Agenda and minutes

RESOLVED that Councillor McKay be appointed Chairman of the Audit Committee for the municipal year 2015/16.

RESOLVED that Councillor A Turner be appointed Vice-Chairman of the Audit Committee for the municipal year 2015/16.

The Chairman welcomed everyone to the first meeting of the Audit Committee for this municipal year and especially the new members of the Committee.

Apologies as detailed above.

Members and officers will disclose any pecuniary and any other significant interests they may have in relation to the matters under consideration.

None.

To approve as a correct record Minutes of the last meeting of the Audit Committee held on 10 March 2015.

The minutes of the Audit Committee meeting held on Tuesday 10 March 2015 were confirmed as a correct record.

Presentation by the Corporate Director of Resources.

The Corporate Director of Resources gave a detailed presentation to Members in advance of the requirement for the Audit Committee to approve the 2014/15 Statement of Accounts. It was explained that in their role as governors there is a need to reasonably understand the statements that they are being asked to approve.

A copy of the presentation is attached to the minutes.

RESOLVED Members thanked the Corporate Director of Resources for the presentation and looked forward to receiving the Statement of Accounts for 2014/15 at the next meeting.

Report of the Corporate Director of Resources.

The Head of Governance introduced the report which relates to the requirement for the authority to undertake an annual review of the effectiveness of the system of internal audit. The Accounts and Audit Regulations 2015 require the relevant body, at least once a year to conduct a review of the effectiveness of its system of internal audit. The purpose behind this is to ensure that the opinion in the annual audit report issued by the Head of Governance (Chief Internal Auditor) can be relied upon as a key source of evidence in the Annual Governance Statement.

Members noted that from 1 April 2013, ‘Public Sector Internal Audit Standards’ (PSIAS) replaced the ‘Code of Practice for Internal Audit in Local Government’. In Local Government these standards are mandatory for all principal local authorities subject to the Accounts and Audit Regulations 2015. To accompany the new PSIAS, an ‘application note’ has been produced by the Chartered Institute of Public Finance and Accountancy (CIPFA) to give guidance on applying the standards. The application note is no longer simply guidance, however, but constitutes ‘proper practices’ alongside the PSIAS and it includes a checklist for measuring the performance of Internal Audit against the standards as part of the quality assurance and improvement programme.

Last year was the first year that the effectiveness of Internal Audit was carried out using the newly published PSIAS and the checklist provided by CIPFA in the Local Government Application Note. Seven minor actions were identified that required attention to ensure the internal audit service was fully compliant with PSIAS.

PSIAS state that an external assessment must be conducted at least every five years by a qualified, independent assessor or assessment team from outside the organisation. External assessment can be in the form of a full external assessment, or a self-assessment with independent external validation. A Final decision was yet to be made as to which option would be selected, however it was highly likely the Council will continue with the annual self-assessment and opt for an external validation before 2018.

The outstanding actions were noted as highlighted in the appendix.

Resolved that members note the results of the May 2015 review of the effectiveness of Internal Audit.

Report of the Corporate Director of Resources

The Head of Governance presented the Internal Audit Annual Report for 2014/15.

This report is produced in order to meet the requirements of the Public Sector Internal Audit Standards and to assist in meeting the Accounts and Audit Regulations 2015, which were recently issued and came into force on 1 April 2015. It provides details of audit coverage and the work carried out by the section and contains the Chief Internal Auditors opinion of the overall level of control in operation.

The Audit Committee’s role is to review work carried out; which included formal consideration of summaries of work done, key findings, issues of concern and any actions in hand as a result of audit work. A key part of the role is receiving and reviewing regular reports from the Head of Governance (Chief Internal Auditor) in order to reach an overall opinion on the internal control environment and the quality of internal audit coverage.

Resolved

That the Audit Committee note the Internal Audit Annual Report for 2014/15, the Risk Management Progress report – Operational Risks and the Strategic Risk Management Review.

Report of the Corporate Director of Resources

The Head of Governance introduced the report explaining that the Council is required to prepare an Annual Governance Statement (AGS) for inclusion in the Annual Statement of Accounts in June 2015, following the review of the Council’s governance arrangements.

The Head of Governance briefed members on the AGS and confirmed that there were no significant governance issues to report.

Resolved

That the Audit Committee, having reviewed the document, formally approve the Annual Governance Statement 2014/15, noting that it incorporates the Council’s Code of Corporate Governance.

Letter from the Council’s External Auditors, KPMG.

The External Auditor introduced KPMG’s Annual Audit Fee Letter dated 28 April 2015. The letter was self explanatory with a proposed indicative fee for the audit for 2015/16 of £48,662 (plus VAT) which reflected a 24% reduction from the planned fee for 2014/15 and also a proposed indicative fee for the Certification of grant claims and returns for 2015/16 of £5,676 a reduction from the previous years’ charge of £7,440.

Jillian reminded members that ultimately the responsibility for appointing External Auditors would transfer to Wyre after audit contracts expire in 2017 or from 2020 if they are extended by Public Sector Audit Appointment Ltd, an independent company appointed by the Local Government Association.

Resolved

That Audit Committee Members note the contents of the External Audit Annual Audit Fee letter for 2015/16.

Each year, Audit Committee Members are given the opportunity to speak to the External Auditors (KPMG) in confidence, in accordance with the Audit Committee work programme. It was suggested by Jillian, however, that this item be deferred to the 22 September Audit Committee meeting, after the Financial Statements had been audited and recommendations proposed.

Members agreed to the proposal and the September agenda will be amended accordingly.