Internal Audit Annual Report 2024-2025
Argyll and Bute Council · 12 June 2025
Back to Audit and Scrutiny Committee — 12 June 2025 and its agenda
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 12 JUNE 2025 INTERNAL AUDIT – ANNUAL REPORT 2024/25 1.0 INTRODUCTION 1.1 The purpose of this report is to advise the Audit and Scrutiny Committee (the Committee) of the work undertaken by Internal Audit in respect of the Annual Audit Plan 2024/25 and advise the Committee of the contents of the Chief Internal Auditor’s (CIA) independent annual opinion on the effectiveness of the Council’s risk management, internal control and governance processes. 1.2 The Public Sector Internal Audit Standards (PSIAS) became effective on 1st April 2013 and remained valid until 31 March 2025, required that: “The chief audit executive [ABC: Chief Internal Auditor] must deliver an annual internal audit opinion and report that can be used by the organisation to inform its governance statement. The annual internal audit opinion must conclude on the overall adequacy and effectiveness of the organisation’s framework of governance, risk management and control. The annual report must also include a statement on conformance with the Public Sector Internal Audit Standards and the results of the quality assurance and improvement programme.” 1.3 Attached as appendices to this report are: • Appendix 1 – Internal Audit Annual Report and Summary of the audits completed in 2024/25 • Appendix 2 – Internal Audit Opinion for 2024/25 2.0 RECOMMENDATIONS 2.1 The Audit and Scrutiny Committee endorses the content of this report and the associated annual opinion of the CIA. 3.0 DETAIL 3.1 Internal Audit is an independent and objective assurance function designed to add value and improve the Council's operations. It helps the Council accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the Council's risk management, internal control and governance processes.
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3.2 Internal Audit's purpose, authority and responsibilities are set out in detail in the Internal Audit Charter, which was most recently approved by the Committee in March 2025. Internal Audit reports its outputs regularly throughout the year to the Committee. The Committee also approves Internal Audit’s annual plan and monitors the performance of the function. 3.3 The risk based audits contained within the 2024/25 Internal Audit Annual Plan are shown in the table included at Appendix 1 page 12. This shows the overall audit opinion for each audit and the number and significance of agreed actions. 3.4 Internal audit activity is planned to enable an independent annual opinion to be given by the CIA on the adequacy and effectiveness of internal controls within the authority, including the systems that achieve the corporate objectives of the Council and those that manage the material risks faced by the authority. It should be noted, however, that the presence of an effective internal audit function contributes toward, but is not a substitute for, effective control and it is primarily the responsibility of line management to establish internal controls so that the Council's activities are conducted in an efficient manner, to ensure that management policies and directives are adhered to and that assets and records are safeguarded. 3.5 Internal Audit operated during financial year 2024/25 and reported directly to Kirsty Flanagan as Section 95 Officer. I also have unrestricted access to those charged with governance, specifically: Elected Members; the Chief Executive; Executive Directors including the Executive Director who is the Council’s Monitoring Officer. In addition, Internal Audit staff have unrestricted access to all documents, systems and information necessary to reach an opinion or view on any matter under consideration. 3.6 Internal Audit activity during the year was undertaken in accordance with the revised Internal Audit Annual Plan. 3.7 There were no substantial changes made to the 2024/25 audit plan. Three reviews relating to ‘New Roads and Street Works Coordination’ ‘Eclipse post implementation’ and ‘Roads and Flood Prevention’ were cancelled due to a variety of reasons, respectively ranging from recent work having been undertaken internally, postponement to another financial year and a national review to be undertaken in the specific area. 3.8 I am pleased to report that, successful attempts have been made to address the vast majority of outstanding historical recommendations with close ongoing monitoring by Internal Audit and SMT. Council officers have continued to make progress in terms of implementing agreed audit recommendations, despite challenging and competing demands and finite resources. Furthermore, there are robust follow up procedures in place with reports taken to the SMT on a quarterly basis and reported as a
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standing item on the Committee’s agenda. 3.9 There is a formal requirement for me to prepare an annual opinion on the Council’s internal control system. The opinion is presented to members of the Committee and is intended to provide independent and objective assurance as to the adequacy and effectiveness of internal controls within the Council. 3.10 In addition to the work carried out by internal audit, my opinion is also informed by: • the work of External Audit • the work of other external inspection agencies who report on the Council’s work • statements of assurances provided by the Chief Executive, Executive Directors and Heads of Service providing their opinion on the effectiveness of control, governance and risk management within their areas of responsibility. 3.11 My evaluation of the control environment is informed by these sources and in bringing these together, consideration has been given to whether there is evidence that any key controls are absent, inadequate or ineffective and whether the existence of any weaknesses identified, taken independently or with other findings, significantly impairs the Council's overall systems of internal control. Wider issues relating to the Council's corporate governance and risk management arrangements have also been considered. 3.12 The nature of individual audit assignments is such that most Internal Audit reports identify some weaknesses or areas where scope for improvement exists. However, I am pleased to report that, generally across the Council, there continues to be a strong recognition amongst management of the importance of proportionate but effective internal controls. Senior management has also established an operating culture where good standards of governance are seen as a key requirement in the way in which the Council conducts its activities. 3.13 During work undertaken in 2024/25 there have been instances where the control environment was not strong enough or complied with sufficiently to prevent risks to the organisation. In these cases, Internal Audit has made recommendations to further improve the systems of control and compliance. Although sometimes significant to the control environment in place for the individual system or areas that have been audited, I do not consider these weaknesses material enough to have a significant impact on the overall opinion on the adequacy of the Council's control environment at the year end. 3.14 My formal annual Internal Audit opinion on the soundness of the Council's internal control systems is presented in my Internal Audit Annual Report in particular at Appendix 2. Overall, the results of the work of Internal Audit in 2024/25 taken with other information available
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to me did not lead me to conclude that the Council's overall systems of internal control were significantly or materially impaired. 3.15 It has been a particularly busy year for the internal audit team as they have supported the Chief Internal Auditor in the further development of our work practices including working closely with the counter fraud team, together with the preparation for the implementation of the new Global Internal audit Standards (GIAS). The team have worked hard to deliver the internal audit plan, I am pleased to report that one of our trainees has completed the Chartered Institute of Internal Audit qualification and has been placed into the vacant auditor post. Interim arrangements will continue until other staff members have qualified and training plans are sufficiently progressed, this will support staff in developing experience along with underpinning professional qualifications in order to improve resilience. It is my opinion that the profile of Internal Audit continues to improve within the Council as does the quality of the work it delivers and is evident in the feedback received from post-audit surveys indicating a satisfaction rate of 97%. 3.16 As required by the PSIAS a five-yearly external assessment took place in 2022-23 and the service was found to be fully compliant in all 14 areas of review. Two minor housekeeping issues were identified and these have now been fully implemented. All identified actions for improvement have been tracked through our quality assurance and improvement programme with updates reported to Committee as part of a standard agenda item. The next scheduled external independent assessment is in 2027. 3.17 On behalf of my team I would like to thank all Council staff who have assisted Internal Audit during the course of our work throughout 2024/25 and to thank senior management and elected Members for the consideration and due regard given to our work. It is important that good relationships exist in order to promote and improve controls within the Council and it is clear that such relationships are in place. 4.0 CONCLUSION 4.1 Subject to the matters listed in the Annual Governance Statement reasonable/satisfactory assurance can be taken that the systems of governance and internal control are operating effectively. Internal Audit continues to develop and improve as a service. Our Internal Audit Annual Report 2024/25 on page 10 provides a dashboard of our opinion in each area of Governance, Risk Management and Internal Control. 5.0 IMPLICATIONS 5.1 Policy: none 5.2 Financial: none 5.3 Legal: none 5.4 HR: none 5.5 Customer Service: none 5.6 Risk – The implementation of recommendations contained in audit reports may
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help mitigate the risk to the Council. 5.7 Climate Change: none 5.8 Fairer Scotland Duty: none 5.9 Equalities: none 5.10 Consumer Duty: none 5.11 Island Communities: none 5.12 Children’s Rights and Wellbeing: none Paul Macaskill Chief Internal Auditor 12 June 2025 For further information contact: Paul Macaskill, Chief Internal Auditor Tel: 01436 604108 Email: paul.macaskill@argyll-bute.gov.uk APPENDICES 1. Internal Audit Annual Report 2024/25, Counter Fraud update and summary of planned work in 2024/25 2. The Certificate of internal Audit Opinion 2024/25