To consider the key points arising from the CIPFA Audit Committees: practical guidance for local authorities and police and the revised Audit & Governance Committee’s terms of reference, prior to their onward submission to Council for approval.

The Committee considered a report on the CIPFA Practical Guidance for Local Authorities on Audit Committees.  Attached to the report at Appendix 1 were proposed revised terms of reference for the Committee and at Appendix 2 a Self-assessment of good practice against the CIPFA Practical Guidance for Local Authorities on Audit Committees.

The report noted that the Guidance updated previous CIPFA guidance from 2018 and complemented the CIPFA Position Statement on Audit Committees; it also incorporated recent legislative changes and professional developments following the Redmond Review into the effectiveness of external audit and transparency of financial reporting in local authorities.  Whilst it was guidance CIPFA expected that all local government bodies should make their best efforts to adopt the principles, aiming for effective audit committee arrangements.  The report summarised the guidance relating to the purpose, independence and effectiveness, core functions, membership, engagement and outputs, and impact of the Audit Committee.  CIPFA had endorsed the recommendation of the Redmond Review that the external audit annual report should be submitted to Council by the external auditor and the report sought the Committee’s endorsement of this change.

The report explained that a self-assessment using the CIPFA self-assessment tool had been conducted by Internal Audit in January 2023.  This had concluded that current arrangements partially complied with the guidance, with ‘moderate’ improvement required.  One of the outcomes from the self-assessment review was to propose that the Committee’s terms of reference should be updated to those suggested by CIPFA for local authorities. 

The report noted that, generally, the current terms of reference addressed the core areas identified in CIPFA’s Position Statement but would benefit from updating.  Areas for possible increased emphasis included organisational risk profile, value for money and an oversight role on fraud and anti-corruption and a broadened reference to internal controls and financial management.  Possible areas for specific inclusion were reviewing governance and assurance arrangements for significant partnerships/collaborations, considering the assurance framework and whether it adequately addressed the Council’s risks and priorities, detailing that both the Chief Auditor and External Audit had unrestricted access to the Committee Chair and an opportunity to meet privately with the Committee.  The proposed Terms of Reference would also remove the decision-making powers of the Committee in relation to the approval of the annual financial statements, which would therefore revert to Council.

Resolved –

(1)            That the key points arising from the ‘CIPFA Audit Committees: Practical Guidance for Local Authorities and Police’, as summarised in the report, be noted;

(2)            That the recommendations of the Redmond Review that the external audit annual report should be submitted to Council by the external auditor be endorsed;

(3)            That Council be recommended:

(a)   to approve the revised Audit & Governance Committee terms of reference, as set out at Appendix 1, and the removal of its decision-making powers in relation to the approval of the annual financial statements, returning the latter to Council;

(b)  to require the Audit & Governance Committee to produce a public report annually on how it had complied with the CIPFA position statement, and discharged its responsibilities, including an assessment of its performance.