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REPORT TO: Audit and Governance Committee

MEETING DATE: 26 April 2011

BY: Chief Executive

SUBJECT: Internal Audit Report Stocktakes

1 PURPOSE

1.1 To inform the Audit and Governance Committee of the findings fromInternal Audits recent attendance at year-end stocktakes.

2 RECOMMENDATION

2.1 That the Audit and Governance Committee note the contents of theExecutive Summary and Action Plan from our recent attendance at year-end stocktakes.

3 BACKGROUND

3.1 As part of the year-end procedures for 2010/11, Internal Audit attendedstocktakes at the Councils Property Maintenance Stores, RoadsServices Depot and Waste Services Depot.

3.2 The main findings from our attendance at the year-end stocktakes areoutlined in the attached report.

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6 RESOURCE IMPLICA TIONS

6.1 Financial - None6.2 Personnel - None

6.3 Other - None

7 BA CKGROUND PAPERS

7.1 None

AUTHOR S NAME Mala Garden

DESIGNATIONInternal Audit Manager

CONTACT INFO 01620 827326

DATE 14 April 2011

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EAST LOTHIAN COUNCIL INTERNAL AUDITSTOCKTAKES

1. EXECUTIVE SUMMARY

1.1 Introduction

As part of the year-end procedures for 2010/11, Internal Audit attended theannual stocktakes at the Councils P roperty Maintenance Stores and RoadServices 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 isapproximately 400,000.

1.2 Areas where Expected Controls were Met

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 thequantity 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 thecompleted stocksheets.

Systems are in place to ensure that the fuel stock held at the Road ServicesDepot is checked as part of the year-end procedures.

1.3 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 toproperly 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 properlyaccount 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 thequantities recorded on the fuel management software differences werenoted. Risk failure to identify and investigate discrepancies.Th l k f i f d i l ibl

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STOCKTAKES

ACTION PLAN

PARAREF

RECOMMENDATION RESPONSIBLEOFFICER

AGREED ACTION RISK ACCEPTED/

MANAGED

AGREED DATEOF

COMPLETION

2.1 Stock items in the mobile working vans

should be clearly identified and held in anorganised manner.

Administ rat ion and

ProcurementManager

Agreed Apri l 2011

2.2 A year-end stock check of fuel held at WasteService should be carried out the year-endstock f igure should be provided to CorporateFinance.

Waste ServicesManager

To be provided 31March or nearestpossible date.

March 2012

2.3 Regular reconcili ations should be undertakenbetween the physical fuel stock held byWaste Services and the quantities recordedon the fuel management software. Alldifferences should be fully investigated.

Waste ServicesManager

Reconciliations to starton a monthly basisuntil sufficient dataavailable to reassess.

Apri l 2011

2.4 Management should ensure that there isadequate segregation of duties in respect of administering Waste Services fuel stock.

Waste ServicesManager

Addi tional offi cers tobe trained up on IT.

Apri l 2011