Part A: Executive Summary
Attachment 2: Risk Assessment Matrix
C.2. Other: Audit Activities undertaken in the period since the last Audit Report to the Audit Committee identified as ‘in progress’ at 15 November
2016
C2.1 Sponsorship (Audit item 12 in the 2016 Internal Audit Plan)
In 2016 the review of donations and sponsorship was referred to a consultant to review independently on behalf of the Council. The results of the review are to be reported to Council shortly. As an external review has been undertaken, an internal review has not been undertaken (inefficient use of resources). Once the result of the external review is known, the recommendations of that review will be followed up by Internal Audit where relevant.
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C2.2 Output Budgeting
Audit Objectives and method: The overall aim of the review undertaken was to:
Gain an understanding of the Councils budget process;
Determine whether the budgets process is effective and efficient in achieving its aims;
Determine whether legislative requirements are being met;
Determine whether the budget process and the developed budget allows the measurement and monitoring of outcomes against goals and Councils strategic outcome
Findings:
Council had relevant policies and procedures in place that were up to date;
Council had met the legislative requirements and timeframes as outlined in the Local Government Act, 1993;
Timely reporting was in place with respect to Council.
An audit of the achievement of Councils KPI’s will be undertaken separately (as part of the 2017 audit plan).
Conclusion
No recommendations have been raised as a result of this review. Budget monitoring with respect to procurement will be reviewed in detail as part of the procurement audit planned for 2017.
Satisfactory Effective control environment
C2.3 Rates (Audit item 9 in the 2016 Internal Audit Plan)
To date, the external auditor (PWC) has reviewed the financial aspects of the rates process which tests the relevant controls, pensioner rebates, calculation, classification and rates reconciliations in place (that is, notices and assessments as well as income to rates notices issued).
The review of fire safety inspections (identified in the 2017 Internal Audit Plan) has provided Internal Audit with another source of information by which to compare to Council rate revenue with respect to ‘businesses’.
Audit has therefore combined the review of business rates income with the review of fire inspections to ensure that the Councils rates system results in information that is accurate, complete and valid. To date no exceptions have been noted, however final conclusions will not be made until the fire safety inspection review is completed (mid-March).The final results and conclusions concerning the review of fire safety inspections and ‘business rates’ will be reported in the next internal audit report to the Audit Committee.
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C2.4 Recruitment and Terminations (Audit item 11 in the 2016 Internal Audit Plan)
Audit
Number 11
Background In the period from 1/4/2015 to 7/10/2016 there were 129 recruits and 138 terminations.
Total staff numbers and type at the review date was: 657 (part time staff counted as 1 – this is not Councils FTE), made up of:
Councilors: 11
Senior Staff: 4
Contract Staff: 46
Salaried Staff: 276
Sal PT Staff: 113
Wages Staff: 113
Wages PT: 2
Casual: 92
Relevant parts of the Local Government Act 1993 that need to be complied with: s348 – s354A.
Objective
Recruitment and Terminations was identified in the Internal Audit Plan for 2016. The rationale for this was based on the risks associated with factors such as:
Legislative exposure
Resourcing impact
Corruption risk (assessed as high by the ICAC).
The primary objectives of this review were to:
Ensure that Councils recruitment and termination practices are efficient and meet Councils legislative requirements and best practice. This area was identified as a high risk by the ICAC and within the Councils ERM system (Risk identified in the ERM (R000133) The recruitment process does not appoint on merit or organisation fit)
Secondary Objectives were to :
to assess the efficiency and effectiveness of the internal controls that are in place to manage the key risks arising from recruitment and termination related processes;
to provide Management with recommendations to strengthen the internal control environment and the efficiency and effectiveness of associated operational practices where applicable; and
to provide an independent opinion to Council’s General Manager, the Executive and the Audit Committee on the level of reliance that can be placed on existing internal controls with notification of further actions for improvement, as agreed by Management
Scope and
method The last internal audit undertaken reviewed Councils recruitment activities to 30 March 2015.
This audit reviewed Councils recruitment and termination practices in the period from 1 April 2015 to 7 October 2016 (18 months).
Audit did not review the efficiency of recruiting practices in this period, given that recruitment was suspended during the period to May 2016 because of potential ‘merger’ activity by the State Government. This aspect will be reviewed in future audits.
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Findings A number of instances were noted during the audit whereby the classification of personnel records in ECM was not appropriate or records were linked to the incorrect personnel file. These were referred to the relevant HR partner and have been corrected. Care should be taken concerning classification in ECM.
One instance was found where the pay rate identified in the Letter of Offer was incorrect. This was identified by Payroll and the corrected in the payroll system.
Following this instance both Payroll and HR have implemented processes to ensure timely communication of any further instance noted.
It was also noted that terminated staff were not being exited from Councils systems on a timely basis - leaving Councils systems open to access after the staff member had left the Council. Both Councils IT and Human Resource Teams have met and processes have been agreed to ensure that this risk is negated.
Conclusion
Issues noted during the review are currently being addressed and corrected. This will be followed up by Internal Audit in April 2017. With the correction of these issues the result of the audit is considered:
Satisfactory Effective control environment
C2.5 Procurement (Audit item 10 in the 2016 Internal Audit Plan)
In 2016 10 days were allocated to the review of tendering and use of consultants.
This time has been added to the time allocated in the 2017 (Audit item 23) to allow the more comprehensive review of the Councils purchasing practices to be undertaken. This review is currently being undertaken and the results will be reported to the Audit Committee in the next Internal Audit Report.
C3. Other activities undertaken by Audit
C3.1 Investigations: Audit reviewed an investigation undertaken with respect to the payment of fines/penalties incurred with respect to Councils fleet.
Recommendations have been made with respect to the deficiencies noted in this system. Implementation will be followed up in May 2017.
C3.2 Review of the WHS External Action Plan: This action plan has been developed to ensure that the Councils WHS system reflects better practice.
Internal Audit will follow-up the results of the Action Plan implementation in May 2017.
C3.3 Audit reviewed the 2015/16 Acquittal and 2016 Annual Compliance Return with respect to NSW ADHC (Hills Community Care).
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Part D: Details of recommendations outstanding at the date of this report and the action taken by Management to implement these recommendations
Internal Audit monitors all the recommendations raised and agreed with management to ensure that they are implemented within agreed timeframes.
The Audit recommendations outstanding (including Management Comments) at 1 March 2017 are listed at Attachment 3.