Internal audit plan for April 2003 to March 2004

Report: 10
Date: 27 March 2003
By: Director of Internal Audit

Summary

This report and associated appendices sets out the proposed plan for the use of Internal Audit resources from 1 April 2003 to 31 March 2004.

The annual plan is based on an updated Audit Needs Assessment and Risk Analysis for the next five years ahead.

The Treasurer has approved the proposed annual plan for submission to the Audit Panel.

A. Recommendations

1. The Audit Panel approves the proposed use of audit resources and notes the summary calculation of audit need and comparison to planned work set out in Appendices 1 and 2.

2. The Audit Panel approves the programme of Internal Audit work, set out in Appendices 3 to 5.

B. Supporting information

Purpose and basis of the annual internal audit plan

3. The annual plan of Internal Audit work is designed to ensure that I have sufficient information to form an opinion on the adequacy of the arrangements to provide a proper and effective internal control framework for MPA/MPS business. My opinion is formed from the risk scores achieved on systems audit and related work as well as any fraud or wastage from a breakdown in control that has come to light in systems over the year.

4. The plan is risk based, with the highest current financial and business risks determining the systems that Internal Audit will review next year. In preparing the plan the proposed plan for Audit Commission work relating to this year’s and next year’s accounts has been taken into account. The draft Internal Audit plan has been given to the Director of Resources for comment and other MPS Management Board members as well as senior members of MPS civil and police management have been approached about audits planned in their area of responsibility.

5. The annual plan is drawn from our assessment of need based on a five-year cycle but takes into account likely staffing levels and the need for some contingency time. The calculated audit need is set out in Appendix 1. Appendix 2 identifies available audit resources and reconciles the plan to the overall need. The plan should enable 82% of the identified need for systems advice and routine audits to be met (3,169 audit days out of 3,891). 76% of the need identified for investigative work will be met (1,473 out of 1,945 days). In all, 80% of the identified Internal Audit need for the year is reflected in the plan. These calculations are set out in the reconciliation in Appendix 2.

6. The plan ensures that key issues such as Corporate Risk Assessment, Corporate Strategy and Planning, Police Overtime, Estate Strategy Management and the Procurement and Contract Management Framework are addressed by relevant systems audits. In addition a number of key financial systems, including Budget Preparation Approval and Monitoring, Receipt and Banking of Income, VAT Control and Investment, Borrowing and Cash Management will be reviewed.

7. We are continuing our theme from last year’s plan of ensuring that wherever possible we will offer proactive advice. In Appendices 3 to 5 we have set out the systems audit programme, those key areas of new and developing systems where we will offer assistance and advice during the year and, finally, a programme of planned follow-up reviews of the progress in implementing recommendations accepted from earlier audits. In addition we plan to review ten BOCUs or OCUs across both TP and the specialist areas of the MPS, addressing issues such as devolved management, budgetary control and crime property.

Key themes of our work for 2003-2004

8. Key themes for this coming year are to increase the amount of time we are able to devote to reviews at local BOCU or OCU level as well as continuing to expand the advisory role of Internal Audit, particularly for new and developing business and financial systems. This will enable us to contribute further to the Treasurer’s Financial Management Strategy. In terms of Specialist OCUs, we will review the Transport OCU in conjunction with the MPS Inspectorate and in liaison with our counterparts at Transport for London. Major projects where we will offer advice to the MPS include Overtime and Duties Management, partnerships, devolved financial management and C3i.

Liaison with other review bodies

9. Time has been set aside in the plan to supplement the work of the Audit Commission by carrying out health checks of the key financial systems. We will also be analysing data to support both this work and National Fraud Initiative. We will continue to work to ensure that there is no unnecessary duplication of audit effort. To that end we will continue our liaison with the financial team of HMIC and the MPS Consultancy Services Best Value lead as well as the MPS internal Inspection Liaison and Analysis Unit.

Fraud investigation and liaison

10. We are planning for around the same amount of investigative work next year to recognise the likely continuing shortfall in forensic auditors. Investigative work will form 32% of the plan, this is in proportion with the overall need between investigative and systems work although at a reduced provision for both. It will continue to be supplemented by analytical review work to enable a more focused approach with the level of resource available to us.

11. We will work in conjunction with investigative bodies in the MPS, including Professional Standards and the Fraud Squad. To that end, on behalf of the Treasurer we will assist the MPS to implement processes to put in place the framework necessary to meet the anti-Fraud and Corruption strategy for the MPA. We will also continue to share responsibility for the whistle blowing ‘Right Line’ with MPS Professional Standards.

C. Equality and diversity implications

None.

D. Financial implications

The Annual Plan is designed to match the agreed budget for 2003-2004. There are no further financial implications.

E. Background papers

None

F. Contact details

Report author: Peter Tickner

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1: Calculation of annual internal audit need

• Systems audits per audit needs assessment (Based on five year cycle High risk system three audits in five years Medium risk system twice in five years Low risk system once in five years): 13655 days
• Every BOCU one 40 day audit every five years (and some central OCUs):1800 days
• Five year total system audits and reviews: 15455 days
• Annual total systems audit need: 3091 days (53% need)
• Systems development work per annum: 590 days (10% need)
• Analysing key financial systems per annum: 210 days (4% need)
• Total systems audit and audit advice need: 3891 days (67% need)
• Forensic Audit (Investigations, Preventative Advice and National Fraud Initiative work): 1945 days (33% need)
• Total Annual Internal Audit Need 5836 days (100% need)

Appendix 2: Audit plan 2003/2004 based on probable staffing levels

Reconciliation of need against plan

Appendix 3: Proposed systems audit plan 2003/04

Appendix 4: Internal audit - proposed systems development projects 2003/04

Appendix 5: Internal audit programme of follow up reviews 2003/04

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