Agenda item

Agenda item

Internal Audit Progress Report

Report of the Acting Head of Finance Shared Services and Shared Internal Audit Service

 

This report gives details of the progress made in implementing the recommendations of the internal auditor.

 

Minutes:

The Committee received a report of the Acting Head of Finance Shared Services which included the Shared Internal Audit Service’s progress report.

 

The Head of Assurance, Shared Internal Audit Service highlighted sections within the report.  She advised that two audits had been completed in June and both related to IT.  The IT Disaster Recovery had been given a moderate assurance level with two high priority recommendations and one medium.  There had been two parts to the IT Operations and Contract Management audit.  The Council had been given a substantial assurance for its contract management; however, Capita had been given a limited assurance level for IT operations.  This audit also had two high priority recommendations and one medium.

 

In response to a question from the Portfolio Holder, the Head of Assurance, Shared Internal Audit Service explained that the programme was bespoke to each authority following discussions with managers.  There are occasions when similar audits were being carried out at other districts and any shared learning was forwarded to the districts.

 

Councillor Khan asked officers if they could provide an update on the situation regarding the contract with Capita.  He felt the IT operations management were the route of many problems within the Council.

 

The ICT Client Section Head acknowledged that the IT issues had an impact on users and services.  The company had been given a further deadline of 31 July 2015 to complete the remediation activities that had not yet been delivered.  She provided Members with the background to the issues and the previous deadlines that had been set.  She said that there had been a patchy delivery and she had not received all evidence requested to show the actions had been completed.  There had been several changes in the company’s management team, including at Managing Director level.  Each time there had been a change the ICT Client Section Head, and the Senior Management team, had to build up relationships again.  The current team appeared to be committed to altering the company.

 

The ICT Client Section Head informed the Committee that when the ICT service had been outsourced to Capita 12 officers had been transferred under  the Transfer of Undertakings (Protection of Employment) regulations (TUPE) across from the Council.  There were very few of those original officers still working on this contract.  The company usually reduced the number of engineers at a local level and the majority of work was delivered from a central place, however the centralisation of services had not been completed. When remediation began the Council had agreed not to apply the service credit penalties, however, in the recent letter the Council had stated that it would impose these penalties from 1 August 2015.  She added that it had been agreed to continue with the ‘Modernise IT’ programme at this stage.

 

Councillor Mauthoor said that every department relied on IT and Capita had failed in its role.  She asked whether the Council was looking at other alternatives and why the company had been given so many chances.

 

The ICT Client Section Head agreed users and departments suffered due to the poor service.  She confirmed that the discussion about other alternatives had taken place; however, IT was a high risk and highly complex service.  It was potentially easier to get the company to do their work rather than change.  If the Council terminated the contract with Capita, it would be necessary to consider the alternatives.  Most of the officers TUPE’d over to Capita had been made redundant by the company and were therefore not available to come back to the Council.  The gaps in Capita’s local documentation and local knowledge would have to be filled and this would require specific resources to be brought in to deliver that. The current preferred option was to try to make the contract work and turn it around with Capita, however, it was not happening quickly enough.

 

The Director of Finance advised that part of the reason IT was so bad was due to the lack of investment by the Council prior to the outsourcing.  The Council had transferred a failing service.  Outsourced Services Scrutiny Panel was monitoring the service and contract and had required Capita to attend twice and answer questions.  The company had accepted it was not delivering the required service.  It was not an easy option to break the contract, but the Council was getting close to making a decision as to whether it should stay or break it.

 

Councillor Silver noted that the deadline had been changed on three occasions. He asked who had made the decision to move the deadline.

 

The ICT Client Section Head explained that officers had seen some progress.  The company had added additional resources and had completed some of the work.  There had been sufficient work to allow an extension.  Part of the difficulties had been the changes of staff. 

 

Councillor Silver questioned whether the initial progress had continued and whether officers expected it to carry on.

 

The ICT Client Section Head confirmed that she had seen a continuation of the progress, but the work was not close to being completed. 

 

Councillor Khan noted the officers comments about the company’s regular changes at senior management level.  He had the impression that the Council had been giving the company the benefit of the doubt.  He asked officers if they could state what would be the ‘last straw’.  He felt the Council should break the contract immediately.

 

The Director of Finance advised that as the Council was in a contractual remedial process with the company that work needed to be completed.  At the end of July a formal decision would be made.

 

Councillor Khan noted the recommendations listed for the Vinci contract.  He asked whether any area had given internal audit any concerns.

 

The Head of Assurance, Shared Internal Audit Service stated that she had been happy with the replies provided by the relevant officers.

 

Councillor Williams noted the recommendation for Risk Management.  He had understood this was working well.  Members had received reports and copies of the Risk Register.  He asked where the process was failing.

 

The Head of Assurance, Shared Internal Audit Service explained that when a risk had been identified, officers had been asked to provide more detail.  An extension had been granted until September.

 

RESOLVED –

 

1.      that the Internal Audit Progress Report against the 2014/15 Audit Plan be noted.

 

2.      that amendments to the Audit Plan as at June 2015 be approved.

 

3.      that the removal of the implemented recommendations be agreed.

 

4.      that the changes to the implementation date for 19 recommendations, as set out in paragraph 2.6 of the report for the reasons set out in Appendix 4, be agreed.

 

Supporting documents:

 

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