Agenda item

To consider a report regarding Audit Committee effectiveness and action plan.

The Committee received the Audit Committee Effectiveness and Action Plan.

During the discussion of this item, the following points were made:

·       The Chair took the Committee through the report.  A significant amount of work had been undertaken on the overall assessment and the terms of reference.  Some actions for improvement, such as the appointment of an Independent Member, had already been taken.

·       The Committee was asked whether they agreed with the self-assessment.  Mike Drake noted that Requires Significant Improvement had been selected for the question Has the committee maintained its advisory role by not taking on any decision-making powers?.  He questioned if this was because the Committee had been taking decisions that it should not have been.  The Chair commented that the Committee had taken some decisions such as approving the Treasury Management Strategy, which it was now less appropriate for an Audit Committee to take.  The Assistant Director Governance indicated that the latest CIPFA guidance had been published in autumn, so the rating was not intended as a criticism of current or historic practice.  However, the guidance had now changed, and the Committee would take on more of a scrutiny role than previously, advising the decision makers.

·       Councillor Smith noted that the Committee had been marked as Does not comply with the following questions - Has the committee met privately with the external auditors and head of internal audit in the last year?, Has an evaluation of knowledge, skills and the training needs of the chair and committee members been carried out within the last two years?, and Across the committee membership, is there a satisfactory level of knowledge, as set out in the 2022 guidance? The Chair commented that the Committee had not privately met with the Head of Internal Audit or external audit, but can choose to do so.  The Assistant Director Governance stated that an evaluation of skills had not been carried out recently.  There was more that could be done around skills, training and how Members were selected to sit on the Committee.

·       Councillor Gee questioned whether the Chair should be an Independent Member.  It was suggested that the Chair not be part of the ruling Group.

·       The Committee considered the proposed actions.  Members agreed that it should be recommended that an additional Independent Member be appointed as per good practice.

·       The Committee considered the proposed changes to the Committee’s terms of reference. 

·       Mike Drake questioned whether the voting arrangements should be clarified in the terms of reference.  The Assistant Director Governance indicated that it was referred to elsewhere but could be clarified.  Councillor Davies suggested that a reference be included as to where the information could be found elsewhere in the Constitution.

·       It was clarified that the Executive would agree the Treasury Management Strategy.  Councillor Gee questioned which Committee would agree the Statement of Accounts in the future.  The Chair commented that the Committee could still request reports such as the Statement of Accounts and the Treasury Management Strategy, for review and to make recommendations, but would no longer approve them.

·       Councillor Gee questioned the value of the Committee reviewing the Treasury Management Strategy.

·       Helen Thompson commented that she welcomed a conversation around the approval of the accounts.  The Committee approving the accounts were those charged with governance, and would therefore receive the reports from the external auditors.  The Assistant Director Governance commented that the CIPFA guidance had stated that the accounts should not be approved by the Audit Committee but agreed to look into this further.

·       Councillor Smith questioned whether the section relating to the duration of the meeting should be aligned with the Full Council meeting procedures.

·       Mike Drake felt that Committee had a role in looking at the Financial Statements.

RESOLVED:  That

1)    the annual assessment of the Committee’s effectiveness at Appendix A based on the October 2022 CIPFA guidance on local authority audit committees be agreed;

2)    the associated action plan at Appendix B be agreed including:

a)     Approving the recruitment and appointment of a second independent member of the Committee for the 2023/24 municipal year;

b)     Recommending to Council the proposed constitutional changes to the Audit Committee’s terms of reference as set out at Appendix C, with the exception of the approval of the Financial Statements removal and the checking of internal consistencies with other areas of the Constitution.