The Committee considered the report of the Head of Internal Audit Partnership setting out details of the work of the Internal Audit Section over the financial year 2009/10 and the opinion of the Head of Internal Audit Partnership on the overall adequacy and effectiveness of the Council’s control environment, in the context of the Annual Governance Statement.

It was noted that:

·  The statutory Code of Practice for Internal Audit in Local Government in the United Kingdom required the Head of Internal Audit to provide a written report to those charged with governance, timed to support the Annual Governance Statement.

·  The Accounts and Audit (Amendment) Regulations 2006 also required that “the relevant body shall at least once in each year, conduct a review of the effectiveness of its system of internal audit”.  In previous years a separate report had been prepared containing the ‘review of effectiveness’.  However, in the context of last year’s Triennial Review of Internal Audit by the Audit Commission, which confirmed the effectiveness of Internal Audit at that time, and the transition to the new four-way Internal Audit Partnership, it was considered that a separate report was not appropriate.

·  It was the opinion of the Head of Internal Audit Partnership that substantial reliance could be placed on the Council’s control environment in terms of the overall adequacy and effectiveness of the controls and processes that were in place to achieve the objectives of the Council.  There were no qualifications to that opinion.

·  The opinion on the control environment was principally formed through the results of Internal Audit work during the financial year but other factors had also been considered such as the results of external audit work during the year (including the Use of Resources assessment) and any concerns expressed by the External Auditor; the effectiveness of the Council’s risk management arrangements; significant control breakdowns during the financial year, whether they were found by Internal Audit or not; the results of any other form of external inspection or assessment; and the effectiveness of senior management in resolving control weaknesses.

·  Thirty two audit projects were completed between April 2009 and March 2010.  The work of the Internal Audit Section had established that for the majority of the areas examined, substantial controls were in place. Where weaknesses had been identified they were reported to the appropriate Head of Service who then had the responsibility for taking the necessary action in order to rectify those weaknesses.

The Committee asked a number of questions of the Officers relating to, inter alia, the risks associated with changes to the Council’s management structure especially in terms of minor areas of activity and given the current economic climate; the implications of the implementation of the Mid-Kent Improvement Partnership; the surveys carried out to assess satisfaction with the audit service; and the management response to various audit findings.

RESOLVED:  That having considered the replies to its questions, the Committee:-

1.  Notes the Head of Internal Audit Partnership’s opinion that substantial reliance can be placed on the Council’s control environment in terms of the overall adequacy and effectiveness of the controls and processes which are in place to achieve the objectives of the Council;

2.  Notes that there are no qualifications to that opinion;

3.  Notes that the results of the work of the Internal Audit Section as shown in the Appendices to the report of the Head of Internal Audit Partnership and as previously reported to the Committee on 30 November 2009, are the prime evidence source for the opinion set out in paragraph 1 above;

4.  Agrees that the outcomes of the Internal Audit work and the other matters referred to in the report of the Head of Internal Audit Partnership provide evidence of a substantial level of internal control within the Council, which supports the findings and conclusions shown in the Annual Governance Statement for 2009/10;

5.  Notes the improvements in control that occur as a result of the audit process; and

6.  Agrees that, on the basis of the work and process set out in the report, and the outcome of the Audit Commission Triennial Review of Internal Audit in 2009, it is satisfied that the Council’s system of internal audit is effective.