Internal Audit Progress Report

Report: 8
Date: 2 December 2004
By: Director of Internal Audit

Summary

This report sets out progress for the first six months of the financial year in achieving the 2004/2005 Internal Audit Plan. It also summarises the results of significant Internal Audit work to date and the adequacy and effectiveness of control in MPS systems where Internal Audit has issued formal reports since April 2004.

A. Recommendation

That

1. members note the progress made in achieving the 2004/2005 Internal Audit Plan; and
2. note the current Internal Audit evaluation of the adequacy and effectiveness of internal control in the MPS.

B. Supporting information

Progress Against the 2004/2005 Internal Audit Plan

1. Unless any major unplanned work arises in the next three or four months, we are on course to meet the performance target set by the Treasurer for completion of our Systems Audit Plan for this year (audits finished and a report issued for 90% of the plan).

2. We have also carried out five audits of local Borough/Operational Command Unit financial and business systems. Our work in this area has proved to be particularly productive and of value to local senior managers. We are about to commence three further audits and intend to carry out a two reviews in the specialist OCUs later in the year.

3. We are currently advising on twenty of the twenty-seven areas of work published in our systems development programme at the start of the year. Work is due to commence in line with the MPS programme for development for the remaining seven areas.

4. We have completed twelve follow-up audits to report stage, thirteen are in progress and a further twenty-seven are planned for the second half of the year. However, as a result of delays in starting some audits, 38% of the follow-ups in our published programme are now not due until next year (the timing of the review is dependent on the date the final report is issued).

Opinion on the adequacy and effectiveness of MPS systems

5. In my Annual Report for 2003/2004, I noted that, on the scale where 1 = excellent control and 5 = unacceptable control, the MPS had an overall score of 2.9 but for follow-up audits the score improved to 2.1. This was the third year in succession where the MPS scores had shown improvement. At the half way stage for 2004/2005 the equivalent scores are 3.3 overall and 2.7 for follow-up audits.

6. The unexpected dip in the overall score is mainly due to three reviews, two involving the covert work area and one relating to the Storage and Display of Police Artefacts. We have been assured that appropriate action is being taken to address the issues we have raised. I hope to report improved assurance scores when we return to these areas as part of our follow-up work programme.

7. The disappointing dip in follow-up scores is largely due three areas that only managed to achieve a follow-up score of 4. These were Building Security, Temporary Imprest Account Control and the Informants Reward System.

Current investigations

8. In my last report I drew attention to the case of a Finance and Resource Manager in the Department of Information who fraudulently obtained £195,000 from MPS funds. We have fully recovered the funds fraudulently obtained and the offender has been sentenced by Southwark Crown Court.

9. Our close working relationship with the Directorate of Professional Standards continues to mature and to the benefit of both sides with mutual assistance. I have signed an updated memorandum of understanding with the DAC for Professional Standards and we had a useful meeting with them and MPS Human Resources to ensure appropriate arrangements are in place to deal with disciplinary matters involving PCSOs. We also passed a case to the Directorate of Professional Standards involving fraudulent travel expenses that we had discovered following a Right Line call. This resulted in the criminal investigation of a police officer who has since admitted the fraud and resigned.

10. I am pleased to report that an interpreter has agreed to repay the sum of £240,000 in an out of court settlement following one of our investigations.

11. Work on the Audit Commission’s National Fraud Initiative 2004 has commenced and we have supplied the requested data to them for their data matching exercise. We expect to receive the results of the exercise in January 2005 and, following evaluation, cases from this will form part of our work for 2005/2006. The last cases from the last exercise in 2002 are working their way through the criminal justice system, however, to date fraud convictions have led to the dismissal/resignation of three MPS staff and three further staff have been disciplined.

12. In the next quarter we will be examining a number of estate related issues. Whilst they have their origins before the resignation of a senior manager in this area they have a potential to cause an on-going loss of income to the MPA or incur avoidable expenditure. We are also looking at the claims for purchases made for minor repairs and a criminal prosecution is pending.

Current advice and review activity

13. We are continuing to work with the Head of Business Support, Finance Services and the Devolution Team in reviewing the Scheme of Devolved Financial Management. In particular, we are advising on the internal control issues that have arisen following a recent survey of BOCUs conducted by the Devolution Team. Other advice in high-risk areas includes the Outsourcing Work Programme, which is at a critical stage in a number of areas. We are represented on each of the Action Groups set up for the Outsourcing Programme and have also conducted a review of the Governance Framework in place for the programme. We continue to advise on the upgrade of the MPS corporate accounting system, MetHR and MetTime.

14. We have recently conducted an audit of police overtime which has informed the member led review. We are now working with the MPS Overtime Working Group on the way forward for implementation of the agreed recommendations. We have also been working with the senior management team of a BOCU to help improve the control framework of their business and financial systems. This advisory work arose as a result of a BOCU review and we intend to develop this approach for future reviews. Our Advice Note on Business and Financial Systems for BOCUs will form an integral part of this advisory role.

13. We have issued the following final systems audit and follow up reports since the publication of my Annual Report:

• Equipping and De-equipping MPS Vehicles
• Vehicle Maintenance and Repair
• Vehicle Fleet Management
• Hire of Vehicles
• Corporate Strategy and Planning
• Inventories and Asset Registers
• Uniform Services – Stores and Stock Control
• Cash Security and Disbursement
• Investment, Borrowing and Cash Management
• Storage and Display of Police Artefacts
• Occupational Health and Welfare Services
• Review of MPA Business and Finance Systems
• Accident and Riot Claims and Payments
• Linguistics
• Havering BOCU Review of Business and Finance Systems
• Rent and Housing Allowance Follow up
• Boat Support and Maintenance Follow up

Responses to audit reports in high risk areas

14. There are no responses currently outstanding for high-risk reviews.

High risk recommendations

15. At the September meeting I agreed to report progress on the implementation of those high-risk recommendations outstanding from previous years and for those made in the first half of this year. I am pleased to report that thirteen of the recommendations from previous years have been implemented in full and work is in progress for the remaining twelve. A total of two high-risk recommendations made in the first half of this calendar year have also been implemented in full and action is being taken to address the remaining nineteen. I am grateful to the Director of Resources for his efforts to ensure that senior MPS line management make every effort to implement accepted high-risk recommendations.

Staffing

16. I currently have thirty-four staff in post and four vacancies. We are awaiting the results of the vetting process for two auditors who we hope to have in post by the end of the calendar year. I also intend to recruit an Executive Assistant to replace my personal secretary within this timeframe.

Liaison with other bodies, partnerships and joined-up working

17. We are continuing to work in liaison with the MPS Director of Risk Management and internal and external inspection and review bodies. I attend the MPS Strategic Corporate Governance Committee and the Professional Standards Strategic Committee and my Deputy represents Internal Audit on the MPS Risk Management Project Board. We are working with the Audit Commission, HMIC and the MPS Inspectorate to ensure that a co-ordinated work programme of inspection and review activity is produced for next year.

18. We also participate in the Pan-London Counterfraud Partnership and are members of working groups looking at the money laundering and whistleblowing obligations on GLA, Local Authority and National Health Service bodies.

C. Equality and diversity implications

Internal Audit continues to reflect the diverse community within which the MPS and MPA operate. The percentage of visible ethnic minority staff is 32%. We also employ staff with disabilities and from a wide age range.

D. Financial implications

The Internal Audit Budget is currently on target (the underspend on salaries has been off set against the cost of employing contractors to assist with our investigation work).

E. Background papers

None.

F. Contact details

Report author: Peter Tickner, Director of Internal Audit, MPA.

For information contact:

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

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