PAPER C

AUDIT PANEL - 16 FEBRUARY 2005

ANNUAL PLAN FOR INTERNAL AUDIT

REPORT OF THE CHIEF INTERNAL AUDITOR

PURPOSE

1. The purpose of this report is to inform the Audit Panel of the proposed internal audit activity for the next financial year.

BACKGROUND

2. The council is the largest employer on the island, spending and receiving around £327 million per annum and employing around 5,000 staff. In addition, it manages its own pension fund valued at £150 million. The council seeks to achieve its objectives through the maintenance of a comprehensive system of risk management that should ensure that services are delivered in a proper, economic, efficient and effective manner. Internal audit’s role is to assess the adequacy and effectiveness of the risk management system and in particular the quality of the internal control arrangements designed to mitigate risks. Internal audit is part of the control regime and being a finite resource, needs to plan and allocate resources in a rational and systematic way in order to ensure that all the council’s activities receive an appropriate amount of attention.

3. The annual audit plan that is attached to this report at Appendix A. This annual plan is essentially the second year of the three year strategic plan presented to the Panel at its meeting in July last year. The plan has been modified slightly from what was reported last year to take account of changes in the authority’s risk profile as well as high risk activities not audited as planned in the current years plan. The plan sets out the specific activities to be audited, the audit approach to be adopted and the time needed to execute the audit. Clearly, there are some activities and systems that need to be audited more frequently than others. This is illustrated by the approach to the council’s main financial systems such as the main accounting system where we need to be able to give annual assurance that these systems are operating in line with management’s expectations and can be relied upon to provide accurate information for the production of the authority’s published financial statements. Resource allocation to other areas of the plan and in particular the frequency of review is based on risk assessment and available audit resources, the idea being to match risk with internal audit resource.

4. The audit plan is structured under eight headings:

(i) Compliance audits which are primarily concerned with determining the extent to which the council’s activities are conducted in accordance with internal rules, regulations and the law.

(ii) Financial systems audits which aim to give assurance to management that the council’s core financial systems are appropriately controlled and can be relied upon to produce accurate financial information for internal management purposes and support the production of the council’s published financial statements.

(iii) Operational audits which essentially are concerned with the management of business risks to ensure that operations and hence the council as a whole will achieve their objectives.

(iv) Anti-fraud audits which seek to either reduce the risk of fraud through the dissemination of good practice or seek to discover fraud in high risk areas.

(v) Contracts audits that review the controls over the council’s procurement systems.

(vi) ICT audits which are technical evaluations of the councils ICT infrastructure and systems to ensure that the council’s information management arrangements are secure, adequate and effective.

(vii) Project audits designed to give real time assurance that strategic projects will be successfully implemented.

(viii) Follow-up audits are intended to improve internal audit effectiveness by determining whether agreed recommendations from earlier reviews have been implemented and if not why not.

5. Elsewhere on the agenda, members will be appraised of the contents of the Audit Commission’s Annual Audit Letter. Two particular issues regarding internal audit are included in the management letter: the balance of work between financial systems and operational audits and the arrangements for performing follow-up audits. These comments relate to financial year 2003/04. In the current financial year and in the plans for next year, the concerns expressed by the Audit Commission have been addressed and appropriately balanced plans including provision for follow-up audit have been prepared.

6. Existing audit resources, after making allowances for training and other indirect activity are included in summary in the plan. The number of available days totals 1,214.5 which matches the resource rationed plan.

7. The Audit Panel is requested to :

(i) consider the relative priorities and amounts of time devoted to areas of council activity;

(ii) make recommendations as appropriate about the priorities of the audit teams work;

(iii) approve the annual audit plan for 2005/06.

RELEVANT PLANS, POLICIES, STRATEGIES AND PERFORMANCE INDICATORS

This Annual Audit Plan is derived from the Strategic Audit Plan approved by the Panel last year. The strategic plan takes account of Corporate objectives, BVPIs, the Annual Action Statement as well as local internal audit performance indicators.

BACKGROUND PAPERS USED IN THE PREPARATION OF THIS REPORT

Audit planning file held by G. Richardson

Contact point: G.B. Richardson, Chief Internal Auditor, 3683

G B RICHARDSON

Chief Internal Auditor

Expected Audit Resources 2005/06
	ICT AUDITOR	CIA	AUDITOR	AUDITOR	AUDITOR	AUDITOR	AUDITOR	ADMIN.	TOTAL
Total Days Available	261	261	212	212	239	261	261	64	1771
Less:
Annual Leave	20	25	20	20	35	26	20	5.5	171.5
Bank Holidays	10	10	10	10	10	10	10	5	75
Training	10	10	10	28	28	10	10	1	107
Management		50							50
Administration	12	15	12	12	12	12	12	30	117
Sickness	5	5	5	5	5	5	5	1	36
Total Indirect Time	57	115	57	75	90	63	57	42.5	556.5
Net Productive Time	204	146	155	137	149	198	204	21.5	1214.5
Productivity % excl A/L and B/H	88	65	85	75	77	88	88	40	80
Productivity %	78	56	73	65	62	76	78	34	69
Average WTEs	6.79
Average Productive Days WTE	178.99

	RISK RATING	FREQ. YEARS	2005/06 DAYS
ANNUAL AUDIT PLAN 2005/2006
COMPLIANCE AUDITS:
SCHOOLS
Primary Education
Arreton St George's CEP	C	1	0.5
Bembridge CEP	C	1	0.5
Binstead Primary	C	1	3
Brading CEP	C	1	3
Brighstone CEP	C	1	0.5
Carisbrooke CEP	C	1	0.5
St Thomas' CP	C	1	0.5
Chale CEP	C	1	0.5
Chillerton Primary	C	1	0.5
Cowes Primary	C	1	3
Love Lane Primary	C	1	3
East Cowes Grange Primary	C	1	0.5
Holy Cross CP	C	1	0.5
Freshwater All Saints CEP	C	1	0.5
Gatten & Lake Primary	C	1	0.5
Godshill Primary	C	1	3
Gurnard Primary	C	1	0.5
Hunnyhill Primary	C	1	0.5
Nettlestone Primary	C	1	0.5
Newchurch Primary	C	1	0.5
Barton Primary	C	1	0.5
Nine Acres Primary	C	1	0.5
Newport CEP	C	1	3
Niton Primary	C	1	0.5
Northwood Primary	C	1	0.5
Greenmount Primary	C	1	0.5
Haylands Primary	C	1	0.5
Oakfield CEP	C	1	3
St Mary's CP	C	1	0.5
Dover Park Primary	C	1	0.5
St Helens Primary	C	1	3
Sandown CEP	C	1	0.5
Broadlea Primary	C	1	0.5
St Johns CEP	C	1	0.5
Shalfleet CEP	C	1	0.5
Shanklin CEP	C	1	0.5
Totland Primary	C	1	0.5
St Saviours CP	C	1	3
St Wilfrids CP	C	1	0.5
St Boniface CEP	C	1	0.5
St Margarets CEP	C	1	0.5
Whippingham Primary	C	1	0.5
Wootton Primary	C	1	0.5
Wroxall Primary	C	1	3
Yarmouth CEP	C	1	0.5
Summerfields Primary	C	1	0.5
Middle Schools
Archbishop King CM	B	1	0.5
Bishop Lovett CEM	B	1	0.5
Downside Middle	B	1	0.5
Forelands Middle	B	1	3
Lake Middle	B	1	0.5
Mayfield CEM	B	1	0.5
Trinity CEM	B	1	0.5
Nodehill Middle	B	1	0.5
Osborne Middle	B	1	0.5
Kitbridge Middle	B	1	0.5
Sandham Middle	B	1	0.5
Solent Middle	B	1	0.5
Somerton Middle	B	1	0.5
Swanmore Middle	B	1	0.5
Ventnor Middle	B	1	0.5
West Wight Middle	B	1	0.5
High Schools
Carisbrooke High	B	1	1
Cowes High	B	1	1
Ryde High	B	1	1
Sandown High	B	1	1
Medina High	B	1	1
Special Schools
Medina House	C	1	0.5
St Georges	C	1	0.5
Education Other
Teachers Pay	A	2	3
PLASC	B	3	3
COMMUNITY SERVICES
Leisure Centres	C	4	5
Tourist Information Centres	B	3	3
Beaches and Esplanades	A	2	3
Museums	C	4	5
Pop Festival	A	1	3
Financial Services
Bankline	A	1	2
Highways
Public Transport Support	A	2	10
Coastal Protection
SCOPAC	D	1	1
Certification checks	B	1	1
Consumer Protection
Licensing	C	4	7
Property Services
Markets	C	4	3
Fire and Rescue
Retained Firefighters Pay	B	3	3
Adult Operations
Direct Services
Daycare Elderly/Other Services	C	4	3
Fieldwork
Pooled Budgets for Nursing Care	B	3	1
CSDP/Occupational Therapists	C	4	3
Central Services
ESF/SRB Grants	C	4	3
Contracts/SLAs including Meals on Wheels	C	4	6
CORPORATE SERVICES
Legal and Democratic Services
Members Allowances	C	4	3
TOTALS			134.5

FINANCIAL SYSTEMS	RISK	FREQ.	2005/6
	RATING	YEARS	DAYS
Main Systems
Main Accounting	C	1	20
Housing Benefit	A	1	60
Council Tax	B	1	20
NNDR	D	1	10
Creditors	B	1	30
Customer Accounts	C	1	10
Payroll	B	1	20
Pension Benefits/Contributions	C	1	20
Corporate Finance
Formula Spending Share (FSS)	A	2	20
Treasury Management	B	2	10
TOTAL			220

	RISK RATING	FREQ. YERAS	2005/06 DAYS
OPERATIONAL AUDITS
Children's Services
Overall Management Arrangements	A	2	20
Education
Behavioural Support	C	4	10
Financial Services	D	5	5
Children's Services
ISP/New Care Leavers Grant	B	3	10
Fostering and Adoption	B	3	10
Children’s Disability Team	B	3	10
Maintenance
Electrical Services	C	4	10
Design
Car Parks	D	5	10
Road Safety	D	5	10
Consumer Protection
Trading Standards	D	5	5
Planning
Development Control	B	3	5
Building Control	D	5	10
Countryside Services	C	4	10
Property Services
Energy	D	5	5
FIRE AND RESCUE SERVICE
Overall Management Arrangements	A	2	10
ADULT AND COMMUNITY SERVICES Mental Health
Management of Mental Health Services	B	3	10
Housing
Supporting People	B	1	10
Enforcement	D	5	5
CORPORATE SERVICES
Economic Development
Economic Development	B	3	10
Legal and Democratic Services
Legal Services - General	D	5	5
Local Land Charges	D	5	5
Business Services
Customer Service Centre/Post Room	D	5	5
CORPORATE ISSUES
Partnerships	A	1	10
Agenda 21/ISO 140000	B	1	10
Crime and Disorder	B	3	10
CORPORATE GOVERNANCE
Statement on Internal Control	A	1	20
Risk Management System	A	1	20
Performance Indicators	A	1	20
PSA Indicators	A	1	20
TOTAL			300

ANTI FRAUD AUDITS	RISK	2005/6
	RATING	DAYS
Reviewing Policies & Procedures
Gifts and Hospitality	C	1
Codes of Conduct	B	5
Fraud awareness training workshops	B	10
Pro-Active Fraud Detection Work
Claims Based Payments	A	20
TOTAL		36

	RISK	FREQ.	2005/6
	RATING	YEARS	DAYS
CONTRACTS AUDITS
ONGOING WORK
Final Accounts	A	1	18
Contracts Administration			10
Pre Tender Work	A	1	12
Contracts Advice	B	1	5
Current Contracts	A	1	12
Post Contract Reviews	A	1	5
Financial Evaluations	A	1	5
SPECIFIC PROJECTS
Service Contracts Monitoring	A	1	15
Use of Consultants	A	2	15
Social Services Contracting Processes	A	3	15
Leisure Contracting Processes	A	3	10
Highways Contracts	A	1	10
TOTAL			132

	RISK	FREQ.	2005/6
	RATING	YEARS	DAYS
ICT AUDIT PLAN
Determine the IT organisation and relationships	B	3	10
Manage the IT investment	A	2	10
Manage human resources	B	3	5
Ensure compliance with external requirements	A	1	10
Assess risk	A	1	5
Manage projects	B	2	10
Manage quality	A	1	5
Acquire and maintain application software	B	2	10
Acquire and maintain technology infrastructure	A	1	5
Develop and maintain procedures	B	2	10
Install and accredit systems	B	2	5
Manage changes	A+	1	5
Manage third party services	B	3	10
Ensure continuous service	A+	1	10
Ensure systems security	A+	1	10
Identify and allocate costs	B	2	10
Manage the configuration	A	1	5
Manage problems and incidents	A	1	5
Manage data	A+	1	5
Manage facilities	A	1	5
Manage operations	A+	1	5
TOTAL			155

PROJECT AUDITS	RISK	2005/06
	RATING	DAYS
Gags (DIP/CRM/BPR/Info Mgt/FOWG)	A	68
eGovernment (IEG,ePIPS,ePROCUREMENT,eForms etc	A	7
ACCISS Replacement	B	5
TOTAL		80

FOLLOW - UP AUDITS	2005/06
	DAYS
BVPIs	1
Youth & Community	1
Schools Inspectorate	1
Wight Leisure	1
Tourism	1
Environment Services OMA	1
Coastal Protection	1
Environmental Health	1
Property Services	1
Adult & Community OMA	1
Children’s Services	1
Homecare Services	1
Care Management & Needs Assessment	1
Safer Communities	1
Supporting People	1
Homelessness	1
Corporate Services OMA	1
Human Resource Management	1
Governance Framework	1
AV Unit	1
Development Control	1
Fostering	1
Section 17	1
Resource Centres	1
Mental Health Day Centres	1
Capital	1
Section 106 Agreements	1
TOTAL	27

Annual Plan 2005/2006	2005/06
	DAYS
SUMMARY SHEET
Compliance Audits	134.5
Financial Systems Audits	220
Operational Audits	300
Anti Fraud and Corruption Audits	36
Contracts Audits	132
ICT Audits	155
Project Audits	80
Follow-Up Audits	27
Contingency	130
TOTAL	1214.5