Report of: The Internal Auditor, BDO

Purpose of the report: To inform the Audit and Governance Committee of progress made against the 2024/2025 internal audit plan.

Recommendation: To discuss and note the report.

Yasmin Ahmed, an Internal Auditor with BDO, presented the report which informed the Committee of progress made against the 24/25 internal audit plan; in terms of progress, all reviews of 23/24 had been completed. Additionally, planning for 24/25 is underway and a QL review is planned for the 24/25 review.

In terms of data analytics, the Internal Auditor stated that they try to include this each year in their review. They reviewed the approval and review processes and found that there were clear processes in place for card transactions. Despite this, they also found that transactions were not approved in a timely manner, sometimes with a delay of over a year. Additionally, they found that with accounts payable, there was a significant amount of outstanding debt, which was recommended to be cleared.

For 23/24, Yasmin said that they reviewed about 30,000 transactions, which was a significant amount of data. They will need to go back to this data again to see where the outstanding debt is and if it is in a better position in the next review.

Nigel Kennedy, Head of Financial Services, stated that they had already made a substantial provision for back dated debt. They will be able to return to the matter of backdated debt, in greater detail, at a later meeting of the committee. Additionally, there is a need to map the credits to the outstanding debt and that there are some debts still being reviewed by the legal team.

Councillor Smith asked if any of the debts were incurred because invoices were sent to organizations which were unable to make payments via online banking. The Internal Auditor responded that this was the case with some of the debts analysed. She also stated that when they come back to this matter in the next review, they expect the debts to be lower.

Yasmin Ahmed also discussed their assessment of the Council’s implementation of the selective licensing scheme. It was found that the Council has good procedural guidance on this matter, but that applications are not being processed in a timely manner. Although the Council has been proactive in finding a solution to this issue, that there remains a backlog of 6,000 applications to be assessed by 2027 and expected to meet their target for property inspections by 2027.

David Butler, Head of Planning & Regulatory Services, stated that after they launched the scheme in 2022, they had about 35% more applications come through then they had anticipated and that despite the backlog, they believe they will be able to work through this before the end of the scheme. It was noted that there were staffing issues and were not as far along as they would have liked to be by this point, but they believe they will get to where they need to be by 2027.

Wendy Rollings, Interim Regulatory Services Manager, stated that their target is to issue licenses in 12 months and that this target was based on having 20 officers. Despite having only 10 officers, they have been able to meet their targets and believe that they will meet the larger targets set for 2027.

Councillor Smith asked what proportion of license applications are being refused because properties are found to be in poor condition. The Interim Regulatory Services Manager stated that because properties are not routinely inspected at the moment, they have not rejected applications for that reason.

In response to a question from Councillor Fry, the team is currently exceeding their current monthly KPIs and they are forecasting that it will take them 9 months to clear the backlog.

Councillor Smith stated that she had concerns regarding the lack of property inspections taking place. In response, the Interim Regulatory Services Manager stated that they are behind on their inspection targets and that their current focus is to inspect on a reactive basis.

The Audit and Governance Committee noted the report.