Agenda item

The Divisional Director, Risk and Assurance presented the report. He drew Members’ attention to the developments described in paragraphs 4.10 and 4.11 of the report, namely a joint internal audit working arrangement with North Somerset Council and a contractual arrangement with the South West Audit Partnership (SWAP) to replace audit posts which currently could not be recruited. These would result in a significantly bigger pool of resources. There was a lot of detailed work to be done on integrating these resources, which could impact on the work plan in the short term, but there would be long-term benefits.

The Independent Member expressed concern about the speed of progress on creating an audit partnership. Discussions about a partnership had been under way for the past eighteen months, which was disruptive for this authority and potential partners. He suggested that the Committee should confirm its confidence in officers to progress the partnership more quickly. He wondered whether the external auditors had a view on the speed of progress.

Another Member, however, said that he was impressed that, at a time when the resources of Internal Audit were under pressure, so much progress had been made.

The Chair invited the external auditors to comment.  Mr Morris responded that there were significant changes in audit work because of, among other things, the challenge of new audit standards. Local authorities were adopting a variety of new arrangements. He considered that before choosing a new arrangement it was essential to examine the impact on, for example, corporate governance and financial governance. Devon CC, Torbay Council and Plymouth City Council had an audit partnership and had established a joint audit committee to oversee it. The Corporate Audit Committee needed to be comfortable with any new audit arrangements, and progress should take place at a pace that ensured that the right types of audit were being undertaken. The nature of internal audit and the relationship between internal and external audit were changing. Internal audit was becoming more strategic and external audit did not rely on internal audit in the same way that it had done in the past. It was sometimes quicker and more economical for the external auditors to undertake a piece of work than to wait for it to be done by internal audit. However, internal audit remained important and needed a wide range of skills, which a partnership could provide.

The Divisional Director – Business Support thought that a great deal of progress had been made at a time of significant change. It was possible that the partnership with North Somerset would grow, but at the moment it was at a very early stage of development. It would be better to focus on developing relations with North Somerset and only try to enlarge the partnership at a later stage. The arrangement with SWAP would ensure that extra resource would be available and he hoped that performance against the work plan would improve. In the longer term the partnership with North Somerset might extend beyond audit and cover a number of back office functions. The Divisional Director, Risk and Assurance said that B&NES had been thinking about the partnership option for longer than North Somerset had, and that time had to be allowed for the development of a common ethos and culture, even though the total number of staff involved was only about twenty. He said that it would be helpful to him in discussions with North Somerset members if the Committee did reaffirm its commitment to the partnership approach. In response to a Member he said that he expected the pace of progress to pick up, and benefits to be even clearer by next April.

Members signified that they were content with current developments and wished to be kept informed of any obstacles which emerged.

The Risk Manager presented the six-month performance report. He explained that performance had been below the six-month target for the reasons set out in the report: the level of unplanned work, a reduction in staff resources and the need for follow-up work on reviews completed in 2012/13. The Head of Audit, Risk and Information had already informed the Committee of actions taken to strengthen staff resources.

A Member suggested that some of the items on the plan, such as VAT auditing, though important, were too detailed to need reporting to Members. Members should concentrate on the strategic issues.

Mr Morris said that he was impressed by the presentation of the information in the appendices; the dashboard in Appendix 1 was particularly effective. He did not agree with the Member who had suggested that the some of the issues were too detailed to be presented to the Committee.

Replying to a Member, the Divisional Director, Risk and Assurance said that the Audit Reviews were not listed in risk order, and that there were various reasons why an audit would be scheduled for a particular time of year. He suggested that any issue highlighted in red should attract the attention of the Committee.

RESOLVED to note progress made against the Internal Audit plan for 2013/14.