Agenda item

The Committee considered a report of the Director of Corporate Resources, the purpose of which was to present the external Audit Plan for 2013/14 for approval.  A copy of the report is filed with these minutes.

 

    i.          Anti fraud and corruption

 

In response to specific enquiries raised by PWC within the Plan relating to fraud, the Chairman confirmed the following:

 

·         The Committee received regular updates on Anti Fraud and Corruption initiatives, as the Council continually assessed its counter fraud arrangements and performance against professional guidance;

·         The Committee was kept informed of instances of fraud through written reports from the Head of Internal Audit Service (HoIAS) at the conclusion of any investigations.  There was also scope for the HoIAS to verbally brief the Chairman and Vice Chairman of the Committee throughout an investigation when a matter was considered to be of significant concern;

·         In accordance with its terms of reference, the Committee monitored on an annual basis the adequacy and effectiveness of the Internal Audit Service.  On a quarterly basis it considered any major Internal Audit findings and the responses to the implementation of its recommendations, as well as arrangements for the identification, monitoring and management of strategic and operational risk (including fraud risk) within the Council;

·         The Audit Commission’s ‘Protecting the Public Purse 2012’  ‘checklist’ had been used by the County Council to carry out a review of its position and the effectiveness of its fraud arrangements which had been reported to the Committee in February 2013.  

 

   ii.          Misstatement Threshold

 

The Committee agreed that the threshold for PwC treating a misstatement in the County Council’s accounts as ‘clearly trivial’ should remain at the current level of £100,000.

 iii.          Letter – Working more efficiently

 

With regard to the letter attached to the Audit Plan (page 45 of the report) some members raised concerns about the possibility of basic audit tasks being offshored to PwC Service Delivery Centres in India and Poland and questioned who authorised such an arrangement.  The Committee noted that:

 

·      The Audit Commission had appointed PwC as the County Council’s external auditors and it held the contract with PwC and had agreed the process that would allow PwC to offshore data; This would enable basic audit tasks to be undertaken at PwC’s Centres in India and Poland whilst allowing its UK Centre to concentrate on identified high risk areas.  This system had operated in the private sector for some time and created efficiencies (thus keeping costs down) whilst maintaining the quality of service; 

·      PwC did not currently offshore any data and it would not do so if the County Council did not support such an arrangement.  Some members expressed concern that not supporting this option would impact fee levels in future years;

·      Whether or not work was offshored would not affect the fees set out in the Plan for 2013/14 which had been determined at a national level; 

·      Concerns were raised about the ethics of offshoring work and the impact this might have on standards and job security in the UK. 

 

To give assurance to the Committee, Mathew Elmer of PwC offered to present to the Committee a report at its next meeting providing more information on this issue. 

           

It was moved by Mr Lynch and seconded by Mr Sheahan:

 

“That this Committee expresses its opinion that such work should not be off-shored outside the European Union.” 

 

The motion was put and not carried, three members voting for the motion and four against.

 

Following further discussion, it was then moved by Mr Shepherd and seconded by Mr Hart and carried:

 

“That PwC, the County Council’s external auditors, be requested to submit a report to the next meeting of the Committee so that members might be able to understand the ramifications and consider the ethics of the proposal to allow data to be offshored to services in India and Poland for the facilitation of basic audit tasks.”

 

At the suggestion of the Director of Corporate Resources the Committee further requested that the Audit Commission be contacted to seek its views on the practice of off-shoring audit work.

RESOLVED:

 

(a)          That the External Audit Plan 2013/14 be approved;

(b)          That the threshold of when misstatements made in the County Council’s accounts should be treated by the external auditors, PwC, as ‘clearly trivial’ should continue to be those that amount to less than £100,000;

(c)          That PwC, the County Council’s external auditors, be requested to submit a report to the next meeting of the Committee so that members might be able to understand the ramifications and consider the ethics of the proposal to allow data to be offshored to services in India and Poland for the facilitation of basic audit tasks;

(d)          That the Director of Corporate Resources be requested to contact the Audit Commission to seek their views on the practice of off-shoring audit work.