To receive a report from the Internal Audit Manager, Internal Audit Lincolnshire County Council.

Matthew Waller, Internal Audit Manager – Internal Audit Lincolnshire County Council presented Members with the Internal Audit Progress Report January 2025, pages 109 to 130 of the Agenda refers.

In accordance with the proper internal audit practices (Public Sector Internal Audit Standards), and the Internal Audit Charter, the purpose of the report was to provide Members with:

· the status of live internal audit reports.

· an update on progress against the internal audit plan.

· a summary of internal audit performance, planning and resourcing issues;

· a summary of significant issues that impact of the Head of Internal Audits annual opinion.

Members were invited to put their comments and questions forward.

• A Member requested assurance that the recommendations for improvement for bank reconciliation and insurance were being enacted, pages 117 to 119 of the Agenda refer.  In response, the Internal Audit Manager explained to Members that all findings and dates were tracked and that the Committee would only see reports for actions that were overdue.

·       In reference to the Insurance Audit Review, a Member queried the frequency of asset valuations and whether the Council had an asset evaluation policy for insurance purposes, page 119 of the Agenda refers.

In response, the Deputy Chief Finance Officer, PSPS Limited explained to Members that different categories of assets were valued on different bases and that assets were valued on an annual basis for accounting purposes and less frequently for insurance.  Members were provided with an example that play equipment was not revalued and was held at depreciating cost until the end of its useful life.

The Chairman advised Members that further clarification would be requested on insurance valuation practices.

·       A Member requested further clarification whether the definition of asset registers plural indicated that the Council held multiple registers, page 119 of the Agenda refers.  In response, the Internal Audit Manager advised Members that the definition referred to the asset registers of the three Partnership Councils.

·       A Member requested assurance that the manual procedure in place for bank reconciliations could be undertaken by accounting software to minimise the opportunities for fraud.  In response the Chief Finance Officer, PSPS Limited advised Members that management had been quick to implement daily monitoring procedures to ensure that the historic backlog of bank reconciliations that were not being completed in a timely manner was addressed.  Members were further advised that the audit actions had been drafted and were due to be completed by the target audit implementation date of the end of January 2025.

·       A Member further queried the reasons that the process for bank reconciliations was undertaken manually.  In response, the Chief Finance Officer, PSPS Limited advised Members that two of three of ELDC’s bank accounts still required manual bank reconciliation due to utilisation of different software and that ways to automate the process was being examined.

·       A Member queried the process for approval of bank reconciliations.  In response, the Chief Finance Officer, PSPS Limited advised Members that an officer performed the day-to-day matching of transactions which was then reviewed by a manager and was then referred to another manager who provided final sign off of each review.

·       A Member queried the type of software solution that was being considered and timescale for implementation.  In response, the Chief Finance Officer, PSPS Limited advised Members that capacity was the main reason for maintaining a manual process and that the finance system was currently in a migration process to the cloud before work could be undertaken on adding the two remaining accounts.   

·       The Chairman queried whether underinsurance was a risk and what the budget implications were.  In response, the Section 151 Officer advised Members that the updated figures had been received and that increased costs were expected following the Council’s insurance procurement exercise.  Members were further advised that the aim was to work with insurers to help reduce the number of claims made by the Council to reduce premiums.

·       The Chairman queried whether a report on the recommendations on limited insurance items would be forthcoming. In response, the Internal Audit Manager advised Members that a full follow-up audit would return to the Committee on limited assurance items. 

The Chairman thanked the Internal Audit Manager for his report.

Following which it was,

RESOLVED:

That the Internal Audit Progress Report – January 2025 be noted.