Statutory basis of Internal Audit
There are a number of regulations that support the legal
requirement for the maintenance of an Internal Audit service
namely:
- Section 151 of the Local Government Act 1972 which states
"every local authority shall make arrangements for the proper
administration of their financial affairs and shall secure that one
of their officers has responsibility for the administration of
those affairs";
- The Local Government Finance Act 1982 which requires that "the
responsible financial officer of a local authority maintains an
adequate and effective internal audit of the accounts of the body";
and
- This is further supplemented by the Accounts and Audit
Regulations 1996, which states that, “A relevant body shall
maintain an adequate and effective system of internal audit of
their accounting records and control systems”.
This Council has designated the Head of Finance as the "Section
151 Officer" and they achieve the legislative responsibilities by
maintaining the Internal Audit & Risk service.
The role of the Internal Audit service
The
Internal Audit Service Plan details
the Vision and Purpose of the service, and this supports
the "CIPFA Standard of Professional Practice - Auditing"
which states that:
- “Review of internal control systems is a key part of the
internal audit role and by reporting and following up on weaknesses
identified in systems internal auditors (the Internal Audit
service) help organisations to manage their risks effectively and
demonstrate sound financial control, provide information necessary
for management decision making and, through reporting to the audit
committee or equivalent body, contribute to the corporate
governance of the organisation”
Further, it states that the objectives of an Internal Audit
service are:
- “To ensure that the control systems put in place by an
organisation’s management in response to the assessed risks are
audited and reviewed with due integrity, care and
professionalism”.
Internal Audit & Risk at Forest Heath District Council
The Internal Audit & Risk service has the following three
main roles:
Audit reviews
The Internal Audit Service undertakes system‑based audit reviews
to assess the adequacy of the internal controls’ framework, to
identify control weaknesses and to recommend improvements to the
controls’ environment. Systems that are addressed include:
- Financial Systems;
- Corporate Systems;
- Support Systems; and
- Operational Systems.
Internal audit review reports are presented to the
Performance
and Audit Committee for their scrutiny and approval. The
progress made by Services in their implementation of the
recommendations made in these reports is monitored by the
Internal Audit & Risk service and is reported to Senior
Management and the Performance and Audit Committee on a regular
basis.
The Internal Audit & Risk team also provides “good practice”
advice on the implementation of controls, e.g. during the
introduction of new systems. This advisory role is undertaken
whilst ensuring that the independence and objectivity of the
Internal Audit function is maintained.
Fraud and Irregularity
Investigations
In the event that a fraud is discovered, either as a direct
result of an internal audit review or from information received
from management or 'tip-offs', a fraud or irregularity
investigation will be undertaken.
These investigations would be led by the Internal Audit &
Risk Service Manager following strict protocols as laid out in
legislation, including:
The Section 151 Officer and the Monitoring Officer would be
informed of all Irregularity audits and there may be a requirement
for the Leader and Chairman of the Council to be formally
notified, particularly if an officer is suspended under the
disciplinary procedure.
Risk Management
The Internal Audit & Risk Service Manager is responsible for
providing guidance on the implementation and performance of the
Council’s
Corporate Risk Management Strategy.
Further information
The Council produces an
Annual Governance Statement reporting on the activities of the
Internal Audit service , however if you would like more information
about the Internal Audit & Risk service please telephone 01638
719775 or e-mail
InternalAudit@Forest-Heath.gov.uk.