Technical Notes 2024, Issue 107 - Annual Audit Report 2023/24

1. 1. The purpose of this Technical Note is to provide Members with the Annual Internal Audit Report for 2023/2024. In support of this, an update on internal audit work completed in the period since the last Committee and outstanding audit actions is also provided.
2. 2. Under normal circumstances these Reports would be provided to the Council’s Audit & Risk Management Committee.  These were planned to be considered at the meeting on the 13 June however, due to the General Election and the standing down of the Committee cycle, this was not possible. 
3. 3. It is the intention of Officers to bring these Reports back to an appropriate Council or Committee Meeting at the earliest opportunity.  However, to expedite the preparation of the Council’s Draft Financial Statements and Accounts for 2023/24 including these being released to External Auditors it is helpful to release these via Technical Note now pending their full consideration at the next available juncture.
4. 4. The Local Authority Accounts (Scotland) Regulations 2014 require that the Council carries out an annual review of the effectiveness of its system of internal control and that this be considered at a Council meeting or Committee whose remit includes audit or governance functions.  In addition, and following consideration of the findings of the review, the Committee (or Council) must approve an Annual Governance Statement, prepared in accordance with proper practices and in relation to internal control.
5. 5. In order to discharge the initial requirement of the Regulations, this Technical Note provides Members with the annual review of the adequacy and effectiveness of the system of internal control pending its full consideration.  This statement is included as Appendix 1.1 to the Annual Internal Audit Report for the Financial Year 2023/2024, which is attached to this Technical Note. 
6. 6. The second requirement of the Regulations, being the consideration of the Annual Governance Statement, will be met when the accounts, including the governance statement, are considered at a later date.  These steps, taken together, ensure that the Council will comply with the requirements of the Regulations.
7. 7. The Internal Audit team provides an independent and objective assurance function that is guided by an overriding objective of adding value to improve the operations of the Council.  The team assists the Council by providing a systematic and disciplined approach to the evaluation of the Council’s internal controls, governance processes and risk management, in accordance with the Public Sector Internal Audit Standards.

Annual Audit Report

1. 8. The presence of an effective internal audit team contributes towards, but is not a substitute for, effective control.  It is primarily the responsibility of line management to establish internal control so that the Council’s activities are conducted in an efficient and well-ordered manner, to ensure that management policies and directives are adhered to and that assets and records are safeguarded.
2. 9. Internal Audit activity is planned to enable an independent annual opinion to be given by the Audit & Risk Manager as the Council’s Chief Internal Auditor on the adequacy and effectiveness of internal controls governance and risk management systems within the Council.  For 2023/2024, this opinion is included in the Annual Audit Report at Appendix 1.1, which also includes the ‘Statement on the Adequacy and Effectiveness of the Internal Control System’ for the year.
3. 10. The annual statement and opinion includes specific consideration of:

• • Summary of work supporting the opinion,
  • Comparison of work carried out against work planned,
  • Performance of the Internal Audit Team,
  • Impairments or restriction of scope,
  • Conformance with Public Sector Internal Audit Standards, and
  • Consideration of any other relevant issues.

1. 11. In reaching the opinion, the Audit & Risk Manager as the Chief Internal Auditor notes risks raised by Internal Audit in the current and previous years relating to ASN School Transport Contract Monitoring and to Contract Management. 
2. 12. Risks relating to the Health and Social Care Partnership for the areas of Social Work Payment Arrangements and Interim Care Home Funding are also noted.  Individually, these risks do not significantly impair the Council’s systems of internal control.  Furthermore, management have reported progress and detailed plans to mitigating these risks.  The remaining risks will continue to be kept under review, with auditors monitoring compliance with the agreed actions as part of six monthly follow up updates which will be reported to the Audit & Risk Management Committee.
3. 13. The annual statement concludes that reasonable assurance can be placed upon the adequacy and effectiveness of the Council’s internal control system in the year to 31 March 2024.
4. 14. Two additional documents are attached in support of the annual audit opinion for 2023/24.  These are the Internal Audit Follow Up Report at Appendix 2 and the Internal Audit Performance and Output Monitoring Report at Appendix 3.