The Head of Corporate Resources introduced the report. He informed Panel Members that the overall adequacy and effectiveness of the Council’s risk management systems and internal control environment during 2017-18 was Satisfactory. This was an improvement from last year’s Limited Opinion. He told Panel Members that use of Oracle Cloud would have to be successfully implemented as the Council’s core financial systems to ensure a positive outcome opinion next year.
The Head of Corporate Resources stated that resources for internal audit were quite tight with the budget process, and Lewisham was in the lower quartile of London Boroughs on the benchmark for audit days.
The Chair thanked officers for the report and asked what they would like to highlight to Members, and was told that although the opinion had improved from Limited to Satisfactory the Council could still be at risk. Following a question from the Chair the Head of Corporate Resources informed Panel Members that all schools had positive opinions, and officers had looked at nine risk areas, all of them were satisfactory.
Carole Murray said she was glad to note the core audits had gone up as that was one of her key concerns. She added that officers needed to concentrate on the core contract management as this might lead to overspend.
Mr Pleace commented that officers ought to know that some audit sections had installed Pental software and found it was not successful. The Audit Manager responded that they were aware of the risks of implementing a new system and have been working with the provider on the implementation to ensure it works, and hopefully it should be signed off in the next few months. Officers would then monitor the output.
Carole Murray said she was concerned about the number of recommendations listed for Sir Francis Drake school. The Audit Manager’s response was that although their performance had been poor during the first half of the year they had improved during the second half. Ian Pleace said he was concerned that segregation of duties and basic control were still an issue and this could be very problematic going forward.
In respect of the core financial audits, Mr Pleace said before they had two Limited reports and now zero assumption, and that it felt very risky. The Head of Corporate Resources said officers were hoping that the installation of Oracle Cloud would address most of the risks and reduce the level of manual controls and workarounds. The Head of Financial Services said officers had worked very hard with Oracle Cloud and although there were some risks at this stage officers were positive of the outcome.
In response to Councillor Krupski’s query Panel Members were assured that the information from HR solution that was being fed into the system was accurate. The Head of Financial Services said officers felt things were moving in the right direction, and the second phase would come in place in the Autumn and the system would go live in April 2019.
Following Ian Pleace’s concerns about the migrated balances, and data cleansing exercise being a big risk the Head of Financial Services stated that they had cleared out the old data in the correct way and data cleansing continues to ensure that the information inputted is correct. The Head of Financial Services said officers anticipated just smaller problems. Mr Pleace asked that officers update Panel Members periodically when they review the system, and to also have details of balances as a standing report on the agenda.
Action >>>>>> Head of Financial Services
i. the report be noted.
ii. officers report back to the next meeting how they would be addressing the issues raised on section 9 of the report.