Agenda item

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Chris Dickens of PWC confirmed that the Draft Annual Report had not been circulated as the content had only just been agreed with management. Chris Dickens gave a verbal update to members on what the report contained and in particular the opinion that was included in the report. He outlined the internal audit arrangements that had been in place since the transfer to LGSS and explained that this has resulted in some difficulties in obtaining information and also in identifying ownership of issues within the Council.

He explained that the Council was able to gain assurance over the transactional processes that had been reviewed by LGSS but the elements that fall under the councils remit had been difficult to assess. This had been raised at previous meetings of the committee. In the areas that had been audited examples were noted of good controls and effective governance arrangements in place. One area of concern related to financial delegations. Chris Dickens explained that NBC had not assured itself that the financial delegations being used by LGSS were correct. In his view that part of the problem related to the fact that NBC Officers worked with the very same officers they worked with before the transfer, although the reality is the LGSS is a separate entity now. In Chris Dicken’s view, the financial delegations issue was easy to resolve the committee was asked to consider reporting this in the Councils annual governance statement. PwC had been assured by management that this issue would be addressed promptly.

Chris Dickens explained that as a result of the issues noted above, the delays in getting the Audit Plan finally approved and the limitations on internal audit’s ability to complete the programme of work, PwC were unable to provide an opinion on the adequacy and effectiveness of Northampton Borough Council’s arrangements for governance, risk management and control for 2014/15.

In response to a question from Councillor Goldby, Chris Dickens confirmed that the issues relating to availability of information had improved and this should enable more work to be completed in 2015/16 which would allow for an internal audit opinion to be provided.  He confirmed that LGSS operated the Council’s finance system and had largely the same people operating it as the Council did.

Kelly Watson from LGSS confirmed that LGSS operate a number of different financial systems for different organisations and they had extensive controls and mechanisms in place for each organisation to ensure the integrity of the data is maintained.  The provider of the financial system used for the Council is Unit 4 who issue system updates and upgrades. NBC and LGSS have a license with Unit4 to use the software.  NBC/LGSS do not have the IT software expertise and knowledge to operate a financial system ‘in house’.  The majority of other local authorities and companies operate their financial ledger system this way.  Regarding the process to ensure the Council is using the right system, the Council goes out to open tender on a regular basis to ensure they receive best value for money.

Paul Clarke, Group Auditor, LGSS confirmed that they had controls and procedures in place within LGSS, they were performance monitored and had regular meetings to ensure the system remains fit for purpose.

In response to a question from Councillor Chunga, Kelly Watson confirmed that the Council had previously tendered for the Agresso system and had undertaken the necessary market testing to ensure that it was the best system for them to use. The Committee asked for more information about how the financial system had been tendered and have it on their plan to understand better.

Councillor Nunn requested that a brief summary of the procurement process be presented to the next meeting.

Chris Dickens commented that if there was a change to the financial system then it would be reflected in the risk register and would be considered as part of the audit planning process.

Action – Finance to provide a brief summary of the procurement process to the next Audit Committee meeting.