Internal audit progress report

Report: 4
Date: 14 March 2008
By: Director of Internal Audit

Summary

The report details the work of Internal Audit for the period December 2007 to February 2008. 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 final reports since April 2007.The revised Internal Audit Strategy for the next three years is also attached.

A. Recommendation

That

1. members note the progress made in achieving the 2007/08 Internal Audit Plan;
2. note the current Internal Audit evaluation of the adequacy and effectiveness of internal control in the MPS; and
3. approve the revised MPA Internal Audit Strategy.

B. Supporting information

Progress Against the 2007/08 Internal Audit Plan and Evaluation of the Effectiveness of Internal Control in the MPS

Progress

1. Work is underway on 90% of the systems audit programme with 63% currently at report stage. We are still working towards achieving our target of 90% completion of systems audits to report stage. However, we have been an auditor short throughout the year and with the resignation of another auditor at the end of December 2007, we are currently two field auditors down.

2. We are proposing to postpone four audits, representing 10% of our original plan. The Estates Strategy review is to be conducted jointly with the Audit Commission and has been carried forward to the first quarter of next year at the request of the Authority. Our review of Together is being covered as part of our advisory work on Programme Management and following discussions with senior management of Operation Emerald we have agreed to carry forward the review of Criminal Justice Processes to allow time for the pilots of the Integrated Prosecution Teams to have taken place. Our review of Works and Engineering Maintenance will also now be carried forward to next year and covered under our review of the Property Services Outsourcing arrangements.

3. We have made good progress with our Borough/Operational Command Unit (B/OCUs) review programme having finalised eight audits. Reports are at draft stage for SCD5 Child Protection, Kensington and Chelsea and Lewisham and we are currently conducting a review of Camden BOCU. We have also carried out an extensive follow up programme with fifteen B/OCUs being re-visited in 2007/8.

4. We are advising on those systems published in our systems development programme at the start of the year. In particular, we are providing significant input and control advice into systems developing in HR, Finance and DoI. We have also conducted additional advisory work as requests for our assistance continue to increase.

5. Twenty-five final follow-up reports have been issued with a further nine having reached draft report stage and eleven currently in progress. Ten follow-ups are planned for the remainder of the year. We have carried forward 31% of our original planned follow-ups into next year, as the final report has not been issued. A further 7% of follow ups have also been carried forward due to the lack of resources.

Opinion on the Adequacy and Effectiveness of MPS Systems

6. In my Annual Report for 2006/07 I noted that, on the scale where 1=excellent control and 5=unacceptable control, the MPS had an overall score of 2.9 (3.3 for systems audits and 2.5 follow-ups). At this stage of the year for 2007/08 the equivalent score is 2.7 overall (3.1 systems audits and 2.4 follow-ups).

7. It is encouraging to note that the follow up audits continue to indicate an improvement in internal control. We are working with MPS senior management and the Director of Strategic Finance in particular, to do all that we can to help ensure that this trend continues.

Current Investigations

8. We have taken on sixty-nine new cases since the 1 April 2007. This is broadly in-line with earlier years. In my last progress report I highlighted the disappointing level of calls received on the Right Line, the MPS telephone hotline for reporting wrongdoing and the need for the facility to be refreshed – we have only received three calls so far this year. A re-launch of the Right Line by MPS Directorate of Professional Standards is imminent and will include a confidential e-mail facility.

9. Our most significant task in the last quarter has been in relation to the MPS Amex corporate charge cards. We have been working closely with MPS Professional Standards and Finance Services as part of a joint effort to process outstanding matters. Further information on this is a separate agenda item. The current diversion of investigative teams to this investigation is impacting on work in other areas.

10. Work undertaken in relation to property store losses has resulted in two police officers being subject to a disciplinary investigation and a member of police staff facing a disciplinary board. A member of police staff has also resigned and been subsequently convicted for travelling without payment of fares by claiming to be a police officer. This resulted from initial research by the forensic team and good casework by British Transport Police and the train operating company.

11. We have also been working jointly with MPS Finance Services, Professional Standards and the Director of Leadership Development to work towards raising the level of fraud awareness in the conduct of the MPS business. We plan to use the Audit Commission’s ‘Changing Organisational Cultures’ toolkit to achieve this and delivery is planned for early in 2008/09.

12. Part of the MPA growth bid for 2008/09 included a fraud prevention post. A similar post exists in Transport for London and we are told that it has proved invaluable in developing fraud awareness and improving fraud reporting. We are planning to develop this role on the basis that prevention is superior to detection after the event.

13. We are also planning with MPA colleagues in the Communications Unit to include functionality within the MPA website to facilitate members of the public and others reporting internal fraud. The facility will include an on-line form, a telephone number and an address for correspondence. This is planned to go live in the next few weeks.

Current Advice and Review Activity

14. We have been providing advice on a number of significant procurement issues that have arisen in recent months. We are supporting the Procurement Oversight Group, Deputy Treasurer and Deputy Chief Executive on the current review of the Authority’s Contract and Financial Regulations. We continue to advise on the Transforming HR Programme, Finance and Resource Modernisation, MetaFor project, covert policing control environment and the work being undertaken in the MPS to support the 2012 Olympics. We have also worked with Finance Services advising on the development of the control framework around the use of corporate credit cards.

15. We continue to support members in their scrutiny role with audit senior management representatives attending the HR, IT, Estates and Procurement Oversight Working Groups.

16. We have issued the following final audit and follow up reports since December 2007.

Systems and B/OCU Audit Reports

• Use of Mobile Resources – SCD
• Systems Supporting the Use of Police Dogs
• Systems Supporting the Use of Police Horses
• Management of Outsourced Transport Services
• Investment Borrowing and Cash Management
• SO17 Palace of Westminster
• Croydon BOCU

Follow Up Audit Reports

• Lambeth BOCU
• DCC8 Directorate of Professional Standards
• Dispatch and Distribution
• Rent and Housing Allowance
• Barking and Dagenham BOCU
• Ealing BOCU
• Southwark BOCU
• Hammersmith BOCU
• Wandsworth BOCU
• CO18 Aviation Security OCU
• Royal Parks OCU

Feedback from Auditees

17. On completion of an audit, I write to the senior manager of the area concerned seeking their views on the conduct and value of the audit. This year we have received an increased number of responses and I am encouraged by the scores and comments. We are averaging 4.5 from 5 (where 5 shows the greatest level of satisfaction) with an overall satisfaction rating of 89%. In particular, we are gaining excellent feedback on the conduct of audits and my auditors have been the subject of such comments as “The service was valued. As a Borough Commander the audit provided an objective assessment of the systems and processes operating. I am grateful for your support” and “The auditor was a great help throughout the process and has been more than willing to answer ad hoc questions after completing the audit. Please pass on thanks to the auditor for his helpful, professional and supportive approach. We valued his input and advice.”

MPS response to Draft Internal Audit Reports

18. We continue to experience difficulties in obtaining prompt responses to our formal draft reports. The average response time is currently fourteen weeks against a target of three weeks. We are also experiencing delays in receiving comments on discussion drafts (this is an essential part of the audit process as it allows any significant issues and the factual accuracy of our findings to be discussed in full before progressing to requesting a formal response). I am, therefore proposing to introduce a new system for dealing with responses. Senior managers will be encouraged to respond within two weeks of receiving a discussion draft at which point we will proceed to formal if comments are not received and take the report to be factually accurate. On issuing the formal draft if a response is not received within the three week target, in the fourth week we will issue the final report recording that a management response has not been received.

Staffing

19. The Authority recently agreed to fund two additional posts in the Internal Audit Directorate, the Fraud Prevention Officer post and an analyst. As at February 2008 I, therefore, have a staffing allocation of thirty nine with thirty four in post. Due to delays in the vetting process, we lost our recent recruit at auditor level who has now taken up another opportunity.

20. We plan to run a recruitment campaign in the near future for the additional Analyst and Fraud Prevention Officer posts and the vacant Auditor posts. However, in the interim we are looking to provide secondment opportunities and are hopeful of filling a number of posts on this basis. We are also about to recruit to meet our administrative support needs.

Internal and External Liaison

21. We are continuing to work in liaison with the MPS Risk Manager and the internal inspection review bodies. We are actively involved in the Internal Inspection and Review Group aiming to ensure internal review activity is properly co-ordinated and duplication is avoided.

22. My Deputy represents Internal Audit on the MPS External Inspection and Review Group. We also continue to meet with the Audit Commission and HMIC on a regular basis to ensure that a co-ordinated work programme of inspection and review activity is carried out in 2007/08.

MPA Internal Audit Strategy

23. I have attached the revised Internal Audit Strategy at Appendix 1. The document sets out the strategy for MPA Internal Audit for April 2008 to April 2011. It demonstrates how Internal Audit supports the overall aims and objectives of the Metropolitan Police Authority and the Metropolitan Police Service while maintaining its professional standards.

24. The strategy has not fundamentally changed to that previously approved by the Committee. It has been updated to reflect the Authority’s Corporate Priorities and has additional strategic aims and targets set around our responsibilities for equalities, the National Fraud Initiative and our work on Material Systems in conjunction with the Audit Commission. It also reflects changes to the CIPFA Code of Practice for Internal Audit in Local Government revised in 2006.

C. Race and equality impact

1. Our diverse workforce sets a good example to the MPS. The MPA’s commitments in relation to equality and diversity are considered in all audits and investigations carried out by Internal Audit. We have also conducted an equalities impact assessment on the revised Internal Audit Strategy.

2. We monitor the behaviour of our staff through questionnaires to auditees on a range of matters related to audit and investigative fieldwork. This helps to ensure that any diversity issues are quickly identified and addressed.

D. Financial implications

We are currently forecasting an underspend on the Internal Audit budget allocation at the year-end. This is mainly due to the current staffing position within the Directorate.

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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