To receive a report from the Internal Audit Manager.

Matt Waller, Internal Audit Manager, Assurance Lincolnshire presented Members with the Internal Audit Progress report, pages 95 to 178 of the Agenda refer.  The report provided the Audit and Governance Committee with a written status report summarising internal audit activity as follows:

 

·         Purpose of the Report and the Performance Dashboard

·         Update on Internal Audit Activity and Analysis of ‘live’ audit reviews

·         Overdue medium/low priority actions

·         No assurance – Procurement Cards Review Final Report

·         Limited Assurance – Payroll Reconciliation Report

 

The Chairman informed Members that the report was being presented to the Committee in three sections and requested clarification on the definition of P-cards for the benefit of Members.  In response, the Internal Audit Manager explained to Members that P-Cards were purchase cards that were provided to staff members to be used to obtain items and services of small and varying amounts in value.

 

No assurance – Procurement Cards Review Final Report:

 

The Internal Audit Manager provided Members with background information on the issues that had been identified in relation to the procurement card process which had been raised by colleagues. This had led to an investigation in agreement with Managers who had been proactive to instigate the audit report, pages 117 to 150 of the Agenda refer.  It was further advised that an action plan had been produced and that measures had been implemented for non-compliance of use, monitoring of expenditure, ensuring that receipts and VAT receipts were correctly used, to ensure the central recording of records, in addition to manager approval and training for all members of staff. 

 

The Chairman invited the Section 151 Officer and the Assistant Directors from high spend service areas to comment.

 

·         James Gilbert, Assistant Director – Corporate thanked the Chairman for being invited to the Committee and reassured Members that the recent transition to an online system for recording receipts had created a more robust process for the use and management of P-Cards.  The Assistant Director – Corporate further advised that a management response had been felt necessary and that all staff that were issued with cards had undertaken training which had raised awareness and greater understanding of compliance.  Members were further assured that deadlines for the audit action plan had been completed and that the first month of using the new system was providing a good indication that the process for procurement cards had been significantly strengthened.    

 

·         The Chairman referenced there was 52 P-Cards in use for ELDC and queried if the Council had 52 members of staff that were fully trained, page 120 of the Agenda refers.  In response, the Assistant Director – Corporate reassured Members that a robust system was now in place and confirmed that 52 members of staff were fully trained and that Managers who reviewed and authorised expenditure had also undertaken training.

 

·         Emily Spicer, Assistant Director – Wellbeing and Community Leadership advised Members that P-Cards played an important role in her team which currently held 18 cards and that uses of the cards included managing homelessness and securing last minute accommodation.  The Assistant Director – Wellbeing and Community Leadership provided further assurance that all her team which included herself had undertaken training and that the new app was enabling receipts to be uploaded quickly and effectively.

 

·         Christian Allen, Assistant Director – Regulatory confirmed to Members that his team currently held 9 P-Cards and that he was satisfied that improved control measures had been implemented including the use of the online system to process receipts and authorise transactions.

 

·         Victoria Burgess, Assistant Director – Neighbourhoods informed Members that she was responsible for authorising transactions for one person in her team who was a P-Card user and assured Members that the new IT system was a significant improvement which was proving easier to use and less time consuming.

 

·         Andy Fisher, Assistant Director – General Fund Assets informed Members that from a management perspective the new online system and app was robust and had significantly improved the process.

 

·         John Medler, Assistant Director – Governance informed Members that his team held 5 P-Cards and confirmed that processes had been implemented and all staff including himself had received training.

 

Members were invited to put their comments and questions forward.

 

·         A Member voiced concern with how the P-Card issue had been identified and queried whether there were other processes where similar risks had not been identified.  In response, the Section 151 Officer explained to Members that processes had loosened during COVID when different approaches had been necessary and triggering the audit to reassess the processes in place had been the correct way forward as the new system was robust and had significantly improved administration.

 

·         A Member queried if the new online system communicated seamlessly with other Council systems.  In response, the Section 151 Officer informed Members that the new system was fully integrated and there had been no issues. 

 

·         A Member further queried whether issues existed transitioning to the new system.  In response, the Section 151 Officer explained to Members that the previous system which was audited had been entirely manual operated whereas the new system was fully electronic and automated with notifications being promptly sent to Managers.

 

·         A Member queried the duration that P-Cards had been in use within the Council.  In response, the Assistant Director – Corporate recalled they had been used by the Council since 2007.

 

·         In relation to VAT, a Member queried if there was a value to how much could be reclaimed.  In response, the Section 151 advised Members that the Council had backtracked to establish what amounts could be reclaimed.  It was further advised that the previous manual system did not have the same level of accuracy as the new system which would ensure the processes for maintaining records were as robust as possible.

 

·         A Member requested clarification whether there was a timeline for re-reviewing the processes.  In response, the Internal Audit Manager advised Members that when a no or limited assurance report was presented to the Committee, a follow up audit would automatically occur six to twelve months following the audit review and a report would be brought back to the Committee to show where any improvements had been made.

 

·         In reference to the statement that "At present there is no regular independent monitoring of P-Card expenditure” a Member queried if the Internal Audit Manager was responsible for independently monitoring progress of this report, page 123 of the Agenda refers.  In response, the Internal Audit Manager confirmed he was not responsible for monitoring P-Card expenditure.

 

The Section 151 Officer advised Members that independent monitoring was the responsibility of PSPS as part of the sampling process and that the sampling process that was previously in place had not been working effectively.  It was further advised that the issues had centred on the implementation of the manual policy and processes and that automation of the process would now improve the effectiveness.  The Section 151 Officer confirmed that PSPS were considered independent.

 

·         The Chairman sought clarification whether the P-Card monitoring team sat within PSPS rather than within the Council.  In response, the Section 151 Officer advised this was correct.

 

·         The Chairman commented on the need for teams to have capacity to undertake training and the importance of transparency from managers on whether there were capacity issues within individual teams.  In response, the Assistant Director – Corporate gave recognition to the increased level of work that was being undertaken across the Partnership and advised that a culture was being encouraged for more openness about capacity within services.  In reference to the Card’s,  the Assistant Director – Corporate explained that the new process was intended to be less of a burden and less time consuming and reassured Members that wider capacity conversations were taking place across the Partnership linked to various programmes of work.

 

·         A Member queried how often managers submitted reports on P-Cards.  In response, the Assistant Director – Corporate provided an example of purchasing train tickets and confirmed that receipts were being uploaded to the app on an as you go basis and manager authorisation was occurring once a month.  The Section 151 Officer further advised Members that the new system provided prompt e-mail notification to managers if a receipt has not been attached.

 

·         A Member further queried the process for online purchases.  In response, the Section 151 Officer advised that a PDF invoice where available was attached and uploaded as proof of purchase.

 

The Chairman thanked all the Assistant Directors for their attendance. 

 

N.B. Assistant Directors - Corporate, Wellbeing and Community Leadership, Regulatory and Neighbourhoods left the Meeting at 11.33am.

 

Limited Assurance – Payroll Reconciliation Report:

 

The Internal Audit Manager provided a brief introduction, pages 151 to 176 of the Agenda refer. 

 

Members were invited to put their comments and questions forward.

 

·         A Member queried if the audit plan recommendations for Invest East Lindsey had been completed.  In response, the Internal Audit Manager advised that no outstanding actions remained on the tracker and that all the recommendations were monitored.  Any work that was not completed would be presented to the Committee in a progress report.

 

·         Referring to the Executive Summary which showed that 6 out of 9 recommendations had not been implemented, the Chairman sought clarification on what was expected to occur, pages 156 and 157 of the Agenda refer.  In response, Samantha Knowles - Chief Finance Officer (PSPS) advised Members that the payroll control account reconciliations had been signed off to the end of January 2024 and the February 2024 reconciliations had been completed pending approval.  Members were assured that progress had been made since the follow up audit and PSPS were committed to ensuring that the recommendations and the action plan was implemented.

 

The Chief Finance Officer (PSPS) provided further assurance that performance clinics were being implemented to ensure that all reconciliations were monitored on a frequent basis and that further management controls had been put in place as a prevention measure.

 

·         Referring to the statement that the delay in preparing reconciliations was attributed to staff capacity, a Member commented that staff capacity was continuing to be an issue, page 157 of the Agenda refers. 

 

·         A Member queried the mechanics of payroll reconciliation.  In response, the Chief Finance Officer (PSPS) advised Members that the payroll was processed through a separate system called Ciphr and the pay data needed to be integrated into the general ledger in a separate system called Unit 4 which meant that a reconciliation between the two systems was always occurring.  

 

·         A Member sought clarification whether there was a future solution to integrating the two systems which would save time.  In response, the Chief Finance Officer (PSPS) advised that solutions were being explored whether a payroll system that was aligned to the finance system would be beneficial as part of PSPS’s transformation plan.

 

The Chairman thanked the Chief Finance Officer (PSPS) for attending.

 

No further comments or questions were received.

 

Following which it was,

 

RESOLVED:

 

That the Internal Audit Progress Report be noted.