Agenda item

The Committee received a report from the Chief Internal Auditor on the Mid Year Progress Report.  The report was submitted to Audit Committee as a routine planned report within the work programme of the Committee. In addition, the report had set out Internal Audit performance and progress with regards to the 2012 / 2013 Audit Plan.

The purpose of the report was to inform Members of the Audit Committee on Internal Audit activities and performance progress against the Annual Audit 2012 / 2013 as at 30 September 2012.

The following key points within the report included:

• Assurance Opinion;
• Status of the higher risk assessed activities;
• Status of the specific management requests;
• Operational Plan that was agreed by the Audit Committee on 26 March 2012 i.e. the Audit Plan;
• Carry forward activities for 2011 / 2012;
• Reserve list of audits progress; and
• Other internal performance monitoring such as days sickness per person and post audit customer satisfaction questionnaires.

Comments and responses to questions were as follows:

• Members praised the work conducted by the Audit team and commented on the high standard shown in the production of the report provided;

• In clarification sought by Members over the case of a Peterborough City Council (PCC) ex-employee that had accessed information regarding a procurement exercise, the Group Auditor advised that there were adequate procedures in place for PCC’s removal of the ex-employees access, however, there was a one off compromise of the web based procurement system.  Members were also advised that further analysis was  underway to revise Council procedures in relation to  web based systems access;
• In clarification sought by Members over the data compromised, the Group Auditor confirmed that the information was in relation to a tender exercise and was archived data rather than “live” data.  Members were also advised that the procurement system accessed had a very good in-built auditing system, where it was possible to review the types of information that had been accessed;
• In clarification sought by Members over the breach of access to procurement data, the Group Auditor advised that the ex-employee had received a formal caution by the Police; 
• In clarification sought by Members over the company identified as being in receipt of compromised tender information in relation to a contract, the Group Auditor confirmed that the company had withdrawn from the bidding process; 
• Members commented that the company in receipt of the compromised tender information should not be included in any further tender exercises for PCC. The Cabinet Member for Resources advised Members of the Audit Committee that  it was clear throughout the investigation, that the company in receipt of the compromised tender information was unaware how the information had been obtained and that they had relied on a consultant to produce the bidding documentation;
• Members commented that companies invited to tender by PCC, should be under an obligation to implement procedures in order to provide assurances that the information they were receiving was from a legitimate source;
• The Group Auditor further advised that the ex-employee that had accessed the tender information had admitted to the Police that the company was unaware how the information had been obtained;
• In response to a question raised by Members regarding introduction of a system where companies were required to prove that their information had been provided by a legitimate source, the Cabinet Member for Resources advised that such a system would be difficult for companies to administer; 
• In clarification sought over the costs for the hire of a single supplier for the City Water Festival, the Chief Internal Auditor advised that the actual cost was £15k, excluding VAT; which had been made up of two payments of £7,500;
• Members were informed by the Chief Internal Auditor that the total costs for the City Water Festival had reached £25k, which had included VAT and other sundry costs such as barriers, security, provision of toilets, general advertisement and posters;
• Members sought clarification over the discrepancies that had been highlighted within the report which related to direct payments and whether the issues had been resolved.  The Group Auditor confirmed that a follow up report was underway and that an update on the various actions in place, would be presented to a future meeting of Audit Committee;
• In response to a question by Members on how the number of issues highlighted within the report and the level of high priority for each issue had been identified, the Chief Internal Auditor advised that management teams and their risk registers were often consulted in order to identify high risks and to develop a robust audit plan;
• Members were also informed by the Chief Internal Auditor that there were areas within PCC that the Audit team would receive information for, which would  build a flavour for what issues the Council may be experiencing;  and
• The Cabinet Member for Resources highlighted that repeat audits should be conducted on PCC travel and subsistence in order to ensure that the correct procedures were being followed. 

AGREED ACTION:

The Committee

Received the Internal Audit Update Report to 30 September 2012 and noted in particular:

1. Progress made against the plan and the overall performance of the section.

The Committee Further Agreed:

I

• That the Group Auditor would provide Members of the Audit Committee with the appropriate details surrounding who had put together the tender information for the company identified as being provided with an unfair advantage over a tender bidding exercise following an ex-employees access to procurement systems;
• Provide the audit report to Members of the Audit Committee, which had detailed the investigation into the City Water Festival payment allegations; and
• The Group Auditor would provide Members with details of the critical action identified for Direct Payments.