Agenda item

The Director of Finance, Assets and IT will submit a report on the various options available for the appointment of external audit services from 2018/19 onwards and seeking approval to recommend to Council the preferred option.

The Director of Finance, Assets and IT submitted a report on the various options available for the appointment of external audit services from 2018/19 onwards and seeking approval to recommend to Council the preferred option.

The report provided an appraisal of the three main options available as follows:

·         Option 1 – a Standalone Tender

·         Option2 – Combined Tender

·         Option 3 – a sector led procurement scheme whereby an Appointed Person appoints the external auditor on the Authority’s behalf

The preferred option was Option 3 on the basis that this provided the potential economies of scale and, more importantly, a high probability of securing auditors with the necessary experience and knowledge to effectively audit the Authority.  It the Authority approved this option during the compulsory appointing period it would need to give notice to the Appointing Person of the decision to become an opted authority.

In the ensuing discussion, and in response to detailed questioning, the following matters were highlighted:

·         The Service Director Finance outlined the process to be adopted in the appointment of External Auditor in relation to all three options and also made reference to the role of the Public Sector Audit Appointments Ltd in this process

·         It was noted that the Local Government Association supported the approach outlined in Option 3

·         The rationale for recommending Option 3 was outlined as it was particularly felt that the more Authorities which opted for this approach would provide certainty about the volume of work included in the procurement exercise and would secure the best possible prices

·         The Authority could, as it currently did, procure additional services over and above those included within the original ‘contract’

·         The new regulation required the rotation of auditors every five years, although a waiver could be sought if required.  In addition, the lead auditor was required to rotate every two years

·         In response to detailed questioning, it was noted that the majority of Authorities appeared to be recommending Option 3

·         Whilst the exact audit fees were uncertain at the moment, it was thought that any other option would be likely to be more expensive

·         The External Auditor referred to and there was a discussion of the ways in which quality assurance would be maintained .  Arising out of this discussion, the Director of Legal and Governance commented on the statutory processes for the appointment of External Auditor and to the ways in which quality would be ensured.  He suggested that some form of client panel would be established to oversee the process but it was acknowledged that further information was required on the selection process to be adopted

·         The Service Director Finance assured the Committee that under the current regulations there could be no one firm monopoly for undertaking External Audit Services for Local Authorities

RECOMMENDED TO COUNCIL:

(i)            That the options available for the procurement of external audit services from 2018/19 onwards be noted; and

(ii)          That the Council opt in to the sector led scheme for appointing auditors as outlined in Option 3 within the report now submitted.