Directorate of Audit, Risk and Assurance progress report

Report: 7
Date: 10 December 2009
By: Director of Audit, Risk and Assurance

Summary

The report summarises the work completed by the Directorate of Audit, Risk and Assurance since the Committee last met and identifies key areas of work planned for the 4th quarter. It also provides an update on the adequacy and effectiveness of control in the MPS based on final reports issued to date.

A. Recommendation

That members note:

1. work undertaken by the Directorate of Audit, Risk and Assurance and progress made in achieving the 2009/10 Audit Plan; and
2. the current evaluation of the adequacy and effectiveness of internal control in the MPS.

B. Supporting information

Audit Work Completed in the 3rd Quarter 2009/10

1. We have issued fifteen final reports since the September meeting of the Committee. Appendix 1 highlights the overall opinion, effective areas of control, the control issues identified and the progress made in implementing our recommendations, for each review completed. It also summarises the output of our follow up audits which continues to demonstrate that there is an increased level of implementation of recommendations. The control environment in these areas has improved as a result. Thirty-three audits are also at draft report stage and a further thirty - eight audits are in progress.

2. We have provided risk and control advice to the interim HR payroll project, finance modernisation project, the language programme board, the Authority on contract compliance and senior management in the covert area. We have also conducted a joint review with Finance Services on the financial management of Imber Court. Following a re-evaluation of the business case and benefits the Metafor project (a forensic case management, asset tracking and property management system) is not being taken forward. We are advising on alternative solutions to meet the identified business needs.

3. We have supported MPS Directorate of Professional Standards (DPS) in bringing a criminal case against an MPS linguist who is awaiting trial in the Crown Court on six counts of fraud. We have also completed an assessment of the extent of over-claiming to support civil recovery action. Our advisory work on the language programme board has ensured that the risk and control issues arising from this case are addressed in the new system for managing the linguist service.

4. We have been working with DPS and the MPS Directorate of Finance Services to ensure that the lessons learnt from the Amex cases have been identified and addressed. Our analysts have run our software analytical tool against the data for the first year of the replacement Barclaycard system and queries identified have been passed to the MPS Directorate of Finance Services for resolution.

5. We are also assessing the report by the Office of Fair Trading into the operation of cartels in the construction industry as their report identifies a number of companies that have been awarded contracts by the MPA. MPS Directorate of Procurement Services presented a report on this issue to the Resources and Productivity Sub-Committee on 3 December.

6. We have contributed to the investigation of ninety-six cases of potential irregularities and/or fraud since the 1 April 2009 and have received five calls on the Right Line, the MPS telephone hotline for reporting wrongdoing. We are also developing our approach to analysing the under lying risk and control issues that are evident from our investigative work. This will be used to inform our risk review and fraud prevention programmes.

Internal Control Environment

7. The overall assurance score to date for 2009/10 based on our final reports is 2.5 [1] with first time reviews scoring 2.7 and follow ups 2.3. This is a notable improvement on the overall score of 2.8 (3.1 first time reviews and 2.4 follow ups) for 2008/9.

8. The progress made in implementing our recommendations is shown at Appendix 2. In reviewing the data for recommendations implemented in this calendar year, it should be noted that nine reports (129 recommendations) have been issued in the last two months. In liaison with Finance Services, we are refining our analysis of this data and will in future be reporting on how many recommendations have not been implemented by the agreed deadline. This will give greater clarity to our reporting of progress during the year.

9. We are seeing a general trend of increased implementation of our recommendations. Greater emphasis is also being placed on monitoring high risk recommendations as evidenced in the separate report to this committee, although a number remain outstanding past the original agreed implementation date. We are also working with the MPS quality assurance team and business groups to progress those medium risk recommendations (27% of those accepted) that remain outstanding from 2008.

10. Our analysis of recommendations made show that the main control areas are around management supervision and review (32%), reconciliation (18%), authorisation and approval (12%) and guidance and training (10%). MPS Performance Board are now receiving this level of analysis and are overseeing the measures being put in place to address the underlying control issues.

Key Work Planned for 4th Quarter 2009/10

11. We will be carrying out systems reviews of; the contract management of two major outsourced services – property and IS/IT; partnerships and funding control, programme management, business charge card system and witness and jury protection. Our follow up of risk management will include conducting a joint review with the MPS risk manager to help determine the level of risk maturity in the MPS. We will also be following up our reviews of the security vetting and clearance control framework and treasury management.

12. Our planned review of the MPS internal inspection and review activity will now be conducted in a systems development and advisory capacity. This work will contribute to the production of the map of the assurance functions in the MPS and build on the review of inspection activity currently being carried out by the Director of Resources. In liaison with the MPS we are also conducting a self assessment of the corporate governance framework against recognised best practice issued by CIPFA/SOLACE. The output from both reviews will be reported to this Committee.

13. We are reviewing our approach to our BOCU work to account for the changes in the finance and resources structure and to place greater emphasis on reviewing the effectiveness of risk management at a local level. We will also continue with our advisory programme and support the work being carried out in the MPS to increase contract compliance.

14. In liaison with our key contact in Finance Services we are about to publish a revised fraud prevention notice to all staff. The Audit Commission are finalising their report on the output of the Fraud Awareness workshops held in 2008/9. We intend to hold a further series of fraud awareness and prevention workshops with the MPS and the Audit Commission following receipt and evaluation of the report.

Directorate of Audit, Risk and Assurance Performance

15. We are currently on target to complete 90% of our work programme by the year end. A total of 80% of systems audits are underway and although we have only completed 30% of our B/OCU programme this is as planned. We are providing advice on the areas included in our published programme and are on target to complete those follow ups that are now due in 2009/10.

16. We are exceeding our productivity target of 75%, currently achieving 79% and are spending our time broadly as planned, although more time has been spent on advisory work reflecting increased requests for assistance.

17. We are working with the MPS to clear any draft reports outstanding from the previous financial year and are aiming to improve the timeliness of the reporting process.

C. Race and equality impact

The MPA’s commitments in relation to equality and diversity are considered in all activities carried out by the Directorate of Audit, Risk and Assurance. We also monitor the behaviour of our staff through questionnaires to auditees on a range of matters related to audit and investigative work.

D. Financial implications

There is a risk of loss, fraud, waste and inefficiency if our recommendations are not effectively implemented. Savings and recoveries made as a result of audit work enable funds to be directed towards core policing activities.

E. Legal implications

None given.

F. Background papers

None

G. Contact details

Report author: Julie Norgrove, Director Audit, Risk and Assurance

For information contact:

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

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