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Advancing our Services SWAP 2018/19 ANNUAL REPORT

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Page 1: SWAP 2018/19 ANNUAL REPORT - irp-cdn.multiscreensite.com...2018/19 ANNUAL REPORT SWAP Internal Audit Services Mission Statement SWAP is a ‘not for profit’ organisation delivering

Advancing our Services

SWAP 2018/19 ANNUAL REPORT

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Welcome to SWAP

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2018/19 ANNUAL REPORT

SWAP Internal Audit Services

Mission Statement

SWAP is a ‘not for profit’ organisation delivering Internal Audit services by applying global standards at a local level for our partners and our clients, helping them achieve their business objectives.

Aims

By working in partnership SWAP aims to:

• Provide a professional cost effective, high quality Internal Audit service to all partners and clients that understands their business needs.

• Improve the standard of corporate governance, risk management and internal control systems for all partners and clients.

• Expand the business, incorporating new partners and fee-paying clients, where it is beneficial to the company and our owners to do so.

SWAP Internal Audit Services are excellent value for money offering first-rate quality at an affordable price. As a ‘not for profit’ public sector company we offer everything from partnership to a one-off contract to meet your needs across a wide range of audit services.

Objectives

We want to:

• Continuously improve the quality and productivity of the Internal Audit service we provide.

• Ensure that a sustainable Internal Audit service is available to our partners and clients at all times; retaining existing and attracting new.

• Create an outstanding working environment for SWAP employees.

VisionWhile the Mission statement says what we do, the Vision statement sets out our aspirations for the future: to be a nationally recognised brand known for high quality internal audit services.

Values

SWAPs values have been defined after investigating what matters to our partners and clients:

• Candid – We pride ourselves in being straightforward to deal with, fair, open and accountable.

• Relevant – We are an informed and experienced professional workforce, who are up to date with emerging issues and a forward-looking attitude.

• Inclusive – We value the power of the collective mind and harness opportunities for working together and collaborating with others whenever possible.

• �Innovative – We thrive on being different, both in our corporate set up and in challenging traditional approaches to Internal Audit.

• Dedicated – We value the experience and knowledge of others and make time to listen. We are an established service committed to long term customer service excellence.

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Contents

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2018/19 ANNUAL REPORT

2018/19 ANNUAL REPORT CONTENTS

05 - 06 A Message from the Chief Executive

07 - 08 A Message from the Chairman

09 - 10 Advancing our Commercial Strategy

11 - 12 Advancing our Standards

13 - 14 Advancing our Partners

15 - 16 Advancing our Profession

17 - 18 Advancing our Talent

19 - 20 Financial Performance

21 - 22 Meet the Team

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Chief Executive

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Gerry Cox • Chief Executive

A Message from the Chief Executive

Fourteen years ago, SWAP Internal Audit Services was formed with an initial two district councils as partners. At the time, we joined a very small group of similar internal audit partnerships in the public sector; there were probably only two or three others in local government then. Now, recent survey evidence indicates that more than one third of UK council’s local government audit teams, that’s involving around 150 principal councils, are part of a partnership arrangement of one sort or another. Those are what surveys have gleaned, but I suspect that many more informal relationships have been established. So, whilst SWAP was not the first organisation created for the purpose, we were certainly at the vanguard of what would become an increasingly important delivery model for modern government internal auditing. And today we’re probably the largest public sector partnership of our kind.

It’s not hard to see why the partnership model is so popular. Even large councils find it hard to recruit the necessary skills they need to provide a comprehensive service. Specialists, such as IT and fraud auditors, are expensive, thin on the ground and difficult to retain. As SWAP has grown, from its initial two partners, to twenty-six partners and numerous other clients, we have recruited and trained a mix of skilled staff fit for today’s demanding corporate environment. This enables us to offer a diverse range of services that stand-alone audit teams simply cannot match.

Based on our growing reputation for high quality work and excellent value for money, we continue to attract new clients from across the UK. Having focussed mainly on the public sector thus far, this year for the first time saw us move into the charitable sector; an area we expect to expand in further in the coming years. And although we have

been active for many years in the social housing sector, this area too has seen significant growth for SWAP recently. 2018/19 also saw growth in the police sector with more forces and OPCC’s expected to join us very shortly.

Of course, not every organisation necessarily wants to be part of a formal partnership or, for that matter, contract out their entire internal audit service. SWAP, through our external client’s team, are now providing support to a number of internal audit teams around the country. Everything from taking responsibility for a segment of the annual audit plan, to providing a head of audit service, to delivering a range of one-off audits and much more. Our service offerings are flexible and adaptable to specific needs and we can usually respond very quickly to urgent requests for help.

So, whether it’s a complete internal audit service that’s required, or help with delivering the annual plan, or even help with transformational change projects or benefits realisation reviews, we can deliver. As the country moves towards the uncharted waters of Brexit, SWAP is well placed to help existing and new clients.

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Chairman

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Jason Vaughan • Chairman

A Message from the Chairman

In these uncertain and challenging times SWAP continues to provide the excellent high quality work that the company has a reputation for. As a company owned by partners we can focus on quality rather than having to make a profit and we continue to see very high levels of client satisfaction with the services provided by SWAP. It is very pleasing that the excellent work carried out by SWAP continues to be recognised at a national level with it again being nominated for the Public Finance Award.

SWAP has come from the humble beginnings of two councils deciding to work together in partnership in order to improve the quality of their internal audit service and save money. It now has over 18 local authority partners as well as partners in the police sector. With our expertise well established in the public sector we have also moved into the charitable sector.

We also offer a full range of audit support to existing internal audit teams from providing healthy organisation assessments through to the delivery and provision of annual audit plans. We pride ourselves on being flexible and providing the service that the client actually needs.

The coming year will see some significant changes for SWAP as we look to recruit a new Chief Executive following the retirement of Gerry Cox who has led the organisation from its inception. The work that Gerry has done in establishing SWAP as being at the very leading edge of internal audit services has been exceptional. The Board remain indebted to him and wish him every success with his retirement. The new chief executive is inheriting a significant legacy of an outstanding organisation, excellent staff and a quality service that is nationally recognised. The Board are also

looking at how we can change our governance arrangements. This will ensure they continue to be streamlined, represent the needs of the partners and have the required skills to continue to take SWAP forward.

I agreed to take on the role of Chairman as I recognised the real value SWAP provided and its potential for the future. You are not just ‘buying’ an internal audit service but joining a successful organisation that has a proven track record of delivery, together with the benefits to be gained with partnership working. With SWAP you get so much more than an internal audit service. I have found access to a wide range of staff with enhanced audit skills, who have an in depth understanding of not only my own organisation, but also best practice across the partner authorities.

It is a real privilege to be Chairman of SWAP and oversee such a successful company.

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Strategy

The recommendations were helpful and on point

Cardiff City Council

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Moya Moore • Assistant Director

Advancing our Commercial Strategy

The SWAP Partnership has continued to expand this year with the welcome addition of Gloucestershire Constabulary and OPCC. Interest from other bodies (local and national) about partnership with us remains buoyant.

As a Teckal compliant company, a minimum of 81% of SWAP’s revenue must be generated from business it transacts with its partner organisations. Currently, close to 93% of SWAP’s business is with its partners so there is plenty of scope for significant growth in the commercial sector.

In 2018/19 income from commercial contracts has continued to grow, exceeding budget by 34%. By refining our targets and bidding skills we have realised an improved tender success rate, as well as an increased average contract value.

Demand for top up services to supplement existing in-house teams has also been high, particularly from local authorities in Wales.

We have also been successful in entering two new markets, with Charities and Fire and Rescue Services now making up our client portfolio. We also gained a second Housing Association which enhances our presence as an established service provider in this market.

As well as increasing our market breadth, we have developed our service offering in the year, notably through the provision of Head of Internal Audit Services to a Unitary Council in Yorkshire, where we manage an in-house team to deliver their internal audit plan. This demonstrates our capability of delivering on a national scale.

We continue to work to promote our presence nationally by exhibiting and speaking at professional conferences and entering relevant awards. Plans for the coming year include greater online and social media activity. As the company

grows, we will continue to develop our professional presence beyond our traditional South West homeland through increased involvement with national networking groups.

SWAP staff are the driver of success and we are mindful of the need to ensure we have robust training and development, recruitment and retention and culture and behaviour expectations set out. We have introduced a People Strategy and Action Plan to ensure this remains a focus for the coming year.

Contract management and customer relationship management will remain areas of focus for us, along with a drive to enhance data analytics skills. We continue to be committed to the development of our audit software MKInsight, pursuing and trialling new functionality to enhance our service offering. We achieved Cyber Essential accreditation this year which will enable us to pursue commercial contracts previously closed to us.

Work over the last year to position us nationally and establish credibility in new markets and service areas means we are in a confident position as we enter the new year.

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Standards

I was pleased how quickly and efficiently the whole process was managed

Wiltshire Council

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David Hill • Executive Director

Advancing our Standards

SWAP’s reputation is built on our ability to exceed expectations and deliver a high-quality service to our partners and clients. The company’s growth is therefore directly attributable to the value we place on meeting both professional standard obligations, as well as our own internal performance and quality standards.

Despite our size, we are leaders, shapers and proud promoters of the Internal Audit profession both nationally and internationally:

• We have representatives on several Global IIA Committees so that we are up to date with the latest initiatives surfacing within the Internal Audit world. One of those developments is the Ambition Model which further develops the External Quality Assessment, the requirement to be externally assessed every five years to ensure conformance with the Definition of Internal Auditing and the International Standards for the Professional Practice of Internal Auditing and an evaluation of whether internal auditors apply the Code of Ethics. At SWAP, our last two reviews confirmed full conformance; we took the decision many years ago to undertake this review every three years and continue this path.

• We sponsored the Good Governance category of the Public Finance Awards 2018 and continue to be recognised for our innovative approaches and contributions to the profession (shortlisted this year in two categories).

Exceptional standards and working practices are critical to maintaining our credibility as experienced professionals and ensuring that our Partners and Clients receive the highest quality internal audit service.

Our standards of customer care have been reviewed, with a staff behaviour framework being rolled out, along with corporate values, linked to our staff performance process.

We have also made improvements to the way we communicate and handle information:

• Over the last 12 months we have implemented Office 365 which has allowed us to collaborate more proficiently and securely as an organisation. Embracing the applications within this suite e.g. SharePoint, Yammer, MS Teams and SKYPE have allowed our team to work from anywhere and share information easily.

• We continue to work alongside our Audit Management Software providers MKInsight, constantly looking for innovation that ensures continuous improvement for the service we deliver.

• We have also ensured we remain vigilant regarding data security, achieving Cyber Essentials accreditation in the year.

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Partners

The whole process was very beneficial and it has already helped shape improvements to our processes

Somerset County Council

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Rupert Bamberger • Assistant Director

Advancing our Partners

A core aspect of our role as internal auditors is the advancement and improvement of our various Partners. Indeed, the Global Institute of Internal Audit standards that we follow, make clear that a key focus of all our audit work should be looking to ‘add value and improve an organisation’s operations’.

As such, we look to incorporate and embed this throughout our entire audit process; from putting together our audit plans and scoping individual pieces of audit work, through to reporting and then seeking feedback on the extent to which our work was useful and added value where possible – our feedback is currently an impressive 97% in relation to where we have met or exceeded expectations in this respect!

We’ve even introduced a quarterly staff award for the area where we feel as a company we’ve added the most value. Recent examples include working with one of our Partners using our data analytics software to help identify over £500k worth of duplicate payments which have now been recovered. Another example has included reviewing payments made to a Local Authority Traded Company – through this it was identified that charges had been incorrectly apportioned, resulting in one of our Partner councils being able to reclaim a significant financial amount. The client commented:

‘Thanks for all your hard work on this – it is really appreciated and will hopefully help to recover £72k, so well worth it!’

Aside from our day to day commitment to identify areas we can add value in our audit work, as a company, we are always looking to remain at the forefront of our profession through constant review and innovation in terms of the delivery of our service for our Partners.

This year we have been looking to enhance our annual planning process through a more regular and visible risk assessment to inform our audit plans. We now produce and document a quarterly risk assessment for each of our Partners; informed by local, regional and national factors. This regular risk assessment ensures that our audit plans hopefully reflect new and emerging relevant risks throughout the year.

To complement the above, we are now encouraging our Partners to adopt agile, quarterly internal audit planning, rather than fixing a twelve-month plan at the start of the year. Again, this helps to ensure that the audit plan always reflects the areas of current risk, and can flex to increase or reduce coverage of certain areas in year.

Further innovation in our planning approach has included the clear and visual communication of the extent to which we believe our audit plans are providing coverage of the key risks of the organisation. This approach promotes a greater understanding of internal audit assurance, and how our work hopefully fits into the wider assurance framework. It should again help to focus and align internal audit activity with the areas of highest risk. We also believe this approach will enhance our end of year audit opinion – review of this is currently underway, with our improved approach due to be rolled out shortly.

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Profession

The report highlighted gaps in current operating practices, allowing us to put procedures in place to address these

Devon and Cornwall Police

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Ian Baker • Executive Director

Advancing our Profession

In case we haven’t already mentioned it, SWAP has grown to now include 26 Partner Organisations with a growing number of clients contracting us to provide or support their Internal Audit service. With just over 60 staff spread across our regions and expertise in IT Audit and Fraud together with a wealth of experience in most fields, you could say we are self-sufficient.

We have a number of internal working groups which focus on key risk issues, for example information and technology.

Each group is led by a qualified and experienced senior auditor and championed by one of our Executive Directors. The groups are charged with keeping abreast of latest developments in their field of expertise and sharing the intelligence across the Company so that quarterly, agile plans can be flexed to meet the new and emerging risks faced by the organisations we serve.

Benchmarking and sharing of best practice are relatively easy within our Partnership however, our culture is to go wider to support and advance our profession whenever and wherever we can. Gerry Cox our outgoing CEO has worked tirelessly through the years to advance the profession. Among his many other volunteer roles, Gerry’s volunteering has included serving two terms as President of the IIA–UK and Ireland, chairing the Global Advocacy Committee and serving on the IIA’s Executive Committee and Board, and then as Global Chairman of the Board. Gerry hands over the chalice to Dave Hill, one of our Executive Directors, who has taken up a role as a committee member of the Global IIA Guidance Development Committee.

We actively encourage our staff to share with, and learn from, others. In addition to the above SWAP staff play an active role in local and regional professional groups in order to give and to receive. We are currently involved in the following groups:

• SW IIA Regional Committee

• Welsh IIA Regional Committee

• Local Authority Chief Auditors Network (LACAN)

• Welsh Chief Auditors Group

• Police Audit Group

• Midland Chief Internal Auditors Group

• North and Mid Wales Audit Group

• Chief Internal Auditors Group

• IIA Aspire Community

We also join together with eight other major Internal Audit Partnerships, calling ourselves Audit Together. We meet quarterly to discuss and share knowledge on new and emerging issues and produce regular bulletins on hot topic matters. We’re always happy to share, so if you want to join us on our journey visit www.swapaudit.co.uk and make contact.

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Talent

The approach was thorough and the auditor asked all the right questions. Impressive

Wiltshire Council

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Chris Gunn • Company Secretary

Advancing our Talent

The pace of change never seems to slow down and with it comes challenges for our staff along with plenty of opportunities too.

As an organisation that provides professional services we seek to employ only the best individuals and aim to create an outstanding working environment to attract and retain high quality Internal Auditors. This allows us to continue to deliver the high standards that our customers expect, as well as having staff that wish to belong to an organisation that delivers a cutting edge Internal Audit Service.

Over the last year we have continued to invest in our staff. We employ over sixty staff made up of professionally qualified chartered auditors, accountants, fraud examiners and IT experts all of whom enable us to deliver a service that our customers value.

As part of our commitment to our staff we continue to help them develop and improve their skills. This is achieved by either supporting them to become professionally qualified, or by helping them keep up to date with the latest technological developments in the field of Internal Audit to ensure that our customers get the best value and quality they expect from our service.

As at the 31st March 2019, 63% of our staff hold professional qualifications in Internal Audit or other appropriate certifications that help us deliver the service that our customers desire. 65% of those that aren’t professionally qualified are currently studying.

Our staff have access to e-learning software across our business, allowing staff to access a range of material available for both work related and personal development. This has helped motivate

and retain staff in ensuring that their training needs are met.

We have embraced Office 365 and all the benefits that it brings us in enabling collaboration across the organisation and with our customers.

We work closely with Perspicuity as our IT Partner to ensure that we make the most of the emerging technologies at the same time as protecting the data that we process on behalf of our customers. The expertise that they offer us allows our staff to develop their own IT skills which ultimately benefits our customers.

Advances in technology are impacting on the way in which our customers deliver their services. The knowledge and skills of our staff benefit our customers in that they understand the issues around the adoption of different technological solutions for service delivery. All of our staff use technology in performing audits and our aim is to embed it in every audit that we perform.

Finding the right people in the current job market is a challenge and as an organisation we are getting more creative in looking for candidates with non-traditional audit backgrounds. We have found that those who have softer customer facing skills along with IT and business acumen enable us to keep pace with evolving technologies and deliver when working in collaboration with our customers.

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Numbers

“Revenue�up�for�the�fifth�successive year”

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Financial Performance The Company has had another great year with turnover increasing, moving from £3,114,222 (2017/18) to £3,400,468 (2018/19). This is a result of increased non-partner income and savings generated in employee related costs resulting in a projected surplus in excess of £100k.

The additional income has allowed us to continue our investment in IT and during the year we have invested to ensure that we take full advantage of the Office 365 functionality. This enables our staff to work collaboratively whilst ensuring that the data we process is secure.

The 2018/19 full audited accounts for the Company will be uploaded to our website, but a summary of our income and expenditure unaudited figures are shown below:

Internal Control The Board is collectively accountable for maintaining a sound system of internal control that supports the achievement of SWAP’s objectives, and is responsible for putting in place arrangements for gaining assurance about the effectiveness of that overall system. A key element in that flow of assurance is the annual opinion from the Company’s Internal Auditors the Devon Audit Partnership who are in the process (along with our External Auditors – PFK Francis Clark) of fulfilling their respective roles as part of the year end process.

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2018/19 FINANCIAL YEAR BUDGET UNAUDITED YEAR END FIGURES

INCOME

PARTNER £3,140,686 £3,154,354

NON - PARTNER £178,848 £238,912

OTHER INCOME £2,900 £7,203

TOTAL INCOME £3,322,434 £3,400,469

EXPENDITURE

STAFF RELATED COSTS £3,116,334 £3,031,577

BUILDING COSTS £31,200 £37,855

ADMINISTRATION COSTS £114,806 £158,903

LEGAL AND PROFESSIONAL FEES £59,639 £63,873

TOTAL EXPENDITURE £3,321,979 £3,292,208

PROJECTED SURPLUS/(DEFICIT) £455 £108,261

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Gerry Cox CFIIA, QIAL, CIA, CRMA

Chief Executive Officer

Is former Chairman of the Board of the Global Institute of Internal Auditors and previously served as the Institute of Internal Auditors - UK and Ireland’s President for two terms. Gerry has served as a Head of Audit in Local Government and has more than 30 years of Internal Audit Experience.

Lucy Cater MSc, CMIIA Assistant Director

Lucy is the Head of Internal Audit for four Partner Councils, one Limited Company and has responsibility for an Academy Trust. Lucy is a Chartered Internal Auditor and has over 30 years’ experience in Local Government, over ten years in Internal Audit and prior to that in Financial Services.

Ian Baker CMIIA, QIAL, CIA, FMS Executive Director

A Chartered Internal Auditor and Fellow Member of the Institute of Management Services. Ian has over 30 year’s Local Government experience with 20 years in a senior audit role. A former Head of Audit, Ian is an Executive Director with focus on Quality and Delivery, constantly looking for ways to drive up the quality of our work and improve the customer experience.

Lisa Fryer ACA Assistant Director

A Chartered Accountant with four years in Practice, then 10 years of Financial and Management Accounting experience in both the public and private sectors. For the last 15 years Lisa has been Head of Internal Audit, leading a team in the Public Sector, with responsibility for a range of clients.

David Hill CMIIA, QIAL, CIA Executive Director

A Chartered Internal Auditor, David has worked as an Auditor with the Local Government arena for 30 years. A former Head of Internal Audit, David is an Executive Director with focus on Planning and Performance. He is constantly looking for ways to drive internal efficiencies.

Jacqui Gooding CMIIA, QIAL, CIA, CFE (ACFE) Assistant Director

A Chartered Internal Auditor and Certified Fraud Examiner with 14 years of Internal Audit experience working in the public sector with the last six of those as Head of Internal Audit. Jacqui works with a range of clients including Unitary and District Councils, the Housing sector and Fire Service. Jacqui is the Partnership’s lead on Fraud and Investigations.

Rupert Bamberger CMIIA, QIAL, CA Assistant Director

A Chartered Accountant and Chartered Internal Auditor who has led internal audit teams across a range of public sector clients including Councils, Police and Fire Authorities and a number of Greater London Authority organisations. Rupert has a particular interest in innovating and driving change within the internal audit process to ensure that it remains relevant and constantly adds value.

Ian Halstead CMIIA, ACA, QIAL, CIA Assistant Director

Ian is a Chartered Internal Auditor with over 25 years’ experience working in Internal Audit at District, County and Unitary Councils in Wales. During the last 10 years as Head of Internal Audit, he has been a prominent member of the Welsh Chief Auditor network.

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Meet the team

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SWAP Company Directors as at 31 March 2019

Non-Executive Directors Paul Jones Cheltenham Borough Council

Forest of Dean District Council

Jenny Poole Cotswold District Council

West Oxfordshire District Council

Mark Taylor Dorset County Council

Simon Davey East Devon District Council

Andrew Lovegrove Herefordshire Council

Paul Deal Mendip District Council

John Symes North Dorset District Council

Jane Thomas Powys County Council

Pam Pursley Somerset County Council

Alison Monteith Sedgemoor District Council

Nicola Hix South Somerset District Council

Christine Fraser Taunton Deane Borough Council

West Somerset Council

Jason Vaughan West Dorset District Council

Julie Strange Weymouth and Portland Borough Council

Becky Hellard Wiltshire Council

Karen James Devon & Cornwall Office of the Police and Crime Commissioner

Devon & Cornwall Police

Dorset Office of the Police and Crime Commissioner

Dorset Police

Wiltshire Office of the Police and Crime Commissioner

Gloucestershire Office of the Police and Crime Commissioner

Gloucestershire Constabulary

Wiltshire Police

Dawn Hill Member Representative

Brian Jones Member Representative

SWAP Company Directors as at 31 March 2019

Executive Directors Gerry Cox Chief Executive

Ian Baker Director of Quality

Dave Hill Director of Planning

Moya Moore CMIIA, ACA, QIAL, CIA Assistant Director

Moya is a Chartered Internal Auditor with over 15 years of Audit experience, in both the public and private sectors. She is a member of both the ICAEW and IIA. She is also an accredited trainer who has delivered training to national and international clients. Moya is responsible for new business and marketing within the partnership as well as overseeing a range of partners and clients.

Ian Withers CPFA, CMIIA, QIAL Assistant Director

A Chartered Accountant and Chartered Internal Auditor. Ian has over 20 years Internal Audit experience, including as Head of Internal Audit for large unitary Councils together with a national role. Ian previously chaired the IIA’s Local Government Group. Ian is the Partnership’s lead for IT audit.

Alastair Woodland LLB, CIA, PIIA, MAAT Assistant Director

Has over 16 years of Internal Audit experience across a range of local authorities, for the last 9 years acting as Head of Internal Audit for a number of Local Authorities. Alastair has responsibility for Data Analytics training for staff across SWAP and has been one of the leads on the successful roll out of Office 365.

Chris Gunn Company Secretary

Chris worked as an Auditor in Local Government for more than 20 years. A former Head of Internal Audit, Chris now acts as Company Secretary.

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SWAP Internal Audit ServicesAbbey Manor Business CentreThe Abbey • Preston RoadYeovil • Somerset • BA20 2EN

Direct Line: 01935 848540E-mail: [email protected]

www.swapaudit.co.uk

The South West Audit Partnership Limited (SWAP) is a publicly owned company, limited by guarantee. SWAP is jointly owned by: Cheltenham Borough Council, Cotswold District Council, Devon and Cornwall OPCC, Devon and Cornwall Police, Dorset County Council, Dorset OPCC, Dorset Police, East Devon District Council, Forest of Dean District Council, Herefordshire Council, Mendip District Council, North Dorset District Council, Powys County Council, Sedgemoor District Council, Somerset County Council, South Somerset District Council, Taunton Deane Borough Council, West Dorset District Council, West Oxfordshire District Council, West Somerset Council, Weymouth and Portland Borough Council, Wiltshire Council, Wiltshire OPCC, Wiltshire Police.