Audit & Risk Committee Terms of Reference
1.
Constitution
The Council has established a
Committee of the Council to be known as the Audit & Risk
Committee to report to the Council. This supports the
Council’s corporate governance responsibilities in relation
to internal control, risk management and governance.
2.
Membership
The Audit & Risk Committee
shall consist solely of non-Executive Councillors. The Chair and
Vice-Chair of the Committee shall be appointed by the Council from
amongst the non-Executive Councillors.
Provided the meeting is
quorate, in the absence of the Chair the Vice-Chair will assume the
position and authority of the Chair.
The membership of the Committee should reflect
the political representation of the Council as a whole.
A quorum of at least three Committee members
will be required at all meetings.
3.
Attendance at Meetings
The Director of Finance, the
City Barrister & Head of Standards, the Manager Risk
Management, the Head of Finance (CDN and Resources) and the County
Council’s Head of Assurance Services shall normally be
invited to attend meetings. Other officers will be required to
attend if called for by the Committee or when relevant items appear
on the agenda. All Councillors are entitled to attend public
meetings, should they choose to do so. All such attendees shall
have the right to speak, at the discretion of the Chair, but not
vote at meetings.
4.
Frequency of Meetings
Meetings shall be held not less
than four times a year. Additionally, special meetings may be
convened if an issue arises that, in the opinion of the Chair,
cannot wait until the next scheduled meeting.
5.
Duties
The duties of the Committee
shall be as set out in the annexed schedule to these Terms of
Reference.
6.
Authority
The Committee approves, on
behalf of the Council, the Council’s accounts and its
internal control, risk management and governance frameworks and any
aligned policies and arrangements.
The Committee is authorised by
the Council to investigate any activity within its terms of
reference. It is authorised to seek any information it requires
from any employee and all employees are directed to co-operate with
any request made by the Committee. The Committee will advise the
Chief Operating Officer as the Head of Paid Service if it has
exercised this authority to seek information (other than routine
information) from any employee, setting out the information
required and the circumstances underlying the request.
The Committee is authorised by
the Council, if considered necessary, to secure the attendance of
third parties with relevant experience and expertise provided that
the Committee shall notify the Chief Operating Officer as the Head
of Paid Service before any fees for such attendance are
agreed.
7.
Communications
The Secretary of the Committee
will circulate the agenda and papers for meetings five clear days
before the meeting.
The Committee will consider and
agree the approved minutes of the Committee at its next
meeting.
The Committee’s Terms of
Reference will be made available on the Council’s website.
They will be reviewed and, where necessary, updated at least
annually.
An annual report of the
Committee’s activity will be submitted to the Council each
year.
Duties of the Audit & Risk
Committee
1. Audit
Framework
1.1 Internal
Audit
•
On behalf of the
Council, to approve the Head of Internal Audit & Assurance
Service’s (Leicestershire County Council) annual report and
opinion, considering the level of assurance given over the
Council’s corporate governance arrangements and decide on
appropriate actions.
•
To consider, challenge
and approve (but not direct) Internal Audit’s strategy and
plan and monitor performance on an annual basis.
•
To receive summaries
of Internal Audit reports and the main issues arising.
•
To review and
challenge management’s responsiveness to the internal audit
findings and recommendations, seeking assurance that appropriate
action has been taken where necessary and agreed recommendations
have been implemented within a reasonable timescale.
•
To monitor and assess
the role and effectiveness of the Internal Audit
function.
In fulfilling these functions, the Audit & Risk
Committee fulfils the role of ‘the board’ for the purposes of the
Public Sector Internal Audit Standards.
1.2 External Audit
•
On behalf of the
Council, to review with the external auditor and inspection
agencies the findings of their work including any major issues
which are unresolved; key accounting and audit judgments; and the
levels of errors identified during the audit. The Committee should obtain explanations from
management and from external auditors, where necessary, as to why
errors might remain unadjusted.
•
To consider the scope
and depth of external audit work and to assess whether it gives
value for money.
•
To liaise with Public
Sector Audit Appointments Ltd (as successor body to the Audit
Commission for this purpose) over the appointment of the
Council’s external auditor and conduct such other related
functions as required by the local public audit regime.
•
To facilitate
effective relationships between external and internal audit,
inspection agencies and other relevant bodies and ensure the value
of these audit relationships is actively promoted.
•
To approve any
instances of non-audit work by the external auditors in accordance
with the Policy for Engagement of External Auditors for
Non-Audit Work and report any such instances to the
Council.
2. Risk
Management Framework
•
On behalf of the
Council, to consider and challenge the effectiveness of the
Council’s Risk Management Strategy and Framework, including
the Risk Management function.
•
To consider and
approve, on behalf of the Council, the Council’s Risk
Management Strategy and its key risk management policies including
the Council’s statement of overall risk appetite.
•
To approve, on an
annual basis, the Risk Management function’s terms of
reference and its annual plan.
•
To review (and take
any actions as a consequence of) reports
from the Manager, Risk Management in respect of the status of key
current and emerging risks and internal controls relating to those
risks (the Operational and Strategic Risk Registers).
3. Internal
Control and Governance Framework
•
To review the adequacy
of the Council’s internal control framework through review of
its system of internal control and system of internal audit and
overseeing the production and approval of the Council’s
Annual Governance Statement prepared in accordance with the Local
Code of Corporate Governance.
•
To consider the
external auditor’s report to those charged with governance on
issues arising from the audit of the accounts. (The Committee is to do this before approving the
Council’s published financial statements. The Committee should take note of any adjustments
set out in the external auditor’s report and agree any such
adjustments where management has declined to do so or set out the
reasons for not doing so.)
•
To maintain an
overview of the Council’s Constitution in respect of contract
procedure rules, finance procedure rules and codes of conduct
and behaviour.
•
To review and approve,
on an annual basis, the Council’s anti-fraud, bribery and
corruption and its disclosure (whistle-blowing) policies and
procedures.
•
Annually, to assess
all significant risk issues considering:
o
Changes since the last
annual assessment and the Council’s response;
o
The scope and quality
of management’s ongoing monitoring of risks and the system of
internal control;
o
The incidence of
significant control failings in relation to all significant risks
and their impact.
•
To review regular
reports from Internal Audit and Risk Management on risk and
internal controls, considering:
o
The effectiveness of
systems of internal control across the Council
o
Reports on major
control issues and their impact on the Council’s risk
profile.
•
To consider and decide
on appropriate actions relating to the Council’s compliance
with its own and other published or regulatory policies, standards
and controls, including:
o
Policies relating to
information governance and assurance
o
Health & Safety at
Work
o
Civil Contingencies
Act
o
Policies relating to
disclosures and complaints
o
Others as
appropriate.
4.
Financial Reporting Framework
•
To review and approve
the Council’s published financial statements, the external
auditor’s annual opinion and other reports to Members and to
monitor management action in response to issues raised.
•
To review and approve
the annual statement of accounts and the annual Letter of
Representation on behalf of the Council, giving particular attention to critical accounting policies
and practices, decisions requiring a significant element of
judgement, how any
unusual transactions should be disclosed and the clarity of the
disclosures.
•
To bring to the
attention of the Council any concerns arising from the financial
statements or from the audit.
5. Other
Matters
•
To consider, approve
or make recommendations in respect of any other matters referred to
it by the City Mayor, Chief Operating Officer (as the Head of Paid
Service) or a Director or any Council body.
•
To consider any
relevant matters reserved for Member-level decision as detailed in
Rules of Procedure.
•
To present an annual
report to the Council on the Committee’s conduct, business
and effectiveness.