To receive a presentation from Officers.
Minutes:
CIPFA Guidelines for Audit Committees
The Committee was introduced to the Chartered Institute of Public Finance and Accountancy (‘CIPFA’) ‘Audit Committees’ document (2018 Edition) which, it was explained, provided practical guidance for all Local Authorities and which represented best practice throughout the sector. The document provided a list and assessment of expected core functions and also suggested a range of wider activities which is was open to Local Authorities to adopt. A comparison of the respective roles of the Overview and Scrutiny and the Audit and Governance Committees was also presented.
The Committee received an appraisal and comparison of its own existing Terms of Reference compared with recommended best practice as set out in the CIPFA document. The results of a process of matching from the two sources was set out and, overall, there was reported to be a sound match between the two. In some instances BCP Council went beyond the minimum standards suggested by CIPFA.
Clarity was sought about the status of the Standards Committee and it was accepted that, quite correctly, the Standards Committee stood separate and independent from Audit and Governance with the function of implementing, in practice, the ethical standards as agreed and laid down by the Council and as included within the Code of Conduct.
In response to a further question about the ‘Value for Money’ (‘vfm’) assessment it was noted that the annual report of the Chief Internal Auditor included (for the legacy Councils) a section on vfm arrangements and provided an opinion on adequacy. The Committee were of the view that Terms of Reference of Audit and Governance Committee should, as recommended in the CIPFA document, expressly include vfm .
The Committee considered in turn each line of the matching process and particularly a number of areas where a completely explicit match did not exist. The Committee was accordingly referred to the following CIPFA model Terms of Reference not specifically included in BCP Council Terms and made suggestions set out for further discussion or for consideration by the Constitution Working Group.
CIPFA Model terms:
Governance, Risk & Control
12. To review the governance and assurance arrangements for significant partnerships or collaborations
Internal Audit
14. To review proposals made in relation to the appointment of external providers of internal audit services and to make recommendations (Not Applicable)
23. To contribute to the QAIP and in particular to the external quality assessment of internal audit that takes place at least once every 5 years
25. To provide free and unfettered access to the audit committee chair for the head of internal audit including the opportunity for a private meeting with the committee
External Audit
26. To support the independence of external audit through consideration of the external auditors annual assessment of its independence and review of any issues raised by PSAA or the authority’s auditor panel as appropriate
27. To advise and recommend on the effectiveness of relationships between external and internal audit and other inspection agencies or relevant bodies
Accountability Arrangements
34.To report to those charged with governance on the committee’s findings, conclusions and recommendations concerning the adequacy and effectiveness of their governance, risk management and internal control frameworks, financial reporting arrangements, and internal and external audit functions.
35. To report to full council on a regular basis on the committee’s performance in relation to the terms of reference and the effectiveness of the committee in meeting its purpose.
36. To publish an annual report on the work of the committee.
Governance Risk and Control of partnerships (CIPFA model term 12) – It was explained that whilst the outcomes of Internal Audit’s work in relation to partnership governance were reported to the Committee, the full range of controls and systems were not explicitly reported. It was noted that this could be achieved by simply extending the current reporting to include more detail or by producing a separate report.
Internal Audit (CIPFA model terms 14, 23 and 25) – In response to questions, the Committee was reassured that external specialist expertise (for example in specialist computer and audit skills) was always bought in when required and that there was budgetary provision to do that.
External Audit (CIPFA model terms 26 and 27) – In response to questions, the background to the process for the appointment of External Auditors since the disbanding of the Audit Commission was outlined including the way in which the Public Sector Audit Appointments (‘PSAA’) opt-in regime provided a national tendering and contract framework. The PSAA system provided significant economies of scale, and there were strict Governmental regulations and accreditation regimes which meant that only six External Audit Companies were able to offer this work. It was noted that the opportunity to review BCP Council’s ‘opt-in’ approach could be considered at the end of the current contract and the Internal Audit Manager undertook to advise Members of the contract end date.
[Post meeting noted : The current appointing period covers the audits of the accounts for 2018/19 to 2022/23]
Accountability Arrangements (CIPFA model 34 to 36) – The Committee expressed the view that these accountability arrangements should be included within the Terms of Reference of the BCP Council Audit and Governance Committee.
The guidance from CIPFA also included a statement of the areas of knowledge that should ideally be present within an Audit Committee although it was accepted that the aim should be to have a balance of skills and experience represented. The availability of quality training opportunities, self assessment facilities and evaluation of effectiveness were considered to be essential going forward. Training should be provided through a blend of internal and external provision and this was something that was being investigated and would be reported back to the Committee.
The Committee also underlined the importance of transparency and encouraging widest possible opportunities for engagement by other Councillors. The Committee was also of the view that to promote transparency and clarity a formal ‘Statement of Purpose’ in respect of the Committee should be included within the Constitution as an opening paragraph to the Terms of Reference.
In response to a specific question at this point, Members were informed that the current Constitution provided for and allowed the formal substitution of Committee Members who were absent.
Statutory Financial Reporting Duties for Local Authorities
During the second part of the presentation, the Statutory reporting duties were outlined and explained including Public Rights of Inspection provisions and other CIPFA and Governmental Codes which applied.
Procurement Transparency
It was explained that transparency was achieved by publication through the website of details of all expenditure on a monthly basis. Contract data was also published through the BCP Council Contracts Register accessible through the website. Tendering opportunities were also advertised through the BCP Council’s tendering portal. This meant that future and ongoing procurement information was available and that the ability to tender was open to all and available through a process that was available free to all suppliers. The degree to which local and small businesses were being supported was also apparent through this approach. It was noted that a report on Sustainable Procurement Strategy would be submitted to the meeting of the Committee in January 2020.
Conclusion
The Chairman thanked the Officers for their comprehensive and valuable set of presentations and a number of inportant items for further discusson at the Constitution Working Group had been indentified. There was agreement that this was a productive way to use the additional meetings to address identified areas and subjects highlighted for further attention by members of the Committee.