The Audit Manager led Members through the internal audit report to 30 June 2022 that gave details of audit matters and any emerging issues, not only in relation to audit but risk management and corporate governance. 

Two audit reports were issued in the quarter and an overview of the findings arising from each was given in the Executive Summaries in Appendix A to the report.  Both audits only provided limited assurance on the overall governance arrangements and the reasons for this were outlined in the report.

Appendix B to the report updated Members on progress made on implementing the audit recommendations reported at the previous meetings.  Only two long outstanding recommendations remained and whilst progress continued to be made to resolve the Procurement recommendation, no further progress had been reported during the quarter on ICT Governance.

Good progress continued to be made on the 2021/22 recommendations, with over three quarters of the issues raised resolved, including one high risk recommendation made in quarter 4.

The Audit Manager had previously reported that the Public Sector Internal Audit Standards required all Internal Audit service providers to undergo an external quality assessment every five years. The Rother District Council (RDC) Internal Audit team’s last external assessment was completed in April 2017, so another review was now due.  The Audit Manager had been in contact with audit colleagues from Hastings, Lewes & Eastbourne and Wealden councils to discuss the possibility of conducting reciprocal peer reviews, similar to those carried out in 2017/18 and all had agreed to participate in such an arrangement.  Each council would be reviewed by a team of two, with one auditor acting as the principal (or lead) reviewer and the other assisting in a supporting role only, to reduce the potential for conflicts of interest due to one of the team also being assessed by a council that they themselves had reviewed.

The RDC Internal Audit team was due to be reviewed first, and this assessment would be undertaken by the Chief Internal Auditors at Lewes & Eastbourne and Hastings during the week commencing 23 January 2023.  The Audit Manager hoped to be able to report the results of the completed review at the Committee’s meeting in March 2023.

Members were given the opportunity to ask questions and the following points were noted during the discussions:

•           the Capital Programme Audit had been at the request of the Chief Finance Officer (CFO) due to issues around monitoring. Major steps had already been taken in order to address issues;

•           the Procurement Audit highlighted the need for greater awareness of compliance with the procedure rules, and training for staff and Members was currently being discussed with the East Sussex Procurement Hub;

•           a culture shift was required in respect of issues identified in both audits.  The Corporate Management Team (CMT) were now more involved than in the past, which would help to ensure issues were fully addressed;

•           Members raised concerns that the reciprocal arrangement for an external review of the Internal Audit department with other local authorities might not be completely independent;

•           the Capital Programme was monitored and reported quarterly to the Overview and Scrutiny Committee (OSC) and Cabinet; management responses to issues raised in the Audit would be included. The CFO also added that the major capital programme projects, such as purchases made under the Property Investment Strategy (PIS) and Temporary Accommodation purchase programme, were already subject to rigorous appraisal and in the case of the PIS, proposed acquisitions required the approval of the Property Investment Panel;

•           the CFO was already reporting progress on the Capital Programme to the Senior Leadership Team (SLT) on a monthly basis and affordability was now being looked at within the Medium Term Financial Plan, being reported to the OSC and Cabinet; and

•           Members requested that an update and the management responses to issues raised in the Audits be reported back to the Committee and this would be added to the Work Programme.

RESOLVED: That:

1)         the Internal Audit report to 30 June 2022 be noted; and

2)         an update and the management responses to issues raised in the Audits be reported back to the Committee and added to the Work Programme.