To advise Members on the CIPFA Guidance on Audit Committees.

The Principal Audit Manager presented the report and reminded Members that at the first meeting of the Committee in September 2005 information was given on the position statement guidance now published and highlighted in the report.  Some of the points raised highlighted the need for the Committee:

• to be a fully constituted committee of the Council, which is independent of both the Executive and Scrutiny functions;
• for Members to receive specific training relevant to their responsibilities;
• to have terms of reference that are reviewed annually, taking into account relevant governance developments, which are then integrated within the Council;
• Chairman to have previous knowledge of or to receive appropriate training on financial and risk management, accounting concepts and standards and the regulatory function; and
• to provide effective leadership on audit and governance, with the Committee proactive in providing forward looking agenda items;

Additionally, Members were advised that there was a need to raise the profile of the Audit Committee within the Council.  It was agreed that it would take time to embed across the Council all the issues outlined in the Statement of Internal Control, but good progress had been made to date.  Currently the Audit Committee is made up of Cabinet and Scrutiny Committee Members, CIPFA guidance requires that Members are sufficiently independent of other key committees of the Council.  Therefore the terms of reference and membership of the Committee would need to be re-examined.  It was proposed that the Principal Audit Manager contacted other local authorities to investigate what other authorities are proposing for the make up of the Committee and that this information is circulated to Members.  It was also suggested by the Director that Members would need to discuss the longer term future of the Committee and the possible change of name to the Corporate Governance Committee to cover the other non-financial issues that would need to be dealt with.  It was discussed that it might be more appropriate for backbench Members to make up the membership of the Committee and to consider an independent Chairman.  It was emphasised that it was important that the Committee was not made up of Members with only financial experience, but to have Members with a general business background also.

CIPFA guidance also suggests separate and private meetings with the Chairman and both internal and external auditors.  It was felt however that this would not sit well with the Council’s culture and erode transparency and it was felt therefore that all matters should come before the Committee.  There is also a need for the Committee to decide on the issues to be overseen by them, which are listed below:

·         Risk Management;

·         The Assurance Framework, to include the production of the Statement of Internal Control;

·         Codes of Corporate Governance, standards and behaviour;

·         Arrangements for delivering value for money;

·         Anti-fraud arrangements;

·         Arrangements for performance management;

·         Internal audit strategy/plan; and

·         Anti-corruption arrangements including the Council’s whistleblowing guidance.

Members discussed the issue of training and the Director for Resources advised that a training programme was being put together for Committee Members to cover any gaps there may be from the initial induction training Councillors’ received.  However, a rolling training programme, in line with suggested good practice, was being developed and would commence with risk management.  With regards to the work programme for the Committee, it was anticipated that this would be Member led.  Additionally, it was reported that CIPFA guidelines suggest that in line with good practice the Committee meets four times a year.  It was proposed therefore that the Committee meet four times a year and develop the work programme as set out in the report.

RESOLVED

THAT(a) the Terms of Reference as outlined in the CIPFA guidance in Appendix 3 to the report be adopted;

                  (b) the membership of the Committee be reviewed;

(c)         the strategies to be overseen by the Committee as outlined above, be adopted;

(d)         the timetable for training outlined in the report be adopted;

(e)         the work programme outlined in the report be adopted; and

(f)           a further report be made to the April meeting.