Agenda item

(i)             That the Audit Committee approves the internal audit plan for 2024/25 as set out in annex 1; and

(ii)            That the Audit Committee approves the internal audit Charter for 2024/25 as set out in annex 2.

Natalie Jerams, Chief Internal Auditor of Southern Internal Audit Partnership (SIAP) introduced the item explaining that the Audit Committee was responsible for agreeing the Council’s internal Audit Plan and Charter.

The Audit Plan and Charter (attached as annex 1 and 2 respectively) provided independent and objective assurance that the Council’s systems and processes were appropriate, operating effectively and provided sufficient control for the purposes of risk management, internal control and governance.

The Chief Internal Auditor explained that, in order to increase the responsiveness of audit reviews within the year, the Audit Plan was now presented on a quarterly basis.

It was explained that the previous approach had been to prepare an annual Plan and subsequently seek agreement of changes to that Plan in-year.

The Committee was therefore asked to approve the Plan for Quarter 1 2024/25 and would be asked to similarly approve the plans for Quarters 2 to 4 at future meetings.

In light of the volume of in-year changes over recent years and having considered the approach that was now adopted for many of SIAP’s clients who were in a similarly dynamic environment, the approach in 2024/25 would move to a quarterly planning cycle so that the Plan reflects each quarter’s emerging risks and priorities.

The substitute Member expressed his deep concern regarding this approach and argued that there should be an annual plan and an annual dialogue. The Portfolio Holder for Finance, Governance and Organisation commented that he agreed with these comments.

The Chief Internal Auditor of Southern Internal Audit Partnership explained that a number of clients had successfully adopted this approach. The quarter 1 Plan could be accompanied with a schedule of the ‘universe’ of audits that were likely be considered, if that would provide assurance that there was still oversight across the entire year.

It was further explained that the move to quarterly audit planning had been discussed in detail and agreed with the Corporate Governance Group because responsibility for agreeing the Plan content rests with officers. The Chief Finance Officer explained that the role of Audit Committee under the Constitution was to ‘approve (but not direct)’ the Audit Plan.

The substitute Member observed that there was also limited detail in the report regarding the scope of the Quarter 1 audit reviews. For example, in his view, the audit of insurance should not just be looking at claims but should consider the range of insurance cover and limits, The Chief Internal Auditor confirmed that the scope of the audit was yet to be confirmed with the Chief Finance Officer.

The substitute Member argued that it was contrary to the Constitution to omit the details for quarters 2 to 4. It was explained that three further reports would be submitted to Audit Committee to present each quarter’s plan in future (instead of presenting a single report as previously).

The Committee was advised that SIAP would not be able to commence work in quarter 1 without approval of the Audit Plan at this meeting. Members agreed, in order to enable approval, that the Chief Finance Officer and Chief Internal Auditor would in future include information about the list of potential audits throughout the year when the Audit Plans for subsequent quarters are presented to the Committee in the new municipal year.

With regard to the annual internal audit Charter, the Chief Internal Auditor explained that it was a statutory requirement to adopt a Charter that sets out the responsibilities of SIAP as the Council’s Internal Auditor and confirms the statutory requirements and responsibilities for members and officers. There had been no changes since the last financial year.

The substitute Member asked when the Committee would approve the  internal audit resource plan and how the Committee monitors resources applied against the resource plan?  The Chief Finance Officer and Chief Internal Auditor explained that this was delegated to the Chief Finance Officer when overseeing the contractual relationship between the Council and SIAP.

In terms of the quality assurance and improvement programme it was explained that SIAP was subject to an external assessment every five years; the last one was carried out in September 2020 and the report was presented to Audit Committee at that time. SIAP made reference to this external assessment in their quarterly reports. Between the five yearly reviews SIAP carry out self-assessments which are referenced in their annual report and opinion.

The substitute Member asked further questions about the approach to audit planning and resourcing and reporting. The Chief Internal Auditor explained that the focus in the quarterly progress reports to Audit Committee was on delivery of audits and outcomes, rather than inputs in terms of auditor days utilised.

The substitute Member commented that, if this Committee did not have a role in approving the audit team’s resource plan, then this information should be omitted from the report in future.

The Chief Internal Auditor explained that the resource plan confirmed the number of contracted days that the Council had purchased from SIAP. The Chief Finance Officer explained that any changes to the number of days commissioned would be open to discussion when setting the annual budget for audit services. She confirmed that there had not been any change to commissioned days since SIAP were appointed as the Council’s internal auditors.

RESOLVED that:

(i)             The Committee approves the internal audit Plan for Q1 2024/25 as set out in annex 1; and

(ii)            The Committee approves the internal audit Charter for 2024/25 as set out in annex 2.