Agenda item

The Committee considered a report of the Director of Corporate Resources, which summarised the work conducted during the period 15 May to 18 June 2021, highlighted audits where high importance recommendations had been made and provided a further update on local (external) audit arrangements from 2023 and beyond. It also introduced a proposal to shorten internal audit planning cycles to six month periods. A copy of the report marked ‘Agenda Item 10’, is filed with these minutes.

In introducing the report, the Head of Internal Audit and Assurance Service (HoIAS) reported that there had been two parliamentary committee reports published during the week leading up to this Committee meeting which related to the developments in local (external) audit arrangements. One was a Public Accounts Committee report which had been quite critical of Central Government and recommended it should ensure that the Public Sector Audit Appointment’s (PSAA) next procurement exercise supports a new fee regime for local government audit to bring fees in line with the costs of the work entailed and create an appropriate funding structure. The Committee had requested responses back on the recommendation by the end of September 2021.

A further report had been published by the Housing, Communities and Local Government Select Committee which appeared to indirectly support the PSAA led procurement option by recommending that the Government removed the ability for local authorities to choose their own auditors as the Committee felt there was a risk that auditors might be reluctant to raise potential problems for fear of losing their contract.

Arising from discussion the following points arose:

(i)         A member commented that each update arising from the Redmond Review seemed to imply that more and more onerous conditions were to be placed upon local authorities in respect of corporate governance. The opinion of the HoIAS was sought about what the likely impact on the Committee’s workload would be if the recommendations from the Review were accepted. The HoIAS said that the situation was complex with certain elements relying on Central Government decision making and changes to legislation being brought in, which meant that some developments would take longer to see than others (in some cases a number of years). There was also ongoing concern and discussion around the continuing problem with retaining and recruiting external auditors of quality.

(ii)        The HoIAS stated that in his experience, traditionally, Governance had always been seen by the County Council as being extremely important in terms of how the Authority functioned and that thinking was expected to continue, so it was felt the Council was in a reasonably positive position to manage many of the changes and additional requirements that were either already in place or proposed for the future. It was felt that a number of the requirements would potentially strengthen the Committee’s role and be beneficial to the Council as a whole, but additional work for the Council was to be expected - for the Committee this was likely to mean additional matters to consider as developments evolved. For example, one of the localised recommendations required that consideration be given to the prospect of an independent member joining the Corporate Governance Committee membership.

(iii)       Some other developments in external audit and governance had already been progressed for example, external auditors were now working to a new code of audit practice which had elevated their work around Governance. As part of their audit work, interviews with key people were now expected to be more rigorous. Grant Thornton LLP UK, the County Council’s External Auditors, was in the process of arranging these interviews which were likely to require some level of member involvement. Another development was that external auditors were now required to provide a narrative report as part of their value for money opinion, which the Committee would be required to consider alongside other reports. External auditors were now also required to produce an annual report for Full Council which it was anticipated the Committee would also be required to consider at the appropriate time.

(iv)      Concern was raised that the dates to complete the high importance (HI) recommendations relating to Direct Payments (Personal Budgets) had been further extended. It was acknowledged that there had been a series of previous extensions for the reasons previously reported to the Committee,  due to the impact of the Covid-19 pandemic which had required a large number of staff to be redeployed to assist in other Council service areas. Assurance was provided that the Internal Audit Service regularly followed up with Departments until sufficient progress had been made with HI recommendations. It was hoped that the recommendations relating to Direct Payments would be concluded in line with the further date extension. The Committee requested that if the HI recommendations relating to Direct Payments were still outstanding at the time of the Committee’s next meeting, the Director of Adults and Communities be requested to attend and provide an update explaining why these had not been concluded.

RESOLVED:

(a)    That the Internal Audit Plan and Progress Report and further update on developments in local (external) audit arrangements be noted.

(b)    That if the high importance recommendations relating to Direct Payments are still outstanding at the time of the Committee’s next meeting, the Director of Adults and Communities be requested to attend and provide an update.