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2013 4 July

Election of Chairman

Introductions and Apologies

Minutes of the meeting held on 25 March 2013

POLICE AND CRIME COMMISSIONER FOR NORTH YORKSHIRE AND NORTH YORKSHIRE POLICE

 JOINT INDEPENDENT AUDIT COMMITTEE

 Notes of the meeting held at the Offices of the Police and Crime Commissioner, Barker Business Park, Melmerby on 25 March 2013.

PRESENT:-

In the Chair:                   Erica Taylor, JP (ET)

Members:                     David Portlock (DP) and Michael Wilson (MW).

Officers:                       PCC Julia Mulligan (JM); CFO to PCC Judith Heeley (JH); Temporary Chief Constable Tim Madgwick (TM); Chief Officer of Resources, Joanna Carter (JC); Chief Accountant Jane Palmer (JP); Head of Internal Audit Neil Rickwood (NR); Internal Audit Manager Michael George, External Audit Senior Manager (Mazars) Rochelle Tribe (RT).

INTRODUCTIONS AND APOLOGIES

Apologies were received on behalf of Head of Organisation and Development Gary Macdonald and Cameron Waddell of Mazars.

ET welcomed the two recently appointed members of the Joint Audit Committee (JAC), David Portlock and Michael Wilson.

MINUTES OF THE PREVIOUS MEETING HELD ON 6 DECEMBER 2012

Subject to the following updates, the minutes of the JAC held on 6 December were approved as a true record.

Minute 8:

ET enquired what progress had been made against Time Off in Lieu (TOIL).  TM provided a brief update regarding the new management processes and shift system, but advised that due to major operational events such as G8 in 2013 and the Tour de France in 2014, the backlog of TOIL could not be resolved in the short term.  TM suggested a progress report be provided to the September JAC which will allow time for time the new shift system to be established and for the report to be in context against the Winsor 2 Review. 

RESOLVED

– That a TOIL progress report be scheduled for the JAC scheduled for 23 September 2013.

Minute 14: 

JM advised Members that since the last meeting there had been a major review of the Commissioners decision making process and provided a short presentation to explain the new process and meetings structure and how these will feed into the JAC, the Police and Crime Panel, and in contributing towards delivering the Police and Crime Plan.

In regard to JAC having sight of Decision Notices, Members confirmed that their responsibility was to ensure that the correct checks and balances were in place for the Decision Notices, rather than actually having sight of them.  JH confirmed that the decision making structure will be incorporated into the draft Annual Governance Statement which the Committee will have sight of in June. 

Minute 15:

ET enquired if there were any further applicants to the JAC.  JM responded that following the recent appointment of DP and MW, further recruitment was due to take place.  The minimum number of Members required is 3 and the maximum is 5, but JM explained that she seeks to appoint further Members to ensure that any meetings are quorate.  It was also confirmed that induction training will be provided to new Members of the Committee.

RESOLVED

  • That Induction Training be provided to the new Members of the Committee.
  • That JM will keep the JAC Members updated in regard to the progress of any new appointments.

MATTERS ARISING 

JC provided a verbal update on petty cash, advising that wherever possible petty cash was being reduced or removed entirely and that dip sampling was taking place by JC to ensure transactions are appropriate and correctly recorded and processed.

In regard to the summary for the NHS report ‘Taking it on Trust’ DP asked if NYP had compared their internal control mechanisms to other forces?  JH and JC advised that this would be undertaken as part of the internal review for the Annual Governance Statement.

There were 2 other matters arising, the NHS report ‘Taking it on Trust’ and an update on petty cash, which Members would be updated on as agenda items.

REVIEW OF ACCOUNTING POLICIES 

In response to DP seeking clarity why the current pension costs fall under the Chief Constable and past pension costs fall under the Commissioner, JC explained that as Chief Constables have become new corporations sole in addition to the Commissioner (previously the Police Authority was the body corporate) previous pension costs would stay with the Commissioner for consistency and new and current pension costs would come under the Chief Constable as the new corporate sole.

RT commended the North Yorkshire decision making process in comparison to other forces, adding that the format for the accounts was well supported and evidenced.

RESOLVED – That the approach to be taken in preparation for the 2012/13 accounts, including the draft accounting policies, be approved.      

INTERNAL AUDIT PROGRESS REPORT 

The report provided Members with the progress to date in achieving the Audit Plan which is due to be completed on schedule.  Members discussed the various audit report summaries, in particular the Regional Procurement Report and raised concerns regarding the internal controls, value for money and additional bureaucracy.  MG confirmed that Regional Procurement will be reviewed twice more during 2013/14.

JC requested notice of the Internal Assurance Bodies audit report and to be consulted on the feedback for cultures and behaviour.   

RESOLVED – That the progress made is noted.

INTERNAL AUDIT STRATEGY

The report of the Internal Audit to set out the approach for delivering assurance to the Chief Constable and Commissioner.  DP had several detailed points which required clarity, he agreed to contact NR separately to address these.  ET recommended that Internal Audit provide a short presentation of the strategy to the next meeting of the JAC.

RESOLVED

  • That the Internal Audit Strategy be noted;
  • That DP contacts NR separately to the meeting to receive clarification on his queries;
  • That Internal Audit provides a short presentation to give an overview of the Strategy to the   JAC on 4 July 2013.

INTERNAL AUDIT PLAN 2013/14

The report of the Internal Auditor to set out the plan for 2013/14.  Members noted the report and made no further comments.

RESOLVED – The Internal Audit Plan 2013/14 was noted.

COMMISIONER’S DECISIONS

ET enquired on the progression of the Chief Constable appointment process.  JM confirmed that the selection process will take place on 16 April and the preferred candidate will be recommended to the Police and Crime Panel on 25th April.

DP emphasised that it was not the role of the JAC to scrutinise the decisions made by the Commissioner, but to ensure that the frameworks and procedures for the decision making process are in place.

COMMISSIONERS AND CHIEF CONSTABLES ITEMS

There were no items to note.

TM welcomed the new members of the JAC and the added value and purpose of their role.

PROGRESS ON INTERNAL AUDIT RECOMMENDATIONS

The report of the Internal auditors to provide an update on Internal Audit recommendations.  The Board discussed the recommendations for Additional Allowances, it was felt there is a better process in place but improvements could still be made, such as encouraging the use of pool cars.

RESOLVED – That the report is noted. 

EXTERNAL AUDIT PROGRESS REPORT 

Members confirmed that they would find an External Audit progress report to each meeting of the JAC beneficial.  DP enquired if the correspondence to the Commissioner and Chief Constable from the External Auditors outlining their fees for 2013/14 could be circulated to JAC Members, which was agreed.

RESOLVED

  • External Audit to provide a progress report to each future meeting of the JAC;
  • That the correspondence providing the External Audit fees for 2013/14 be circulated to JAC members.

ANY OTHER BUSINESS          

As this will be JH’s last meeting, on behalf of the Joint Audit Committee ET expressed her thanks to JH for all her help, support and the contribution she had made to the establishment of the Joint Audit Committee.

DATE OF NEXT MEETING

The next meeting of the JAC will be 10am Monday 24th June at the Office of the Police and Crime Commissioner, Melmerby (subsequently changed to 10am Thursday 4 July).

Matters arising

Statements of Accounts with Annual Governance Statements for the year ended 31 March 2013

 JOINT REPORT OF THE CHIEF FINANCE OFFICERS

 PURPOSE OF REPORT

To present to the Joint Independent Audit Committee the Statutory Statements of Accounts and Annual Governance Statements for 2012/13 financial year for the Police Crime Commissioner and Chief Constable for North Yorkshire.

KEY INFORMATION

The following sections of this report set out the key extracts from the Statements of Accounts and associated Annual Governance Statements in user friendly headings.  These accounts are provided in the context that recorded Crime fell by 8% despite funding reductions from central government.  This represents 3,216 fewer victims of crime when compared to the same period in 2011/12.  The North Yorkshire Police area remains the safest in England.

Where the money comes from?

The Police and Crime Commissioner for North Yorkshire (NYPCC) finances its spending through income received from Government Grants and local Taxpayers.  The contributions made by each of these sources of funding are set out in detail at page EF3 within the explanatory foreword of the NYPCC Statement of Accounts.  This funding is as follows: –

                                                                                                           £’000

  • Precepts from District Councils                              61,498
  • National Non Domestic Rates                                 30,731
  • Revenue Support Grant                                                    596
  • Central Government Police Grant                          43,866

                                                                                                          136,691

Where the money goes?

There are two methods of presenting the expenditure incurred against the funding levels above.  The first is in relation to the type of expenditure that the NYPCC and Chief Constable for North Yorkshire (CCNY) incur and this is summarised as follows: –

                                                                                                                       £’000

  • Employee costs (including ill health)                               115,650
  • Premises                                                                                            4,823
  • Supplies and Services                                                                13,597
  • Transport                                                                                          3,171
  • Capital financing and transfers to/from reserves          11,256

                                                                                                                        148,497

  • PCC Expenditure                                                                                 879
  • Less Income from grants and other sources                  (12,685)

                                                                                                                        136,691

The second analysis demonstrates how expenditure is incurred against key business segments (areas of business): –

                                                                                                            £’000

  • Response and Reassurance                                        52,884
  • Crime                                                                                   24,629
  • Specialist Operations                                                    19,861
  • Corporate                                                                           11,993
  • Democratic Core                                                                   879
  • Other                                                                                    26,44

                                                                                                          136,691

The full explanation of each of these segments can be found in the NYPCC accounts at pages EF7 and EF8.

The NYPCC and CCNY have managed all expenditure within the budget for the year and through effective management by budget holders this has resulted in an underspend of £4million.  This was predicted as the year progressed and where appropriate was factored into the 2013/14 budget setting process.

What have we achieved with this?

The Commissioner has clearly set out the vision for NYPCC within the Police and Crime Plan which is for our communities to “Be Safe, Feel Safe”. This is supported by the aim for North Yorkshire Police to be the most responsive

force in the country. The funding invested in services as set out above has been in support of the six key goals that underpin this vision. There has been significant activity and resources invested in support of these goals.  The goals are set out below: –

  • Reduce Harm
  • People First
  • More with Less
  • Fit for the Future
  • Drive Justice
  • Police UK

The full detail of achievements for each goal are set out at pages EF11 and EF12 of the NYPCC accounts.

How do we ensure good governance

The NYCC and CCNY set out arrangements for establishing and monitoring the achievement of their objectives.  These arrangements include proactive arrangements for the management of risks to achieving these objectives.

The governance arrangements ensure that the key rules and regulations associated with delivering services are clearly set out, communicated and managed.  Arrangements are put in place for management of the key policies,

decision making, effective and efficient use of resources and assets.  These provisions also include the appropriate compliance with established policies, procedures, laws and regulations.

The arrangements in place for NYPCC and CCNY extend the principles to partnerships and ensure that appropriate consultation and engagement with stakeholders takes place.  The Annual Governance Statements set out with the Statements of Accounts provide the detailed information regarding these arrangements

Statutory Compliance

The Police Reform and Social Responsibility Act 2011 (the Act) received royal assent on 15 September 2011 and North Yorkshire Police Authority (NYPA) was replaced on 22 November 2012 by two “corporation sole” bodies – the Police and Crime Commissioner for North Yorkshire (NYPCC) and the Chief

Constable of North Yorkshire Police (CCNY).  These bodies are required to prepare separate financial statements and Annual Governance Statements (AGS).

This transaction involved a transfer of functions, but the essentials of service delivery have been maintained.

The financial statements presented here represent accounts for NYPCC and also for the NYPCC Group (the Group).  NYPCC has been identified as the parent organisation of CCNY and the requirement to produce group accounts stems from the powers and responsibilities of NYPCC under the Act.

The Group accounts for the year ended 31 March 2013 are presented in the format laid down in “The Code of Practice on Local Authority Accounting in the United Kingdom” (the Code) issued by the Chartered Institute of Public Finance and Accountancy (CIPFA).

The AGS provide the position as at 31 March 2013.  They describe the respective governance environments for the NYPCC and CCNY. Where possible to do so the Commissioner and Chief Constable have adopted a joint approach to governance and the development of an enhanced internal control environment.

The Accounts and Audit Regulations have a requirement for the audited accounts be published following sign off by the 30 September 2013.  However the Department of Communities and Local Government guidance for publication of draft accounts considers it to be good practice to publish draft accounts in line with  principles of transparency.  The NYPCC and CCNY have a clear commitment to the transparency agenda and have agreed that the draft accounts and AGS are all published following the appropriate scrutiny by the Joint Audit Committee.

RECOMMENDATIONS

That Members consider and note the content of this report and provide any observations and feedback.

Statement of Accounts and Annual Governance Statement 2012/13

Statement of Accounts – Chief Constable – 2012/13

Update of Internal Audit Recommendations

Report of the CHIEF EXECUTIVE OFFICER

PURPOSE OF REPORT

To present to the Joint Independent Audit Committee the update on internal audit recommendations conducted by appointed Internal Auditors to the West

Office of the Police Crime Commissioner and Chief Constable North Yorkshire Police (OPCC/CC)

KEY INFORMATION

OPCC/CC Internal Auditors produce an annual plan of audits for North Yorkshire Police Crime Commissioner and Chief Constable, the annual plan for 2012/13 was reported by OPCC/CC o the Ethics and Standards Board at the beginning of the financial year.

Since the last reporting of audits at the Joint Independent Audit Committee on 25 March 2013 there have been seven new audits with eleven audits remaining live/open and eight audits closed.  The table at Appendix A illustrates the status of recommendations.

The Chief Constable’s Delivery Unit input report recommendations onto the Force Risk Register and monitor compliance and progress with action owners.  Any non-progression with audit recommendations is reported to the relevant Chief Officer Team portfolio lead.  This report assists member of the Joint Audit Committee in carrying out their assurance role for the Police and Crime Commissioner, Chief Constable and the Public.

RECOMMENDATIONS

Members of the Joint Audit Committee requested to note the update on internal audit recommendations conducted by OPCC/CC.

Internal Audit Progress Report

REPORT OF HEAD OF AUDIT

PURPOSE OF REPORT

The report sets out the progress made to date in achieving the Audit Plan.

KEY INFORMATION

This Progress Report monitors delivery of shared Internal Audit services.  The service is shared with West Yorkshire Police and Commissioner’s Office and Humberside Police and Commissioner’s Office.

The 2012/13 Audit Plan is set out in Appendix A and 2013/14 plan in Appendix B.  Table 1 summarises the progress against the plans.

Table 1: Summary of Progress

STATUS OF AUDITS

July 2013

 

2012/13 Plan

2013/14 Plan

Final Reports with Response Received

12

 

Final Reports – Response awaited

1

 

Final Reports – No Response Required

1

 

Draft Reports Issued

0

 

Audits in Progress

0

5

TOTAL

14

5

The audits in progress are: the Diversity Update, Financial System Testing for the Chief Constable and for the Commissioner, Managing Police Officer Rest Days and TOIL and the first Follow Up of 2013/14.  Four reports have been responded to since the last Committee: Property Compliance, Internal Assurance Bodies, the Second Follow Up of 2012/13 and Complaints Handling.  Asset Management has been finalised and NYP are preparing their response.

All audits from the 2012/13 Audit Plan have been completed.

Completed audit reports are provided when the audit opinion is that of limited assurance or inadequate assurance.

Summary Audit Reports are provided in Appendix C for Property Compliance, the Second Follow Up and Complaints Handling.  Appendix D includes a complete copy of the Internal Assurance Bodies Report.

RECOMMENDATIONS

That members monitor the progress made.

Neil Rickwood, Head of Audit

Supporting documentation

  • Appendix A – Internal Audit Plan 2012/13
  • Appendix B – Internal Audit Plan 2013/14
  • Appendix C – Summary Internal Audit Reports
  • Appendix D – Complete Internal Audit Report

Appendix A: Internal Audit Plan 2012/13

Audit Status Coverage 
Follow Up Exercise One Final Report with Response Received To provide assurance that recommendations have been implemented.
Pension Scheme Transfer  Final Report with Response Received To provide support regarding the transfer of data of the police pension schemes to a new provider.  In particular information relating to pensioners and existing employees, underpinning the liabilities of the Authority.
Commissioning by the OPCC.  Final Report, no response required. The objective of the review is to advise the NYPA on commissioning frameworks that would give assurance that the process is likely to produce value for money and demonstrate probity.
Property Compliance  Final Report with Response Received To undertake a compliance programme of audits of connected property stores across North Yorkshire, to provide assurance over the revised policy and resourcing of the property function.
Use of Force Training Update  Final Report with Response Received To assess compliance with NYP policy in respect of use of force training, whether the training has been recorded and to review accuracy with the officers who are recorded as being trained.
Contract Standing Orders Compliance Update Final Report with Response Received To assess compliance with the Authority’s Contract Standing Orders in respect of NYP procurement activity. 
Credit Card Use  Final Report with Response Received To audit the use of corporate and covert credit cards. 
Asset Management Final Report To review the processes that NYP has set up: from prioritisation and establishing of need, asset recording and allocation, maintenance and replacement.  Depending on outcome of 2011/12 Corporate Budget Audit, it is suggested that the focus may shift more onto asset & physical security, insurance etc.
Follow Up Exercise Two Final Report with Response Received To provide assurance that recommendations have been followed up.
Complaints Handling Final Report with Response Received To undertake dip sampling of complaints, including from the point that the complaint was made.  The timeliness of complaints handling and compliance with IPCC Guidance and NYP Policy will be evaluated. Feedback will also be sought from complainants to determine their satisfaction with the process.
Internal Assurance Bodies Final Report with Response Received To review the bodies within NYP charged with providing an assurance function, eg the Delivery Unit and Information Management.  The purpose being to see what reliance can be placed on their work which includes benefits realisation of the change programme and data quality audits, as well as how their work does/can fit together with Internal Audit to provide assurance.
Unsocial Hours Final Report with Response Received To provide assurance over the proposed arrangements to commence paying an allowance to police officers for unsocial hours.
Petty Cash Final Report with Response Received The objective of the audit is to undertake a risk based, systems audit of the Authority and NYP’s use of credit cards, both covert and non-covert.

Appendix C: Summary Internal Audit Reports

Property Compliance

The purpose of this review was to undertake a focused assessment of property handling within NYP, specifically relating to the seizure, retention and disposal of items of property other than found. Issues with the management of property stores have been highlighted through previous audits, including a detailed assessment of Harrogate Property Store and a sensitive property audit. NYP has also undertaken extensive work of its own following identification of problems in this area, including a recent Adequacy Assessment, which outlined proposals for a minimum specification for stores.

The review encompassed extensive testing at seven property stores. Site visits were conducted over a three month period, namely July to September 2012, with checks of Property Other Than Found items and records.

The main test undertaken was to ensure that property held within stores could be located. Internal Audit was able to locate all items recorded as being held in stores from a sample of 105 items.  It was particularly noticeable that property handling at Harrogate has significantly improved and the store in the new police station enables the secure holding of property items.

Internal audit has identified a wide range of issues as a result of this review. These are generally of a minor nature and the issues highlighted are consistent with the size and nature of the audit.

The audit has highlighted that some basic property procedures are too frequently not being complied with; this would suggest that property is not always being given sufficient attention by all those involved. For example in some cases officers are still failing to record the seal numbers of cash exhibits. Whilst in itself this may appear to be insignificant, this could enable part of the contents of a cash exhibit to be misappropriated without detection. In addition, individuals are not always required to sign for items that they are removing from stores; as a result there may be no record of who has taken it.

It was found that the process for the management of drugs has proven to be insufficiently resilient. It was evident that NYP’s procedures in this area have not been complied with. This was highlighted through Internal Audit’s inability to readily locate items of drugs that were transferred from Whitby upon the closure of the drugs store located there.

Security of stores continues to be a problem. Whilst some improvements have been made, there continues to be wide and unfettered access to temporary stores. This is exacerbated by the fact that some items are held in temporary stores for significant periods of time and in some instances this included firearms. NYP Procedure permits officers unaccompanied access to temporary stores, due to their purpose, but this makes the continual active management of them all the more important. However, too often this is not the case. This is highlighted by the fact that items that are not present in temporary stores are not always identified and chased. The continual management of temporary stores ensures that processes remain manageable and more efficient.

In summary Internal Audit are able to provide reasonable assurances that property other than found is being effectively managed. The recommendations made within this report are proposed to place more emphasis on the management of property and basic procedures. However, the current approach towards the security of stores continues to require significant action.

Recommendations

17 recommendations were made.  The principle recommendations are listed below: 

  •  A signature should always be obtained from the individual receiving an item from stores.
  • Organisational Support Officers should be required to check items in store against the POTF Register, in order to identify any ‘missing items’.
  • Access to the external drugs store should be restricted to the Drugs Liaison Officer if possible. If officers continue to be permitted access, additional security measures should be put in place, such as Borer swipe and accompanied access.
  • A reconciliation should be undertaken of all of the drugs items that were transferred from Whitby and Malton
  • NYP should consider allocating the general management of drugs items to the Organisational Support Officers.
  • An item should only be classed as disposed of once it has actually left the stores or been destroyed, for example, transferred to Firearms Licensing for destruction.
  • Cash holdings should be subject to some form of supervisory review
  • Where officers are to be permitted unaccompanied access to temporary stores/facilities, additional security measures must be put in place, such as Borer swipe or a ‘key log’. In addition, temporary stores must also be emptied on a daily basis alternatively, the use of drop box style safes could be utilised for the secure storage of cash and drugs items.
  • Access to permanent stores should be restricted to the Organisational Support Officers and officers should be required to request items from stores in advance, negating the need for out of hours access.

All recommendations were accepted.

 

Commentary

 

Effectiveness of Risk Management Approach

 

Property management procedures considered were generally effective, although there were significant elements of non-compliance. Significant issues with regards the security of stores, continues to be a problem.

Efficiency of Risk Management Approach

A lack of adherence to basic procedures, makes it more difficult than it needs to be to demonstrate continuity of evidence and ensure individuals are accountable for their actions.

Assurance Level

2 – Reasonable Assurance

Overall Risk

5:10

The Second Follow Up 2012/13

Internal Audit has undertaken a Follow Up audit into all recommendations that were categorised as either fundamental or significant and had been closed by the relevant action manager on the  Risk Management system ARM.

No. of Recs assessed as implemented IA assessment of the Implementation Rate Further Rec. Raised
Credit Card Use
1 1 No
Harrogate POTF
4 3 Yes
RMS Procurement
2 0 Yes
Workforce Attendance
2 2 No

Internal Audit in the main agrees with the implementation of the recommendations, as reported by the Delivery Unit. Where Internal Audit feels that these have not been addressed, further recommendations have been made.

Recommendations

For North Yorkshire Police to consider how it provides adequate OSO, POTF cover for each of the main property stores to ensure the continuity of services and maintain the integrity of evidence within the property store.

NYP should seek assurances from Regional Procurement that due account is undertaken in the bidding process of the size of an organisation and its ability to service NYP’s requirements; and that a standard tendering scoring system which clarifies the status of ‘mandatory’ items and ensures that the weightings attached to ‘highly desirable’ and ‘desirable’ is utilised consistently.

Both recommendations were accepted.

 

Commentary

 

Effectiveness of Risk Management Approach

 

Most of the recommendations which were closed on ARM by the Delivery Unit were supported by evidence of the activity having been undertaken. 

Three recommendations were however closed which should have not been and still pose a risk to the NYP. Two of the three were due to responsibility being transferred to Regional Procurement.  However NYP still requires assurance that these matters are being addressed.

Efficiency of Risk Management Approach

Some issues were encountered with the way that information from the Delivery Unit is passed to Internal Audit to follow up.  These matters are being addressed and the continued evolvement of the collaborative working should produce a more efficient system.

Assurance Level

2 – Reasonable Assurance

Complaints Handling

The Professional Standards Department (PSD) in North Yorkshire Police (NYP) receives, records and resolves complaints against police officers and staff. The Centurion system is used to hold comprehensive details on complaints and for generating reports on the complaints handling process.

The complaints handling process has a statutory underpinning and is overseen by the IPCC, who have issued guidance to local policing bodies and police forces on the application of the law. Internal Audit have drawn out the key controls from the guidance and applied it to 44 cases selected from November 2012 to March 2013.

Overall, PSD dealt effectively with the complaints considered and was able to respond to them on a timely basis such that the Commissioner and NYP can derive reasonable assurance that the risks inherent in complaints handling are being satisfactorily managed.  Positive assurances can be given that: 

  • All recorded complaints considered were made by a person with a right to complain.
  • Based on information available at the time of the audit it was noted that 84% of cases were recorded within 10 days, this compares with 2011/12 when it was 90% and the national figure for 2011/12 (the most current year available) of 86%.
  • Matters were accurately classified as direction and control or conduct complaints.
  • Local resolution of complaints was used appropriately.
  • Investigations were set up appropriately. 

However it was considered that minor improvements could be made in a number of areas. 

In each case, including those which are locally resolved, PSD seek to identify any lessons that could be learned. Our review identified that whilst lessons learned are reported to the rest of the organisation, through the use of the Organisational Learning Bulletin, this is an area that could be further enhanced. It is accepted that the process of drawing out the root causes of an incident may be difficult and time consuming in some cases. However, in order to address the issue such that it is less likely to happen again, it may also be necessary to work with the department and teams involved, to gain a deeper understanding of the system in place. 

In addition, whilst accepting that the overwhelming majority of complaints are recorded, a review of matters received which are not recorded identified 2 cases which could arguably be treated as complaints.  

In addition observations were made that: 

  • The letters written to complainants, where their complaint has been locally resolved, should be reviewed and appropriately personalised;
  • PSD need to make it clearer to complainants who is dealing with their case; and
  • PSD investigators should receive specific diversity training. 

Further assurance will be given as to the perception of the complainants later in the year when a survey of their views is undertaken.

Recommendations

PSD should develop how they identify lessons learned.  It is suggested that where possible lessons learned are based upon systematic issues. These should be periodically extracted and taken forward together with the relevant department to identify what action can be taken to prevent the issue from arising again.

PSD should consider selecting particularly well written letters and making them known to other investigators in order that they can learn from them.  In addition investigators should be given guidance on how letter writing can be improved.

PSD should review how they deal with Inbox/ Miscellaneous matters to ensure that they record them as complaints in order to represent a fuller picture of the situation.

PSD should ensure that all complainants are sent a letter as soon as practicable, advising them who is dealing with their complaint and giving them their contact details.

PSD should liaise with the Training department to identify the training needs of Investigators regarding diversity training and put together a training package for them.

All recommendations were accepted, other than the recommendation to review the Inbox/ Miscellaneous matters. PSD believed that the current handling of these matters was appropriate.  Internal Audit had only rated such a review as meriting attention and therefore accept their response.                                        

 

Commentary

 

Effectiveness of Risk Management Approach

 

The complaints handling process is undertaken in an open way. Complainants are given sufficient attention and care is taken to comply with the guidance given by the IPCC.  Further consideration is needed as to how deeper systematic causes of complaints are identified and addressed.

Efficiency of Risk Management Approach

The complaints handling process is well organised and administered.  Complaints are recorded on a timely basis and considerable use is made of local resolution, allowing the issues raised to be responded to swiftly and flexibly.

Assurance Level

2 – Reasonable Assurance

Overall Risk

5:8

Internal Audit Strategy presentation

Commissioner’s Decisions

Commissioner’s and Chief Constable’s items

An opportunity for the Commissioner and Chief Constable to update members of the Committee on any items relevant to its Terms of Reference, particularly new or increased risks and governance matters. 

To assist members in understanding the context of the Committee’s work and current relevant issues.

To include the Shadow Internal Audit Management Board  Verbal report of the Chief Constable’s Chief Finance Officer and Chief Accountant

External Audit:

Review of Internal Audit

REPORT OF THE COMMISSIONERS CHIEF FINANCE OFFICER

PURPOSE OF REPORT

To consider the annual review of internal audit and it’s implications for the level of assurance that can be provided to the Police and Crime Commissioner (PCC) and the Chief Constable (CC).

RECOMMENDATION

Members are requested to consider and agree the findings of the annual review of internal audit, and to monitor the action plan formulated by the Head of Audit at future meetings.

KEY INFORMATION

The Accounts and Audit (England) Regulations 2011 require there to be an annual review of the effectiveness of Internal Audit, the findings of which are to be considered by the Audit Committee.  The process is regarded as part of the wider review of governance arrangements and production of the Annual Governance Statement, which also appears on this agenda.  An effective Internal Audit service is a key part of overall governance arrangements and for adding value to service provision.

The Home Office Code of Practice on Financial Management makes it clear that both the PCC and the CC are relevant bodies for this purpose and both are required to maintain an effective internal audit of their affairs, including conducting an annual review.

The review has traditionally taken place against the requirements of the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for Internal Audit in Local Government.  New Public Sector Internal Audit Standards were launched in December 2012 and came into effect on April 1st 2013.  While the first full review against these standards does not need to take place until the end of 2013/14, it was considered prudent to undertake a full self assessment in order to identify any areas where action was required, and this has formed the basis of the review of effectiveness reported below.  An analysis of the new standards is provided at Appendix A.

The review of Internal Audit for 2012/13 is attached at Appendix B and concluded that while there are a number of actions which need to be taken, some of which represent formalisation of existing practice or are already underway, Internal Audit is considered to be operating in accordance with accepted professional practice and that the PCC and CC can therefore continue to place reliance on their internal audit arrangements for the purposes of the Annual Governance Statement.

STRATEGIC RISK IMPLICATIONS

Failure to comply with the regulations is a strategic risk and the review itself provides an opportunity to identify areas for improvement in the system of internal audit.

AUTHOR:Judith Heeley

Chief Finance Officer

SUPPORTING DOCUMENTATION

Appendix A – The Public Sector Internal Audit Standards

Appendix B – Review of Internal Audit 2012/13

BACKGROUND PAPERS

The Accounts and Audit (England) Regulations 2011 

CIPFA Code of Practice for Internal Audit in Local Government 

Chartered Institute of Internal Auditors’ Quality Assessment 

“Taking it on Trust” Audit Commission Report 2009 

 APPENDIX A

The Public Sector Internal Audit Standards 

The Public Sector Internal Audit Standards (PSIAS) were launched in December 2012 and came into effect on April 1st 2013.  They provide a consistent framework for internal audit services across the UK public sector and are designed to drive improvement, leading to better public financial management. 

The new standards are based upon the Institute of Internal Auditors’ International Standards, Definition of Internal Auditing and Code of Ethics, which form the core of the PSIAS.  The new standards will replace the existing ones in local government, central government and the NHS, including the CIPFA Code of Practice. 

Although there have been no fundamental changes there are some modifications, for example the requirement for an internal audit charter which formally defines the purpose, authority and responsibility of internal audit activity, as well as the nature of consulting services.  It will also need to cover arrangements for avoiding conflicts of interest if internal audit carries out any non-audit activities. 

There is no longer a requirement to produce an audit strategy.  Instead, a risk based plan must incorporate or be linked to a strategic or high level statement.  This should set out how the internal audit service will be provided and developed in accordance with the charter and how it will link to the organisation’s objectives and priorities. 

The quality of service will also need to be rigorously checked under the Quality Assurance and Improvement Programme.  The QAIP required ongoing internal assessment s of all aspects of internal audit activity, as well as an external assessment at least every five years.  The QAIP is designed to assess the efficiency and effectiveness of internal audit as well as identify opportunities for improvement. 

The Head of Audit will have to include a statement on the results of the QAIP in an annual report.  The internal assessments can be divided into two parts.  The first will be monitoring internal audit activity, in the same way as under current procedures.  The other will comprise periodic self assessments or assessments carried out by other officers in the organisation, who will have to have sufficient knowledge of internal audit practices. 

External assessments will need to be carried out by qualified and independent assessors or assessment teams from outside the organisation.  They can be undertaken as a full external evaluation or a self assessment with independent external validation. 

APPENDIX B

ANNUAL REVIEW OF INTERNAL AUDIT 2012/13 

1.         Current Arrangements for Internal Audit 

1.1       The Internal Audit Team is employed by the Police and Crime Commissioner for West Yorkshire, but provides services under collaboration agreements to the PCC’s and CC’s of both North Yorkshire and Humberside.  The Team also has responsibility for the audit of the Regional Collaboration Programme and the National Police Air Service, which is hosted by West Yorkshire. 

1.2       The Team currently comprises of 8.25 full time equivalent staff (as compared to 9 FTEs in 2012/13), led by a Head of Audit and Risk who reports directly to the West Yorkshire PCC’s CFO but with independent access to the PCC, CC, Chief Executive, and the Chair of the Joint Independent Audit Committee in each area. 

1.3       Each client has a dedicated audit manager responsible for delivery of the audit plan.  Staff within the team are deployed to specific clients and jobs so as to maintain continuity and make best use of skills and experience, maximising the benefits of working across the three police areas.  Although continuity is important it is also worth noting that audit staff are generally expected to work at more than one client organisation to ensure as wide a breadth of knowledge of different force systems as possible. 

1.4       Terms of reference for Internal Audit are set out in Financial Regulations, agreed by the PCCs.  These define the status of internal audit, and the principles of how it will operate, ensuring that it has access to all information and officers and staff required to discharge its responsibilities.  The Joint Independent Audit Committee in each area oversees the work of Internal Audit in order to provide assurance the PCC and CC on the effectiveness of internal control and governance and risk management arrangements. 

1.5       During 2012/13 Internal Audit operated in accordance with the CIPFA Code of Practice for Internal Audit in Local Government, which sets out best practice in terms of scope, independence, ethics, audit committee, relationships, staffing, training and development, audit strategy and planning, undertaking audit work, due professional care, reporting, and performance, quality and effectiveness.

 2.         Resourcing, Qualifications, Experience and Vetting

 2.1       Overall the section planned to deliver 1,600 days to clients in 2012/13, from an establishment of 9 FTEs which includes temporary placements.  Of this 225 days related to North Yorkshire and these were delivered in full.

2.2       Internal Audit benefits from a significant investment in training and staff are supported in obtaining professional qualifications.  The following table demonstrates the extensive experience and qualifications within the section, particularly amongst the Audit Managers and Head of Audit and Risk. 

Internal Audit Experience

Number of Staff

Up to 1 year

0

0

1 to 2 years

0

0

2 to 5 years

1

10%

5 to 10 years

3

30%

Over 10 years

6

60%

Total Staff

10 (9 FTE)

100%

 

Qualifications

Number of Staff

Qualified Accountants (ICAEW)

2

Institute of Internal Auditors Member

8

Institute of Internal Auditors Practitioner

0

Studying for Practitioner Level

0

 2.3       In order to fully discharge their audit responsibilities, particularly in sensitive areas of police activity, all 9 current members of the audit team are vetted to security clearance level.

3.         Ongoing Developments in Service Provision

3.1       The arrangements for provision of the internal audit service were extensively reviewed as part of planning for the transition to elected police and crime commissioners in November 2012.  The Police Reform and Social Responsibility Act 2011 created the PCC and CC as two separate corporations sole, each with the responsibility to maintain an effective internal audit service.

3.2       A number of options for future service delivery were identified as part of this transition planning, the preferred model being a consortium arrangement which involved the Head of Audit reporting to a board made up of the statutory finance officers of the PCC and CC in each force area.  The three PCCs and CCs agreed that this could operate in shadow form during 2013/14, to allow each of the clients to consider options for longer term provision.

3.3       The Internal Audit Management Team is continuing to proactively review all aspects of service delivery in preparation for anticipated market testing.  This includes actioning the issues identified as part of the review against the CIPFA Code and the self assessment against the PSIAS, as well as continued focus on ensuring that a quality service is provided.  This is being reported through the shadow board, which has a key role in ensuring that the benefits and added value of delivering internal audit services across the various clients are being realised. 

4.         Compliance against Best Practice

4.1       The CIPFA Code was considered proper practice for Internal Audit under the Accounts and Audit Regulations and the Home Office Code of Practice on Financial Management at the time of the review, and an assessment was undertaken against the checklist contained within the Code. 

4.2       It comprises 11 standards (or principles) 37 related areas and 194 specific questions, which form the basis of the assessment.  The standards are   

  • Scope of Internal Audit
  • Independence
  • Ethics for Internal Auditors
  • Audit Committees
  • Relationships
  • Staffing Training and continuing professional development
  • Audit strategy and planning
  • Undertaking audit work
  • Due professional care
  • Reporting
  • Performance, quality and effectiveness

4.3       The main issues arising from the review, some of which reflect the changing environment in which Internal Audit is now operating given the new governance arrangements in place, were as follows

  • Need for a clearer definition of the role of Internal Audit in fraud related and consultancy work, including the ongoing work with Professional Standards to strengthen the memorandum of understanding on notification of fraud cases
  • Need for a clearer definition of the role of Internal Audit in partnership work and in particular any commissioning activity by the PCC
  • Need for a review of audit resources required, given the need to provide an appropriate level of service to both the PCC and the CC, and including the need for contingency and specialist resources
  • Need to finalise the Audit Manual and ensure it remains appropriate to the new audit standards and local working practices
  • Need to be more explicit in evidencing the environment of continuous improvement through the performance management and quality assurance programme, reporting developments and added benefits through the consortium board and individual Audit Committees.

4.4       An assessment was also carried out against the checklist included in the Audit Commission publication “Taking it on Trust” setting out the features of good internal audit plans.  This highlighted again the need for more clarity on Internal Audit involvement in partnership working, and the availability of contingency budgets to cover emerging risks. 

4.5       A quality assessment against the PSIAS was carried out by the Internal Audit Team using the checklist provided by the Institute of Internal Auditors.  This allows for a record of evidence and information that demonstrates conformance with the Definition of Internal Auditing, the Code of Ethics and each International Standard, specifying general, partial or non-conformance at each stage.  There is then a need for a record of the action required to improve conformance. 

4.6.     The main actions identified arising from the self assessment are as follows: 

  • Potential to survey stakeholder opinion on the perceptions of Internal Audit in respect of profile, integrity, resilience, standards and ethical behaviour, to assess conformance with the Definition of Internal Auditing and Code of Ethics
  • Need to formalise information management and security protocols and ensure compliance with information management policies
  • Need for an annual individual skills assessment for each auditor and clearer links into the performance development review (PDR) process, using post audit reviews more effectively to identify training or development needs
  • Need for a cleared definition of Internal Audit’s role in consultancy work
  • Need to review the Audit Strategy and present in the form of an Internal Audit Charter, including elements (if any) not currently covered by the strategy document
  • Potential to improve documented relationships and co-ordination with other assurance providers, including partners.  This is being addressed through ongoing assurance mapping work.
  • Need to ensure the continued independence of Internal Audit in the context of providing services to both PCC and CC, particularly where there could be areas of conflict or tension.  The consortium board and Independent Audit Committees will have a key role here.
  • Need to finalise the Audit Manual and ensure it remains appropriate to the new audit standards and local working practices
  • Review of the need for and provision of specialist audit expertise, e.g. IT audit
  • Requirement for an external quality review, either as a full external evaluation or a self assessment with independent external validation.  Discussions have already been held with a view to establishing a peer review system with other comparable internal audit providers.
  • Requirement for a QAIP arising out of the self assessment which needs to be reviewed at least annually
  • Work towards a statement that internal audit activity conforms with the Internal Standards, provided the results of the QAIP support this
  • Need to formalise the current assessment of the audit universe and risk as part of the audit planning process
  • Need to streamline use of audit resources through improved workload planning methodology (currently being implemented)
  • Consider a specific governance audit as a core annual assignment
  • Need to consider referencing fraud specifically as part of audit briefs and reports
  • Need to evidence systematic supervision of work at all levels and consistent process of post audit review which assists in identifying any training or development needs
  • Need to include reference in the Audit Charter to the responsibility of the Head of Audit to report any unacceptable tolerated risks

4.7       Several of the areas identified from the CIPFA code and the self assessment overlap and some result from the significant change to the governance arrangements.  A number of actions are already underway to address the issues identified.  It is recommended that the action plan from the Head of Audit resulting from this report be monitored by both the shadow consortium board and the Audit Committee.

5.         Conclusion 

5.1       The review demonstrates that Internal Audit complies with the vast majority of the requirements of the CIPFA Code of Practice, generally conforms with the new public sector audit standards and is working proactively to action areas of partial or non conformance.  An external quality review is planned during the remainder of the year to supplement this self assessment, and in the meantime the Head of Audit will continue to implement the actions identified as necessary to improve conformance.

13.      Any other urgent business (at discretion of Chairman)