1. Internal Audit Update Hampshire Schools Forum 20 January 2015 Natalie Jerams, Audit Manager

2. Presentation outline Introduction and partnership update Thematic audits reviews - background Key findings 2013/14 and 2014/15 Other information

3. Introduction and partnership update HCC Audit Services is in a partnership with other local authority internal audit sections. Partnership currently consists of HCC, Southampton City Council, Havant Borough Council, East Hants District Council and Winchester City Council. Partnership name is “Southern Internal Audit Partnership”.

4. Thematic audit reviews - background No longer visit each school as part of a rolling plan, although some reactive reviews are still carried out each year Themes/topics are identified in consultation with EFS/HIAS each year A sample of schools (across areas and types) are selected for each review (a total of 42 schools were selected in 2013/14) Each school receives written feedback and a main report is collated for wider circulation Audit findings for each review are published in Money Matters once the report is finalised Attend Admin Officer networks regular to feedback our findings.

5. Thematic audits 2013/14 – key issues Recruitment (10 schools selected for this review): Evidence of shortlisting not retained or did not clearly demonstrate why applicants had or had not been selected for interview (5/10) Evidence of interview notes not retained or did not clearly demonstrate why a particular candidate had been appointed (lack of scoring) (2/10) Proof of identity (4/10) and right to work in the UK (5/10) not retained on file DBS checks not carried out or not received prior to employee starting (4/10).

6. Thematic audits 2013/14 (continued) Payroll (10 schools selected for this review): Employee statement reports not printed at all or not printed promptly each month and lack of evidence of review and HT sign off (7/10) Claim forms not fully completed (5/10) Claim forms authorised by the person inputting them to the system – lack of separation of duties (2/10).

7. Thematic audits 2013/14 (continued) Income (10 schools selected for this review): Lack of separation of duties and no compensating spot checks (6/10) Incomplete audit trail – unable to trace from first point income recorded through to bank paying in book (4/10) Cash holding insurance limits exceeded (3/10) Staff responsible for banking did not have, or were unaware if they did have, business cover on their car insurance (4/10).

8. Thematic audits 2013/14 (continued) VAT (6 schools selected for this review): VAT for purchases not always being claimed for correctly (across SAP purchases, imprest and procurement cards) (15/86 imprest or purchasing card transactions where VAT could have been claimed but wasn’t – 17%) VAT codes used incorrectly for income and expenditure (18/142 transactions) VAT for income not always being accounted for correctly (e.g. recording book bags or photo commission as outside scope but should be standard rated – schools are financially benefiting from this 3/10.)

9. Thematic audits 2013/14 (continued) IT Security (6 schools selected for this review): Laptops not regularly checked to ensure that security updates are applied, that the laptops remain in working order and that they are not being used for inappropriate purposes (5/6) Password control/security (2/6) Back up of data - retention (2/6) and testing of back ups (4/6).

10. Thematic audits 2014/15 – so far…. Budgetary Control: Formal approval from FGB and committees are not always minutes and do not include all budget codes at the school (5/10) Not always clear in the minutes if the year end outturn is what was expected and if not why not (2/10)

11. Thematic audits 2014/15 – so far…. Compliance with CSO’s (report has not yet been published) (9 schools selected for this review): Quotes/tenders not always being obtained (6/9 schools for one off spend and 8/9 for aggregated spend) Lack of GB approval for large spend - over HT delegated limits (7/9)

12. Thematic audits 2014/15 – so far…. Offsite Activities (report has not yet been published) (10 schools selected for this review): Approval of visits by the EVC/HT not always documented (3/10) Parental consent forms not always being obtained for each pupil as payment of the trip was considered to be appropriate (1/10) Records not retained after the visit has taken place in line with retention schedules (6/10)

13. Other information Statement of Financial Expectations has been updated and issued as a school communication on 22 September 2014 (SC011833) Internal controls checklist has also been updated to include new checklists for procurement cards and changes to current processes relating to the IBC and was issued as a school communication on 22 September 2014 (SC011834)

14. Contact details Neil Pitman, Chief Internal Auditor (01962 845139, neil.pitman@hants.gov.uk)neil.pitman@hants.gov.uk Children’s Services : Natalie Jerams, Audit Manager (01962 847951, natalie.jerams@hants.gov.uk)natalie.jerams@hants.gov.uk Neil Ireland, Senior Auditor (01962 847943, neil.ireland@hants.gov.uk)neil.ireland@hants.gov.uk Fraud and Investigations Team: Iona Bond, Audit Manager (01962 847417, iona.bond@hants.gov.uk)iona.bond@hants.gov.uk Andy Payne, Senior Auditor (01962 845125, andy.payne@hants.gov.uk)andy.payne@hants.gov.uk

15. Any questions? Thank you