia provided the Council with monthly complaints reports as required by clause 43.3 of the waste management contract
- There was no evidence available to confirm that the 2012 management fee of £717,500 was formally agreed by both parties
- The Authority had been unable to confirm what contract fees were paid because the variation in the fee had not been properly evidenced
The following information from the Head of Clean and Green was also noted:
- All uplifts were agreed within the contract terms and there were bimonthly strategy meetings which were now minuted.
- Veolia had earlier agreed that sales could be increased if more resources were given. This had occurred but levels had since been reduced to a lover level.
- Clause 43.3 of the contract was not specific to commercial waste and therefore a new KPI for commercial waste had been introduced
- Collection of commercial waste was collected into one vehicle (co-collection) and therefore the audit had identified a poor control. However since the audit, commercial waste was collected separately and would be better monitored.
- Removal of different waste categories was measured and an enforcement team was tasked to pursue Veolia where there was non-compliance
- Suitable fee levels were set by Veolia in line with RPI.
- Uplift was not performance related and lacked only the formal letter stating uplift
- Concerning control of KPI performance, the Committee was advised that the present waste contract was a number of years old and did not reflect the 2013 position however it would be reviewed in 2017. Members noted that the contract length an unacceptably long term and it was agreed that a written response would be provided on the rationale for this contract period.
Competitive Tendering Systems Audit
The Senior Procurement Manager, Category and Contract Management was present for the discussion of this item.
The Committee was advised that the purpose of the audit was to ensure that there was compliance with European Union regulations. A limited assurance had been returned as the audit trail was not sufficiently robust through the procurement cycle. The following matters were also noted:
- The audit concerned procurements in 2011-12 during which time there was much managerial change.
- The Senior Procurement Manager Category and Contract Management was now in post and processes had been reviewed and improvement made around governance compliance, systems and training.
- Whilst the audit was being undertaken, a new procurement process had been implemented which incorporated tighter controls.
- Much work had been undertaken since the audit and 99% of the recommendations had been implemented.
RESOLVED
That the report be noted
Supporting documents:
- Quarterly Assurance Report_171213, item 4.1 PDF 89 KB
- Quarterly Assurance Report_171213 Appx 1, item 4.1 PDF 46 KB
- Quarterly Assurance Report_171213 Appx 2, item 4.1 PDF 125 KB