Agenda item

The Head of Internal Audit, Veritau, submitted a report, the purpose of which was to provide Members with an update on the delivery of internal audit and counter fraud work, and on reports issued and other work completed since the last update to the Audit Committee.  The Council’s internal audit and counter fraud work programmes were approved by Audit Committee in July 2024.

The Head of Internal Audit, Veritau, and the Assistant Director of Corporate Fraud, Veritau, were in attendance at the meeting to present the report.

It was explained that internal audit provided independent and objective assurance and advice on the Council’s operations.  It helped the organisation to achieve overall objectives by bringing a systematic, disciplined approach to the evaluation and improvement of the effectiveness of risk management, control, and governance processes.  The work of internal audit was governed by the Accounts and Audit Regulations 2015 and relevant professional standards.

Fraud was a significant risk to the public sector.  Annual losses were estimated as being as high as £59 billion in the United Kingdom.  Veritau was engaged to deliver a counter fraud service for Middlesbrough Council, which helped the Council to mitigate fraud risks and to take appropriate action where fraud was suspected.

The internal audit progress report was shown at Appendix One.  Members were guided through the annexes, which incorporated a summary of current work in progress; internal audit priorities for the year; completed work; and follow-up of previously agreed audit actions.

The counter fraud progress report was shown at Appendix Two.  A range of work was detailed including activity to promote awareness of fraud; work with external agencies; and the result of investigative work undertaken for the Council.  Reference was made to work carried out in October during cyber security month, together with work currently being undertaken with the Department for Work and Pensions (DWP).

During discussion, several points were raised, as follows:

• A Member referred to other work undertaken in 2024/25 and queried when a report would be provided for this.  In response, it was indicated that such reports were not produced.
• A Member referred to grant funding and queried audit practice around this.  In response, it was explained that there were no standard, formal reports submitted to the Audit Committee.  Certification forms were completed in instances where grant funding conditions had been met and there was satisfaction that funds had been utilised correctly.
• A Member referred to management issues and considered subcontractors, for example in respect of SEND.  It was queried whether the report would benefit a scrutiny investigation.  In response, it was indicated that the Audit Committee would not determine this as its remit was to look at governance arrangements.  The Member advised that the Place Scrutiny Panel was currently looking at home to school transport.  The auditor advised that a SEND review had been completed but had not delivered an assurance rating.
• A Member made reference to the TVCA and commented that a scrutiny investigation regarding adult education was being carried out.  It was felt that it would be useful if joint projects could be undertaken to avoid duplication of effort, where possible.
• The auditor indicated that a follow-up piece of work in relation to ‘no opinion’ outcomes would be carried out.  Several challenges were considered, which included: complex issues; obtaining the information required; and leadership changes.
• A Member referred to IT and suggested that software updates could be considered as a potential area for review.  In response, the Committee heard that compliance with data standards fell within the scope of ICT audits, SILO reports, etc.

NOTED