Agenda item

The internal auditor submits a report on the current and planned developments in audit (mostly external audit) and governance, that are associated with the Committee’s responsibilities.

Neil Jones of Leicestershire County Council submitted a report to inform the Committee about current and planned developments in audit (mostly external audit) and governance associated with the Committee’s responsibilities.

Attention was drawn to the Redmond review, which was aimed at examining the existing purpose, scope and quality of statutory audits of local authorities, and it was noted that a number of findings and criticisms had been raised from it.  It was noted that the Chartered Institute of Public Finance and Accountancy (CIPFA) was preparing a comprehensive response to the review and that Neil Jones had responded in his role as Head of Audit. 

Neil Jones noted that he would need to review with members of the Committee and Officers as to how audit arrangements were supported.

It was noted that proposals on value for money were aimed at being more relevant to each individual authority rather than a binary yes or no answer.

It was noted that there could be overlap between this review and the Independent Review of the Financial Reporting Council, the Statutory Audit Market Study and the Independent Review into the Quality and Effectiveness of Audit.

The report examined the Ministry of Housing, Communities and Local Government (MHCLG) looking at the accountability framework and examining whether the government was providing adequate oversight.  It noted that the MHCLG:

·         Was not yet providing effective leadership of the governance system.

·         Did not know why some local authorities were raising concerns that external audit was not meeting their needs.

·         Lacked reliable information on key governance risks, or relied on weak sources of information, meaning it had no way of pinpointing the at-risk councils.

·         Monitoring was not focussed on long-term risks to council finances and therefore to services.

·         Had a complete lack of transparency over both its informal interventions in local authorities with financial or governance problems and the results of its formal interventions.

The report also laid out the CIPFA Financial Management Code which looked at developments in government and local authority financial sustainability.

Councillor Dr Moore enquired as to whether members’ fitness to be on the Committee would be under examination and emphasised the heavy expectation of members to be knowledgeable on complex issues, further noting how members were appointed to the committee.  Councillor Dr Moore further suggested that prospective members be able to observe and shadow meetings, suggesting that if members were fully briefed and motivated then they would be able to be more active on the committee.

Councillor Bajaj supported Councillor Dr Moore’s views, noting that the committee usually had some changes in membership each year, and as such elected members shadowing meetings was a good idea.

Councillor O’Donnell added that any changes to the Committee should be gradual as the financial year does not align with the municipal year.  He also stressed the importance of building relationships within the Committee as it helped with smooth and effective running.

Neil Jones referred to views expressed in Appendix 2 of the report, noting that he considered the arrangements of the Committee to be more recently much improved and that the level of engagement was much better.  He further reported that the Chair would be meeting with the External Auditor on the issue.

Nicola Coombe of Grant Thornton noted that there was recognition that the Audit Committee should be more accountable and praised members’ self-awareness and understanding of the seriousness of the Committee.

RESOLVED:

                        That the contents of the report be noted.