To receive a report from the Audit Manager, Assurance Lincolnshire.

The Audit Manager, Assurance Lincolnshire, presented to Members the Internal Audit Progress Report Quarter 2 which covered the period August 2022 to December 2022, pages 23 to 56 of the agenda refer.

The purpose of the report was to provide Members with details of the audit work completed during the period, to advise on progress with the 2022/23 plan and to raise any other matters that may be relevant to the Audit Committee role.

It was noted that in this period 9 reviews had been completed with 3 high assurance, 3 substantial assurance, 2 limited assurance, 0 low assurance and 1 consultancy, full details were contained within Appendix 4, pages 52 to 54 of the Agenda refer.  Full details on the audits with Limited Assurance were detailed at pages 39 to 45 on the Agenda.

In terms of work in progress the following update was provided: -

Members noted that the report highlighted that 37% of the revised Audit Plan had been completed.  Since the data was recorded on 31 December 2022, the actual work completed was 55% and it was confirmed that all remaining work had been scheduled and was in progress.

Members were further referred to Appendix 3, which detailed the summary of outstanding agreed actions for all audits at 30 November 2022, pages 47 to 51.

Members noted that there were currently 8 actions which were overdue, 2 of which were rated as high.

Members were further advised that one change had been recorded on the Internal Audit Plan 2022/23 ‘ELDC Fraud Risk Register’ so that this was updated to ensure it reflected current issues and national trends.

The Internal Audit Manager was pleased to report that other significant work had been undertaken on combined assurance.  The assurance mapping meetings had now been completed and the results were currently being collated and used to populate the draft report for management to complete.  It was anticipated that this would be completed in March 2023.

In relation to a Member’s query on the delays experienced in obtaining information to progress audits the Internal Audit Manager confirmed that remote working had caused a slight delay but assured Members that all work was contained within the work programme.

Members were invited to put their comments and questions forward.

In relation to the low assurance on Section 106 Agreements, the following comments were received:

·       A Member commented that he was disappointed to see the low assurance awarded and considered that S106s should be linked to the enforcement and non-enforcement of planning conditions.

·       A Member commented that a lack of effective controls for S106s had let down communities, particularly those that had major developments and had not received any S106 monies back into the community.  It was queried why this had not been picked up by the Portfolio Holder and considered that a quarterly report should be presented to Planning Committee.

·       A Member highlighted that there were too many conditions being removed from planning conditions to the benefit of the developer.

·       In relation to the SELCP - Flood Management – High Assurance awarded a Member, and the Chairman of the Caravan Scrutiny Panel raised concerns of inaccurate data of how many people actually lived in caravans year-round and queried how robust the protocols were.  The Internal Audit Manager responded that the audit looked at certain risks and advised that further work could be undertaken in this area to look at climate change and flood management.

In relation to the low assurance on Key Controls – Accounts Receivable – December 2022, the following comments were received:

·       A Member queried what the Council issued credit notes for, particularly in relation to the £500k referred of the £997k credit notes raised between April and July 2022 relating to the management of a complex debt restructure agreement between ELDC and a customer.

·       A Member referred to the credit note raised for £195k for the incorrect amount – this resulted in the customer debt being reduced by an additional £32k at the expense of the Council, page 44 of the Agenda refers and asked where this would have been identified in the process if this had not been reported to A & G Committee.  In response, the Section 151 Officer assured Members that in terms of the process of credit notes, as a result of this an enhanced review of all credit note processes had been undertaken and regular meetings between budget holders and credit collection had been put in place so that they also managed any debts outstanding and made sure the corrections were valid and collected in accordance with agreements that may be in place. 

Members were further advised that enhanced processes around budgetary management were also being looked at.  The Assistant Director, Finance added that this had been brought to their attention before the report was published and Members were advised that further information could be provided on this outside of the meeting to avoid identifying the business concerned if required, to which Members asked that this be provided.

·       A Member queried why Subscription (Recurring) Invoices were issued (in relation to an invoice valued in excess of £100k), page 44 of the Agenda refers.  The Assistant Director, Finance advised that she would respond to this after the meeting.

·       In relation to Debt Recovery a Member queried why recovery action was not always undertaken on a timely basis - the example reported was in relation to a debt that had been with service areas between 4 to 8 months for a debt recovery decision.  The Section 151 Officer confirmed that this was the point of the process that had been put in place, to ensure managers were regularly working on recovery of debts.

·       A Member considered that there may be an issue of how the Council dealt with businesses equitably with regards to recovering debts otherwise there could be a legal challenge on how the Council operated and that there should be a policy on how debts were recovered and hoped that the revision of processes allowed this.  The Section 151 Officer confirmed that they were looking at an equal process on recovery and that the large amount reported was a unique case.

·       In relation to PSPS Finance, a Member highlighted that within the report it referred to complications arising as a result of the interactions with other services to obtain required data.  It was queried whether this was a widespread problem and whether it was possible for this to be looked at.  The Section 151 Officer confirmed that conversations were ongoing and resources were being discussed.

Following which it was,

RESOLVED:

That the Internal Audit Progress Report be noted.

On behalf of the Committee, the Chairman expressed his best wishes to Lucy Pledge, Head of Internal Audit for her retirement from Assurance Lincolnshire and wished her the very best for the future.