Agenda item

Mr P Johnson (Independent Member) will make a presentation on his attendance, together with the Head of Internal Audit and Corporate Anti-Fraud, at a CIPFA Workshop/Development Day for Local Authority Audit Committees in London in November 2018 and will highlight the key points covered at that session.

Mr P Johnson (Independent Member) made a presentation on his attendance, together with the Head of Internal Audit and Corporate Anti-Fraud, at a CIPFA Workshop/Development Day for Local Authority Audit Committees held in London in November, 2018 and highlighting the key points covered at that session.

The day had been led by Diana Melville Legal Advisor from CIPFA and had covered the following four topics:

a)    Developing the Effectiveness of the Audit Committee

b)    A Briefing on Current Governance, Audit and Risk

c)    The Audit Committee and Internal Audit – this had been delivered by the team from Barnsley and, therefore, it was not intended to be covered as part of this presentation

d)    Assurance over Financial Resilience

There had been a variety of attendees who had many different perspectives. 

Particular reference was made to the following

(a)  Developing the Effectiveness of the Audit Committee

·         The role of the Co-opted Independent Member

o   A 2016 CIPFA survey in 2016 had indicated that throughout the UK, 39% of Audit Committees had such members, however, these were mandatory for Welsh Councils and Combined Authorities. 

o   Reference was then made to their role in reinforcing independence and objectivity, supplementing knowledge and experience and providing continuity. 

·         CIPFA Knowledge and Skills Framework - This assisted in the building the effectiveness of Audit Committee Members particularly in relation to the following which were referred to by Mr Johnson in some detail:

o    roles and responsibilities

o   core skills

o   core knowledge

·         where the Committee can influence and add value.  It was suggested that an influential Audit Committee could support:

o   good governance and decision making

o   effective risk management

o   improving value for money

o   achievement of goals

o   effective internal controls

o   effective audit assurance

o   embedding ethical values and countering fraud

o   improving public reporting and accountability

(b)  Briefing on Governance, Audit and Risk

·         A report was provided on the results of auditors work in 2017/18 – reference was made to the number of reports issued within the statutory deadlines but it was noted that the number of reports in relation to Value for Money was significantly lower

·         Current risks and resources – particular reference in this regard was made to the following – most of these had already been identified within Barnsley:

o   Commercial Investments with reference to the CIPFA warning on borrowing in advance of need and investments in commercial properties; the security of funds being the primary policy objective of the Treasury Management Activities; and CIPFA concerns that commercial investments should be consistent wit the requirements of the Prudential Code and Treasury Management Code

o   Outsourcing and Market risks including provider failure; market fragility; supply chain; and capacity and capability

o   Action for Audit Committees – the importance of ensuring that commissioning procurement and contracting risks are identified and that appropriate mitigations are in place

(c)  Assurance over Financial Resilience

·         The Challenge for the future included:

o   The continuing pressure on funding

o   The increasing demand pressures particularly in relation to social care, and homelessness

o   The removal of the local authority pay cap

o   How realistic any ‘efficiency savings’ were in reality

o   Income generation options

o   Maintaining acceptable levels of service

o   The need to realise the ambitions for the local area

o   Staffing pressures and vacancies

o   Public concerns

o   Ofsted and other external inspections which could impact on the financial resources available for Councils

·         The additional assurance that Audit Committees might look for including:

o   The realism of and implementation of savings plans

o   Data quality particularly around critical data on demand

o   The use of benchmarking

o   The viability of business cases and transformation plans

o   The approach to value for money

o   Budget management and reporting

o   Controls over outsourced or commercial arrangements

o   Governance – decision making

The presentation engendered a discussion during which the following matters were raised:

·         It was noted that Barnsley was at the vanguard and almost unique in the country with having more independent Members on the Audit Committee.  It was surprising that the use of such members had not been made mandatory, however, it was anticipated that External Audit would take a dim view of any authorities which did not use Independent Members as this questioned the degree of independence such Committees had

·         Arising out of the above, the Head of Internal Audit and Corporate Anti-Fraud commended on the recent publication of a National Audit Office report which, amongst other things, picked up issues about the efficiency of Audit Committees including the use of Independent Members

·         In response to specific questioning, the Service Director Finance commented on the Authority’s position with regard to borrowing for commercial purposes.  In relation to Financial Resources/Resilience, he commented that CIPFA had produced a useful tool which assisted him and Senior Leadership.  The Council had already undertaken work on most of the factors raised in relation to Financial Resilience and appropriate comparisons had also been made with neighbouring authorities.  A paper had already been prepared as part of the current budgetary considerations which could be shared with the Committee

·         In the light of recent financial difficulties faced by some Authorities, there was a discussion of ways in which such issues could be picked up by Government/External Audit, and of the action that could be taken to address issues identified

·         The External Auditor reminded Members that Value for Money was one of the topics that would be covered at the Local Authority Audit Committee Chair and Members event to be held in Leeds on Tuesday 26^th February, 2019 to which all Members were invited

RESOLVED that Mr P Johnson be thanked for his most informative presentation.