REPORT TO: MEETING DATE: BY: SUBJECT:

Audit and Governance Committee 26 April 2011 Chief Executive Internal Audit Report Stocktakes

1 1.1

PURPOSE To inform the Audit and Governance Committee of the findings from Internal Audits recent attendance at year-end stocktakes.

2 2.1

RECOMMENDATION That the Audit and Governance Committee note the contents of the Executive Summary and Action Plan from our recent attendance at yearend stocktakes.

3 3.1

BACKGROUND As part of the year-end procedures for 2010/11, Internal Audit attended stocktakes at the Councils Property Maintenance Stores, Roads Services Depot and Waste Services Depot. The main findings from our attendance at the year-end stocktakes are outlined in the attached report. POLICY IMPLICATIONS None

3.2

4 4.1

5 5.1

EQUALITIES IMPACT ASSESSMENT This report is not applicable to the well being of equalities groups and Equality Impact Assessment is not required.

6 6.1 6.2 6.3

RESOURCE IMPLICATIONS Financial - None Personnel - None Other - None

7 7.1

BACKGROUND PAPERS None

AUTHORS NAME DESIGNATION CONTACT INFO DATE

Mala Garden Internal Audit Manager 01620 827326 14 April 2011

EAST LOTHIAN COUNCIL INTERNAL AUDIT STOCKTAKES 1. 1.1 EXECUTIVE SUMMARY Introduction As part of the year-end procedures for 2010/11, Internal Audit attended the annual stocktakes at the Councils Property Maintenance Stores and Road Services Depot. In addition, we carried out checks on the fuel stock held at the Waste Services Depot. The total estimated stock value at the three locations is approximately 400,000. 1.2 Areas where Expected Controls were Met 1.3 Property Maintenance and Road Services Clear stocktaking instructions had been issued to all members of staff involved in the stocktake. Stock sheets were prepared in advance of the stocktake with details of the stock number, a description of the stock item and a column for recording the quantity counted. Stock items within the stores were held in an orderly manner and the stock counts were carried out by teams of two both members of staff signed the completed stocksheets. Systems are in place to ensure that the fuel stock held at the Road Services Depot is checked as part of the year-end procedures.

Areas with Scope for Improvement Property Maintenance There was a failure to ensure that stock items in the mobile working vans were clearly identified and held in an organised manner. Risk failure to properly account for stock items. Waste Services No systems are in place to ensure that fuel stock held by Waste Services is checked as part of the year-end procedures. Risk failure to properly account for fuel stock held. No procedures are in place to ensure that regular reconciliations are undertaken between the physical fuel stock held in the tanks and the quantities recorded on the fuel management software differences were noted. Risk failure to identify and investigate discrepancies. There was a lack of segregation of duties one employee was responsible for all aspects of managing fuel stock. Risk irregularities may occur and remain undetected.

1.4

Summary Our attendance at the Property Maintenance and Road Services stocktakes highlighted that appropriate year-end procedures had been followed, however areas with scope for improvement were identified in respect of Waste Services. Detailed recommendations are outlined in the attached action plan. Mala Garden Internal Audit Manager

April 2011

STOCKTAKES ACTION PLAN

PARA REF RECOMMENDATION RESPONSIBLE OFFICER AGREED ACTION RISK ACCEPTED/ MANAGED AGREED DATE OF COMPLETION

2.1

Stock items in the mobile working vans Administration and should be clearly identified and held in an Procurement Manager organised manner.

Agreed

April 2011

2.2

A year-end stock check of fuel held at Waste Waste Services Service should be carried out the year-end Manager stock figure should be provided to Corporate Finance.

To be provided 31 March or nearest possible date.

March 2012

2.3

Regular reconciliations should be undertaken Waste Services between the physical fuel stock held by Manager Waste Services and the quantities recorded on the fuel management software. All differences should be fully investigated.

Reconciliations to start on a monthly basis until sufficient data available to reassess.

April 2011

2.4

Management should ensure that there is Waste Services adequate segregation of duties in respect of Manager administering Waste Services fuel stock.

Additional officers to be trained up on IT.

April 2011