Audit & Risk Committee Terms of Reference
1.
Constitution &
Purpose
The Audit & Risk Committee is a key
component of the Council’s corporate governance
framework. The Committee reports to the
Council and its purpose is to provide those charged with governance
independent assurance on the adequacy of the risk management
framework, the internal control environment and the integrity of
the financial reporting and governance processes.
It fulfils the role of ‘the
Board’ for the purposes of the Public Sector Internal Audit
Standards.
The Terms of Reference of the Committee
will comply with Part 4a of the Constitution unless explicitly
detailed below.
2.
Membership
The Committee shall consist of
non-Executive Councillors, and a maximum of one Executive Member.
The Chair will be a non-Executive Councillor. A quorum of at least three non-Executive Councillors
will be required at all meetings.
The Committee must remain apolitical,
displaying unbiased attitudes, treating auditors, officers, the
executive and management equally.
3.
Attendance by officers
The Director of Finance (S151) or their
nominated officer(s) and the designated Head of Internal Audit
Service shall normally attend meetings. There is a standing
invitation to the Council’s appointed External Auditor to
attend all meetings.
Other officers who will attend as
required, including at the request of the Chair.
4.
Frequency of meetings and
agendas
Meetings shall be held not less than four
times a year.
5.
Duties
The duties of the Committee shall be as
set out in the annexed schedule to these Terms of
Reference.
To support and assist Committee members
undertaking their duties and extending their knowledge, regular
briefings or training will be provided by officers.
6.
Authority
The Committee has the responsibilities
detailed in Annex 1. 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 officer and all officers are directed to
co-operate with any request made by the Committee. The Chair 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 officer, 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
Chair notify the Chief Operating Officer as the Head of Paid
Service before any fees for such attendance are agreed.
7.
Accountability
The Committee will undertake an annual
review of its effectiveness (including where it has added value and
supported improvement).
The outcome of this annual review and the
Committee’s activity will be reported to the Council each
year.
Duties of the Audit & Risk Committee
1.
Audit Framework
1.1
Internal Audit
•
To fulfil the role of ‘the Board’ for the purposes of
the Public Sector Internal Audit Standards (the PSIAS).
•
To review and approve: -
§
The Internal Audit Charter which defines the purpose
of the internal audit function.
§
The risk-based internal audit plan, including resource
requirements.
§
The Head of Internal Audit Service’s annual report containing
an opinion on the overall adequacy and effectiveness of the
Council’s control environment, and conformance to the
PSIAS.
•
To receive regular reports on progress against the internal audit
plan, containing activity undertaken, summaries of key findings,
issues of concern and action in hand.
•
To review conformance to the principles of the CIPFA Statement on
the Role of the Head of Internal Audit in Public Service
Organisations, and to support any improvements required.
•
To contribute to and support an external quality assessment of the
internal audit function which is a requirement of PSIAS to take
place at least once every five years.
•
To review any proposals made in relation to the appointment of
external providers of internal audit services and to make
recommendations.
1.2 External
Audit
•
To consider, comment upon and note the arrangements chosen by the
Council to select and appoint its statutory external auditor.
•
To review the External Auditor’s disclosure of independence
and objectivity. To satisfy itself that no issues with compliance
with ethical standards or problems with audit quality have been
raised.
•
To consider and note the annual audit fees letter and the
assumptions supporting the fees.
•
To consider the scope and depth of all external audit plans,
reports and audit risk assessments.
•
To consider the External Auditor’s ISA 260 Report to
‘Those Charged with Governance’. This contains: -
§
key findings arising from the audit of the Council’s
financial statements;
§
the Auditor’s assessment of the Council’s arrangements
to secure value for money (VFM) in its use of resources; and
§
the requirement for members of the Committee to authorise the
Director of Finance to sign the letter of representation to the
External Auditor from the Council in connection with the audit of
the Council’s financial statements.
•
To note the External Auditor’s annual report on the claims
and returns certified for the Council.
•
To ensure that non-audit work by the External Auditor is in
accordance with the Council’s Policy for
Engagement of External Auditors for Non-Audit Work and report
any such instances to the Council.
2.
Counter Fraud and
Investigations
·
To review and approve, on a triennial basis (unless significant
changes in legislation or circumstances dictate otherwise), the
Council’s policy and procedures for: -
i.
Anti-Fraud (including Bribery and Corruption)
ii.
Disclosure (whistleblowing)
·
To note the outcomes of any review of the Council’s
conformance to the CIPFA Code of Practice on Managing the Risk of
Fraud and Corruption.
·
To receive and note reports on the performance of the counter fraud
function and outcomes from the Council’s participation in the
National Fraud Initiative (NFI).
·
To consider regular reports on the Council’s
application of the Regulation of Investigatory Powers Act (RIPA)
and the outcomes of any inspections and approve the adoption of any
related policies.
3.
Statutory Financial
Reporting
•
To review and approve the annual statutory statement of accounts
and the annual Letter of Representation on behalf of the
Council.
•
To bring to the attention of the Council any concerns arising from
the financial statements or from the audit.
•
To receive periodic reports providing updates on accounting and
financial developments.
4.
Risk Management and
Insurance
·
To review and challenge the adequacy and effectiveness of the
Council’s overall risk management framework, specifically to:
-
i.
Consider and approve, on an annual basis, the Council’s
Corporate Risk Management Policy Statement & Strategy.
ii.
Consider and approve, on an annual basis, the Council’s
Corporate Business Continuity Management Policy
Statement and Strategy, ensuring it is compliant with the statutory
duties required by the Civil Contingencies Act 2004 and continues
to align to international and national standards and good practice
guidelines.
iii.
Review reports in respect of the status of key current and emerging
risks and internal controls relating to those risks, including the
Operational and Strategic Risk Registers) and partnerships with
other organisations.
iv.
Receive and note the annual report on the Council’s insurance
arrangements and its claims performance.
5.
Governance and
Assurance Frameworks
·
To satisfy itself that the Council’s assurance statement
including the Annual Governance Statement, properly reflect the
risk environment and any actions required to improve it, and
demonstrate how governance supports the achievement of the
Council’s objectives. The Committee’s responsibilities
are to: -
i.
Review the adequacy of the Council’s assurance framework
through the annual review of its system of internal control.
ii.
Review and approve the Council’s Local Code of Corporate
Governance prepared in accordance with the CIPFA/SOLACE Good
Governance Framework and the statutory requirement for producing an
Annual Governance Statement.
iii.
Note any reports providing
updates on assurance, risk or governance related
developments
6.
Complaints
·
To consider and decide on appropriate actions relating to the
Council’s compliance with its own and other published or
regulatory policies, Acts, standards and controls.
·
To consider ad-hoc LGSCO reports.
7.
Procurement
·
To receive and note the annual report setting out the
Council’s performance against the Procurement Plan and
compliance with the Contract Procedure Rules (including data on
waivers).
·
To consider any proposals for changes to the Rules to be made to
Full Council and to review any changes to the Rules made by the
City Barrister or any changes to thresholds.
·
To seek assurance that the Council has
appropriate arrangements to identify and manage risks, ensure good
governance and obtain assurance on compliance in its procurement
activity.
8. 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.