Agenda item

Report of the Director of Finance.

The Committee received a report of the Director of Finance, which set out the Internal Audit and Corporate Anti-Fraud Plans for 2019/20 for review and approval.

The Head of Internal Audit and Corporate Anti-Fraud introduced the report and explained, the purpose of the Internal Audit Plan and the Corporate Anti-Fraud Plan, as set out in the report, and invited comments and questions from Members.  She added that senior management across the Council had been consulted on the Plans and that it had been approved by the Corporate Strategic Board (CSB). 

The Head of Internal Audit and Corporate Anti-Fraud responded to questions as follows:

-               flexibility was retained, which allowed Internal Audit to react to unexpected events and emerging risks;

-               risk ratings were assigned to reviews included in the Plan and internal audit had undertaken risk assessments to rate risks that were not included in the Corporate Risk Register;

-               the Plans focused on high risk areas and the risk assessments followed a standard methodology and included, for example, the value of the budget, issues raised by managers and reputation risks and a numerical value was given that was translated into high, medium or low risk rating;

-               in relation to fraud investigations, trigger points were assigned which required engagement with external agencies and partners, such as the police.  A judgement was made following evidence gathering on which agencies to involve and as the investigation team followed the PACE rules, there were no problems with handing investigations over;  

-               London boroughs had been asked to join the London Counter Fraud Hub, which had been piloted by four boroughs.  The Hub initiative had not moved forward as it was felt that the Council had sound processes already in place for mitigating fraud risks in the areas covered by the initiative.  The Council had expressed concerns about entering into a contract with no break clauses and the robustness of data used to produce estimated savings.  To date, no London borough had joined;

-               the security of the IT system related to high risks such as risk to loss of data;

-               it was difficult to assess if more corporate anti-fraud staff would result in the uncovering of more fraud although it was considered likely given the current size of the team which was small;

-               in relation to the performance indicator for recovery of 10 social housing units subject to fraud and misuse, the figure of 10 was an average and it was intended to achieve a 100% target.  Outturn of achievements made and performance indicators achieved would be included in the year end report;

-               IR35 (tax legislation designed to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company) and whether it was being correctly applied had been included due to the working experiences of the Chief Executive in other organisations where it had been an issue.  It was important to minimise HMRC (Her Majesty's Revenue and Customs) penalties;

-               it was up to individual contract managers to ensure that social value was being delivered but it was intended to look at the processes in place to ensure that they were robust.  She noted the concerns expressed by a Member that this exercise would entail  20 audit days and undertook to review this estimate. The Chair stated that it was important that social value was enforced.

RESOLVED:  That the Internal Audit and Corporate Anti-Fraud Plans 2019/20 and the Internal Audit Charter be approved in accordance with the Public Sector Internal Audit Standard 2020 Communication and Approval.