Agenda item

(a)       The Committee approve the changes agreed by the Audit Committee for    the Audit Committee’s Terms of Reference; and

(b)       The Committee approve the changes agreed by the Audit Committee for    the Audit Committee’s Charter.

                        The Internal Audit Manager presented the Terms of Reference and Charter for the Audit Committee. These had been updated following a workshop for Audit Committee members and to bring them in line with CIPFA guidance.  She referred members to the two copies of the Terms of Reference attached one with the tracked changes and outlined the changes to the document and the only additional responsibility was to produce an Annual Report to Full Council.

                        When referring to the Charter she confirmed this was new for the Authority and included more detail on the terms of reference, the roles and responsibilities of Audit and Scrutiny committees and the links with the Chairs and Vice Chairs liaison group.  These were presented for the committee’s consideration and afterwards it would then go to Full Council for approval.

            Councillor Patrick Heesom referred to the Measure and the membership of the Audit Committee.  He commented on the extensive workload of the Committee and suggested it be increased in line with the other Committees.  In response the Chief Officer (Governance) confirmed that any changes to the size of Committees could be considered at the Annual Meeting where this would be discussed.  With regard to the 2011 Measure the proposals within the report were in line with the requirements and guidance from CIPFA. Councillor Heesom suggested that the Audit Committee be asked if they were satisfied with the composition of the committee. 

            Councillor Mike Peers referred the section 8 (financial affairs) and asked if Members should be considering the year-end viability of the council. He added Budget meetings were held but it was up to members to review and comment on the information provided to them.  He felt it would be useful if the Audit committee could produce a report from the information they received.   He also referred to Appendix A on page 55 the arrow from the Audit committee to Annual Governance Statement and Statement of Accounts and asked if it should be a two way arrow. 

            In response the Chief Officer (Governance) outlined the areas covered by treasury management and their responsibilities with regard to prudential borrowing.  The financial health of the council was provided in the budget monitoring reports, and at Corporate Resources Overview & Scrutiny Committee and at Council when setting the budget.  The Section 151 Officer provided advice to members when setting the budget.   With regard to the diagram in Appendix A the Chief Officer felt that the Audit Committee would not refer the Statement of Accounts back to Council but recommend its approval to Council

Councillor Peers understood how the process worked but felt the Audit Committee could do a second check and provide assurance.  He added in the diagram it looked as though the Statement of Accounts and Annual Governance Statement were not passed to the Audit Committee and yet they were asked to comment.  The Chief Officer explained that both these documents originated from the Audit Committee and that this year Members of Audit had more involvement in the preparation of the Annual Governance Statement.    With regard to financial viability Cabinet proposed the budget, it would then scrutinised by the relevant Scrutiny Committees and with the advice of the Section 151 Officer Council approved the budget.

The Internal Audit Manager added assurances were provided through the committee’s forward work programmes, external auditors’ reports and various workstreams.  Also advisory work fed through into the budget process and contributed greatly to the assurances Cllrs Peers referred to. 

Councillor Clive Carver referred to the tracked changes document and could not see what had been changed or added.  He asked why this had been produced this way. The Internal Audit Manager apologised saying it should have shown tracked changes and did not understand why they were not there.  She clarified nothing had been removed.  It was agreed that a tracked version of the document would be circulated to Members.

Councillor Bithell raised a number of questions about cuts to funding, the reduction in staffing levels, composition of the Audit Committee and Audit training.  

The Internal Audit Manager referred to the self-awareness questionnaire the Committee were required to complete and explained that a workshop was held in September which identified areas where the committee could improve and where additional training of individuals or committee as a whole was required.    She referred to the statutory requirements such as statement of accounts and explained how internal audit provided a risk assessment for each area, annual assurance and brought all information together in the action plan. 

In response to a question from Councillor Bithell the Internal Audit Manager explained that an audit was identified as being required through a combination of performance, committee reports and quarterly meetings held with Chief Officers and Service Managers to discuss areas where they had concerns. The Chief Officer clarified not every report provided as much detail when it went to Audit Committee.  Red Reports went into more detail but green reports did not.  Meetings were held with the Chairs of the Scrutiny Committees and the Chair of the Audit Committee to discuss and co-ordinate their work.  Scrutiny looked at performance and budget and Audit looked at process.  He then provided information on the work officers had carried regarding the strategic risks in the Council plan.

Councillor Bithell referred to Value for Money and the impact on performance because of lack of funding and asked was this taken into consideration by audit.  The Chief Officer responded that when internal Audit carried out an audit within their findings were highlighted issues which the management of the service would need to provide a response.  Auditors had options to escalate if they were not satisfied with the response received.  The Auditor would then monitor to ensure the commitments were kept.  Managers made the assessments and were able to judge if resources were available to do it.   

Councillor Bithell referred to the report and asked if the Term of Office should be changed to 5 years to reflect the term of the council.  The Chief Officer agreed with this.

Councillor Glyn Banks suggested that the Audit Committee should meet six times a year to deal with their increased workload.  The Internal Audit Manager responded saying there had only been one occasion when added resources had been brought in whilst the audit team was involved with an investigation.

Councillor Heesom referred to the management and running of the audit function which he felt was very good.  He said he had attended every Audit Committee and felt there needed to be greater co-ordination between the elected Members and the internal audit function.  The work the committee covered was immense and Members needed to understand the process, but raised concerns about the time Members had to read the papers prior to the meeting and felt that the System needed adjusting to allow more time.  He felt the process was valued, necessary and had to have a greater merit.

Councillor Heesom referred to the Workshop in January and encouraged members to attend to develop a better understanding of the paperwork provided to them.  He referred to the general monitoring reports and the item at the end of the reports referred to as loan facilities under Corporate Finances and asked what department this was accountable to.  The Chief Officer advised that members of Audit Committee received their agendas 5 working days before a committee meeting.

RESOLVED:

(a)       The Committee approve the changes agreed by the Audit Committee for    the Audit Committee’s Terms of Reference; and

(b)       The Committee approve the changes agreed by the Audit Committee for    the Audit Committee’s Charter.