Agenda item

To consider a report by the Head of Internal Audit (copy enclosed) updating members on Internal Audit progress.

The Chief Internal Auditor (CIA) introduced the report (previously circulated) updating members on the Internal Audit Team’s progress in terms of its service delivery, assurance provision, reviews completed, performance and effectiveness in driving improvement.

The report provided information on work carried out by Internal Audit since the last committee meeting. It allowed the committee to monitor Internal Audit’s performance and progress as well as providing summaries of Internal Audit reports.

Confirmation that 5 Audits and 3 follow up reviews had been completed since the last committee meeting. It was highlighted that 1 of the 5 completed audits had received a low assurance the audit report had been attached as appendix 2 to the report. Of the 3 follow up reviews completed, 2 had been awarded a medium assurance and details had been included in the Internal Audit Update report. One follow up report was given a low assurance rating, details of that review where included as agenda item 10 on Contract Management.

Confirmation that the Senior Auditor position had been filled through a secondment of an existing member of the team, which in turned created an Auditor vacancy. Members heard the secondment of the Senior Auditor to Trace, Test and Protect (TTP) had been further extended to June 2022.

Members were reminded details of each of the audits had been included as appendix 1 to the report. A brief background of each audit was presented to the committee. The audit conducted on Denbighshire Leisure Limited – Governance & Contract Management was a high level review of the governance arrangements and the management of key risks following the transition. The overall assurance was that the governance arrangements in place with Denbighshire Leisure Limited were robust. Further details of the audit were detailed in the report. The CIA guided members through the detailed report.

Appendix 2 provided members with the Internal Audit of Exceptions, Exemptions and Variations from the Contract Procedure Rules (CPR). The purpose of the review had been to provide assurance that contract exceptions, exemptions, and variations were authorised and used appropriately in line with Contract Procedure Rules. The CIA introduced the Senior Auditor who conducted the audit. The Senior Auditor (SA) provided further details of the audit. The Legal and Procurement team had actively encouraged the audit. The audit sought to assess any effect the pandemic may have had on the use and prevalence of exception and extension requests. Confirmation that a sample of decisions from the previous 2 financial periods. The contract procedure rules were detailed with the provisions for granting exceptions and exemptions and variations were clear and concise. It was felt the pandemic did not increase the volume of directly awarded contracts or extensions.

There were four issues raised during the audit, details of each had been included in the report.  

During the discussion –

·         Exceptions were contracts that had been awarded without going through the tendering process.

·         Teckal exemption was a name of a case that established the principal that it was possible for a public sector organisation to enter into a contract with an entity that it controlled provided that there was no private sector involvement in that entity, the public body was able to demonstrate that it retained the same level of control over the said entity as it would of one of its own service departments and at least 80% of the turnover of that entity was related to work or services being performed for that public body.

·         Members were reminded that the authority held a joint procurement service with Flintshire County Council (FCC). The SA confirmed she had obtained information on the number of contracts that had been awarded directly in the financial years 2019/20 and 2020/21. The numbers of directly awarded contracts did not change in the two periods and were broadly equivalent to the number of directly awarded contracts by FCC. It was stated there was very set and narrow criteria in place for when awarding direct contracts. The issue identified was the understanding of services to obtain Head of service approval had not always been evidenced.

·         Out of the samples reviewed the four contracts awarded under the extreme emergency criteria, there was no evidence to suggest those were not extreme emergency conditions.

·         Proactis was not being used as intended and as required by the Contract Procedure rules.

·         A board was in place attended by Councillor Julian Thompson-Hill that monitors the joint service and performance of both authorities. It was noted that both authorities operated slightly differently under the joint service.

·         The escalation process for a low assurance audit report to be discussed with the relevant Lead Member and senior management. The audit review had been received by CET and was due to go to SLT in the new year.

·         The CIA suggested the results of the Contract Exceptions, Exemptions and Variations audit should be considered alongside the audit of Contract Management which had also received a low assurance report.

The Monitoring officer referred members to the action plan contained within the report. A number of actions had been agreed for each of the four issues raised with a deadline for each action to be completed. It was agreed at CET that a regular report would be presented to demonstrate compliance with CPR’s.

Members suggested a form or checklist to be completed when procuring contracts. The Legal Service Manager informed members that on the proactis system officers could not move on to the next stage of procurement without completing the section before thus acting as a checklist.

Confirmation that the audit on Denbighshire Leisure Limited that was part of the Internal Audit was from a Denbighshire perspective. The authority does provide an internal audit service to DLL as part of the contract. Confirmation that DLL would pay for any internal audits completed by Internal Audit if they request it.

Officers noted the concerns of members and it was agreed that a further update to the committee would be provided.

Members asked if a report on the proactis system could be presented to the committee. The Monitoring Officer stated that when new staff were in post they should be trained fully on any processes the job would entail. The use of Proactis in general needed to reviewed. Confirmation that a proactis comprised of a number of modules to procurement and those modules worked well. The Legal Service Manager confirmed an update report on proactis use in procurement could be included on the committees forward work programme.

RESOLVED that, members note the Internal Audit’s progress and performance. Members requested that a follow up report be provided to committee at the July committee meeting following the internal audit follow up review. It was also agreed a service report on the use of proactis be included on the forward work programme.