District Audit review of Internal Audit - update on progress

Report: 7
Date: 20 June 2002
By: Director of Internal Audit

Summary

This report summarises progress that has been made in implementing recommendations arising from District Audit’s review of Internal Audit in March 2002.

A. Recommendations

1. Members note the progress that has been made in implementing recommendations from District Audit’s review of Internal Audit.

B. Supporting information

1. District Audit published their first report on Internal Audit at the March 2002 Audit Panel. It concluded that internal audit work was of the type of quality that could be relied on by District Audit. The review also found that, subject to the District Auditor’s recommendations for improvement, internal audit achieved the required professional standards.

2. A total of nine recommendations were made and agreed. The following actions have been taken in response to each recommendation:

• Recommendation 1
  The financial recommendations should be updated to fully reflect Internal Audit’s Terms of Reference and status within the organisation.

The Financial Regulations have been updated by the Treasurer and approved for submission to the MPA by the Finance, Planning and Best Value Committee in May 2002. Internal Audit’s rights of direct access to appropriate records, assets and personnel, including MPS senior management is clearly stated. Internal Audit’s unrestricted range of coverage of the organisation’s activities is also made clear.

• Recommendation 2
  Internal Audit should continue to strive towards a full staff complement to ensure a timely completion of annual audit plans to CIPFA Internal Audit Code of Practice Standards and ensure all systems are reviewed over the strategic five year period.

Internal Audit should continue to take steps to ensure slippage in the plan is minimised.

The pay review and relocation of Internal Audit to central London has meant that I have had a certain degree of success in recruiting more staff. As a result of our recent recruitment exercise I hope to have thirty-six staff in post by August 2002. This increase will help us to achieve greater coverage in 2002/03. Our coverage of the plan for 2001/02 was 67%. Although this is only a slight increase on the previous year it is a significant achievement given that we completed a number of high-risk reviews that were not originally planned.

• Recommendation 3
  Internal Audit should ensure that their risk assessments, objectives, strategies and corporate priorities are consistent with those of the organisation as a whole.

In my published Strategy I have demonstrated how Internal Audit contributes to the MPS Mission, Vision and Values. In drawing up this year’s plan I have also used aspects of the MPS risk assessment conducted by Willis and consulted the MPA/MPS Policing Plan. I intend to update my strategy when the MPA corporate objectives are agreed and published.

• Recommendation 4
  Internal Audit should apply the formal framework for quality and peer review of files to ensure quality standards are promoted and maintained.

A peer review process has been introduced and two pilot reviews have been conducted. Post audit performance evaluations have been or are being completed for each of the final reports issued last year. The management team is addressing any training issues or areas for improvement that have arisen.

• Recommendation 5
  Auditors should continually re-evaluate the progress of an audit to assess whether the original scope and terms of reference are still appropriate in the light of findings from the detailed audit.

Control over revisions to original plans has improved and effective scoping studies are being carried out. The average time spent on audits has subsequently decreased.

• Recommendation 6
  Internal Audit should regularly monitor costs and audit days charged against the original budget during the progress of the audit and take corrective action as necessary to ensure budgets and deadlines are achieved. Reasons for variance should be noted on the file.

The post audit evaluation identifies the variance between budgeted and actual time. The cost of the audit is also identified. This documentation is now held on the Permanent Audit Files.

• Recommendation 7
  Internal Audit should ensure that working paper files achieve the standards set out in the CIPFA code of Practice.

Evidence obtained during the progress of audits should be fully cross-referenced into the working paper files and used to support the conclusions reached.

Working papers are indexed and efforts have been made to improve the level of cross-referencing. This area has been examined as part of the peer review and recommendations made for improvement have been introduced.

• Recommendation 8
  Internal Audit should continue to take steps to improve the timeliness of reporting.

Timeliness is not yet as effective as I would wish although it has improved. There are signs that our reminder process is beginning to take effect, however, delayed responses to our reports have been an issue.

• Recommendation 9
  Internal Audit should take steps to ensure follow up audits are undertaken on a timely basis in line with the prescribed timetable.

Due largely to staffing constraints and the completion of some significant additional reviews we have not improved in this area. I intend to address this issue in this year’s programme.

3. In summary, we have made significant progress with the implementation of District Audit’s recommendations. In the coming year I intend to pay particular attention to the timelines of reporting and the completion of follow up reviews.

C. Financial implications

None at this stage.

D. Background papers

None.

E. 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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