Director of Audit, Risk and Assurance Annual Report 2010/11

Report: 8
Date: 7 July 2011
By: Chief Executive

Summary

The attached report contains the 2010/11 annual opinion of the Director of Audit, Risk and Assurance on the effectiveness of internal control within the MPS, which is, the internal control environment has continued to improve and this has been achieved during a period of significant change, however, it is not yet fully effective.

The report also summarises the work and performance of the Directorate of Audit, Risk and Assurance (DARA) and members are asked to conclude on the effectiveness of the MPA internal audit service.

A. Recommendation

1. The Corporate Governance Committee approves the attached draft Annual Report of the Director of Audit, Risk and Assurance for circulation to all members of the Authority.

2. The Corporate Governance Committee confirms that the MPA Directorate of Audit, Risk and Assurance provided an effective audit service to the Authority in 2010/11.

B. Supporting information

1. The attached report sets out the opinion of the Director of Audit, Risk and Assurance on the effectiveness of the control environment, including governance, risk management and internal control within the MPS and MPA for the reporting period. The report also includes, at Appendix 2, a summary of DARA work during the year.

2. The Director of Audit, Risk and Assurance has concluded that the internal control environment has continued to improve and this has been achieved during a period of significant change. Overall, however, DARA’s assessment shows the control environment is not yet fully effective.

3. Key points to note from the draft annual report include:

Internal Control Environment

• The effectiveness of the framework for assessing and managing risk within the MPA and MPS continues to develop and improve. Key developments include increased oversight, an improved corporate risk register and the conduct of a risk maturity review at business group level within the MPS. The Director of Audit, Risk and Assurance concludes that the MPS has established an effective risk management framework supported by a plan for improvement but it is not yet embedded and operating consistently across the organisation.
• The overall assurance score for 2010/11 is 2.5, an improvement on last year’s score of 2.6 (and the highest since the assurance score was introduced in 2001/2). In particular, first time system audit reviews have improved from a score of 2.9 to 2.8 and follow up reviews from 2.4 to 2.3. This shows that although the internal control framework has not yet reached an adequate score of 2, improvements to the governance framework continue to have a positive impact on the control environment.
• A total of 313 DARA recommendations were implemented during the year and the implementation rate has increased slightly from 74% to 75%.
• Analysis of underlying control issues shows that 68% of DARA recommendations made during the year were as a result of controls not working effectively and 35% related to issues around supervision and review.

Directorate of Audit, Risk and Assurance (DARA)

• The Audit Commission continue to place reliance on the work of DARA in reviewing key material systems.
• DARA achieved 87% completion of planned risk and assurance audit work to report stage against a target of 90%. Audit time was spent broadly as planned and productivity has further increased to 82%, exceeding the 75% target for direct audit time
• Fifty nine risk and assurance audits and follow up reviews were finalised and 74 investigations conducted during the year.
• DARA met the 80% target set for overall customer satisfaction with the conduct of reviews exceeding the target in achieving an 85% satisfaction rating overall.
• Timeliness of audit reporting met targets at formal draft and final report stage but needs to improve when issuing the initial discussion draft report.

C. Other organisational and community implications

Equalities impact

1. The MPA’s commitments to equality and diversity are considered in all activities carried out by the Directorate of Audit, Risk and Assurance. The conduct of DARA staff is also monitored through questionnaires to auditees on a range of matters related to audit and investigative work. All field auditors and investigators have received appropriate training in equality and diversity issues and their performance within the MPS is monitored. The DARA work plan is designed to provide as wide a range of coverage of MPS staff and systems as is possible and practicable.

Met Forward

2. Completion of the Directorate of Audit, Risk and Assurance annual work programme, which is designed to support all strands of MET Forward and in particular MET Standards, is making a key contribution to fighting crime, securing value for money and increasing confidence in policing.

Financial implications

3. The cost of DARA activities is met within the MPA’s directly managed budget. There is a risk of loss, fraud, waste and inefficiency if the Directorate of Audit, Risk and Assurance recommendations are not effectively implemented. Savings and recoveries made enable funds to be better directed towards core policing activities.

Legal implications

4. There are no direct legal implications arising from the report.

Environmental implications

5. There are no direct environmental implications arising from the report.

Risk implications

6. The report highlights areas of effective management of risk and areas for further improvement identified as a result of DARA review activity.

D. Background papers

None

E. Contact details

Report author: Catherine Crawford, MPA Chief Executive.

For information contact:

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

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