23 July 2004
Internal auditing standards in Scottish councils have improved over the past three years but performance varies considerably and there needs to be further progress, an Accounts Commission report has found.
It names the four best-performing councils as Angus, East Ayrshire, Highland and Renfrewshire but says internal audit performance has deteriorated in four councils: Dumfries & Galloway, East Lothian, Falkirk and Perth & Kinross.
The report, A job worth doing, published on July 22, assesses progress made since the commission's 2001 report on raising the standard of internal audit in Scottish local authorities.
It discloses that 27 councils have improved their performance but several others have some way to go to comply with the good practice set out in the CIPFA code of practice for internal audit in local government in the UK.
Commission chair Alastair MacNish said councils that were not doing so well should consider entering into consortium arrangements with other public bodies or contracting with the private sector.
'Councils spend nearly £10m a year on internal audit to help ensure that resources are used properly and effectively. This is a valuable resource that is not yet being used to full advantage,' he said.
'The level of improvement in internal audit is encouraging but a number of councils still have a way to go to meet the standard expected of them.'
Internal audit is provided fully in-house in 24 councils. In eight authorities, some internal audit services are outsourced.
The report shows that the biggest improvement since 2001 was made in three of the four councils that were previously in the lowest performance band: Argyll & Bute, Inverclyde and Shetland.
Of these, Argyll & Bute and Inverclyde, which moved to the top performance band, have negotiated contracts with the private sector for internal audit.
According to the commission, councils have done particularly well in establishing a clear role in relation to fraud, ensuring internal audit's independence and freedom from operational responsibilities, instituting management control and recording of internal audit work.
But the commission advises that councils need to do more work in areas such as carrying out effective risk assessment, taking preventative action to minimise risks, and following up recommendations to ensure action is taken.
The report found that two-thirds of councils still do not have fully operational audit committees.
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