| AU.61 | The Chairman, Councillor Penketh, welcomed all Members to the first meeting of the Audit Committee for the 2008/2009 Municipal Year.
Mike Owen, Director of Finance and E-Government introduced himself to the Committee and gave a presentation setting out the role and function of the Audit Committee.
It was explained that the role of the Audit Committee was to:-
• provide independent assurance of the adequacy of the risk management framework and the associated control environment;
• Undertake independent scrutiny of the authority’s financial and non-financial performance to the extent that it affects the authority’s exposure to risk and weakens the control environment;
• oversee the financial reporting process
As approved by the Committee in September 2006 the core functions of the Committee were explained:
- Consider the effectiveness of the authority’s risk management arrangements, the control environment and associated anti-fraud and anti-corruption arrangements.
- Seek assurances that action is being taken on risk-related issues identified by auditors and inspectors.
- Be satisfied that the authority’s assurance statements, including the Statement on Internal Control, properly reflect the risk environment and any actions required to improve it.
- Approve (but not direct) internal audit’s strategy, plan and monitor performance.
- Review summary internal audit reports and the main issues arising, and seek assurance that action has been taken where necessary.
- Receive the annual report of the head of internal audit.
- Consider the reports of external audit and inspection agencies.
- Ensure that there are effective relationships between external and internal audit, inspection agencies and other relevant bodies, and that the value of the audit process is actively promoted.
- Review the financial statements, external auditor’s opinion and reports to members, and monitor management action in response to the issues raised by external audit.
- Take appropriate action to ensure the implementation and review of audit recommendations.
- Deal with any appropriate matter referred to the Committee by other bodies.
- Receive the annual report of the head of internal audit.
- Consider the reports of external audit and inspection agencies.
- Ensure that there are effective relationships between external and internal audit, inspection agencies and other relevant bodies, and that the value of the audit process is actively promoted.
- Review the financial statements, external auditor’s opinion and reports to members, and monitor management action in response to the issues raised by external audit.
- Take appropriate action to ensure the implementation and review of audit recommendations.
- Deal with any appropriate matter referred to the Committee by other bodies.
The presentation set out the requirements for a strong Audit Committee and it was explained that Bury’s Audit Committee met all those requirements.
Barrie Strothers, the Head of Internal Audit explained the role and functions of the Internal Audit Department, their relationship with the departments within the authority, the range of services provided by Internal Audit and the staff structure within the department.
Stephen Kenyon, Head of Strategic Finance gave a short presentation outlining his role within the authority and his relationship with the Director of Finance and E-Government, Internal Audit and the external auditors, KPMG.
Heather Thornton, Assistant Audit Manager at KPMG gave a presentation explaining the work of KPMG and the relationships between the Audit Commission, KPMG and Bury MBC. The presentation also set out the work of KPMG and their planning process.
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| AU.62 | Barrie Strothers, Head of Internal Audit explained that under the provisions of the Accounts and Audit Regulations 2006, the Council had an obligation to issue a Governance Statement. It was explained that the Internal Audit Annual Report provided some of the assurances in order to satisfy that obligation.
Barrie presented a report summarising the work undertaken by the Internal Audit Service in the 2007/2008 financial year and comparing it to the Audit Plan for the year. The report contained the Audit Opinion which assessed the authority’s control framework as “robust” and updated Members on some of the issues facing the Internal Audit Service.
Appended to the report was a Review of the Effectiveness of Internal Control, Annual Report and Opinion for 2007/2008, the Internal Audit Plan 2007/2008 and Internal Audit Performance Indicators.
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| AU.63 | Steve Kenyon, Head of Strategic Finance presented a report from The Executive Member for Resource and Performance setting out details of the risk management activity that had taken place in the previous 12 months and the key issues that would be addressed in the coming financial year.
It was explained that the report would be considered by the Executive and the Council at their coming meetings.
The report set out the approach taken to risk management in Bury internally and within partnership working. The report highlighted the achievements made during 2007/2008, including Reviews and Performance Monitoring, Training and Development, Business Continuity Management, Partnership Risk Management and the Financial and Performance benefits.
It was also reported that the Risk Management Policy and Strategy had been updated to include a new section that makes specific reference to partnership risk. The roles and responsibilities section had been amended to reflect a separation between internal audit and risk management.
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| AU.64 | Barrie Strothers, Head of Internal Audit submitted a report setting out the effectiveness of the Audit Committee 2007/2008.
The report summarised the work carried out by the Committee over the 2007/2008 financial year and included a self-assessment checklist to demonstrate that CIPFA guidance was complied with.
It was concluded that, during 2007/2008, the Audit Committee complied with the best practice features of such a committee as expressed by CIPFA.
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| AU.65 | Steve Kenyon, Head of Strategic Finance presented a report introducing the 2007/2008 Governance Statement. It was explained that under the Accounts and Audit Regulations 2006, the Council was required to produce a Governance Statement which is one of the documents supporting the Annual Statement of Accounts.
The purpose of the Statement was to provide an assurance as to the effectiveness of the internal control and governance statement.
Steve explained that the Governance Statement became a legal requirement with effect from 2007/2008 and replaced the Statement on Internal Control. The Director of Finance and eGovernment agreed locally with KPMG and nationally with CIPFA to pilot the statement for the 2006/2007 financial year. The Council’s statement had been incorporated in CIPFA’s best practice guidance.
Appended to the report was the Governance Statement 2007/2008 which set out the scope of responsibility, the purpose of the Governance Framework, the Governance Framework, risk management, efficiency/value for money, use of resources auditor judgement, group activities, significant internal control issues and looking ahead to 2008/2009.
It was also explained that a Governance Panel would be established comprising the Director of Finance and eGovernment, Director of Legal and Democratic Services, Head of Strategic Finance and the Head of Internal Audit. The Panel would meet on a quarterly basis and assess the adequacy of the internal control/governance framework.
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| AU.66 | Rashpal Khangura presented the final version of the Audit and Inspection Plan 2008/2009. It was explained that the plan had been developed by the Relationship Manager and the Appointed Auditor and set out the audit and inspection work that it would be undertaken during the 2008/2009 financial year.
The plan had been drawn up from the risk-based approach to audit planning and the requirements of moving towards the Comprehensive Area Assessment (CPA).
The plan reflected:
•audit and inspection work specified by the Audit Commission for 2008/2009;
•current national risks relevant to Bury’s local circumstances; and
•Bury’s local risks and improvement priorities.
It was explained that the external auditors when carrying out their audit and inspection duties had to comply with the statutory requirements governing them.
Contained within the report was a breakdown of the fee for audit and inspection work and a plan of key risks that had been identified and the work planned to address those risks.
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| AU.67 | Rashpal Khangura representing KPMG presented a report setting out the review of the processes in place for priority -led funding arrangements. It was explained that the Council’s 2004 CPA report had identified that non-priorities were not formally stated, increasing the risk of resources being redirected to low priorities to the detriment of high priority areas, which could lead to service and corporate objectives not being achieved.
The Council had undertaken work to strengthen its priority-led funding arrangements and had developed a Priority Investment Reserve to support high priority areas.
The review focussed on the processes in place for 2007/2008 which had enabled KPMG to consider how investments had been monitored and assessed over the course of the 2007/2008 financial year.
The key findings of the review were:-
•There were clear linkages between the financial strategy, the corporate priorities and the Priority Investment Reserve (PIR).
•A clear approval process was in place to direct PIR resources to services and schemes.
•Services were proactive in identifying cashable efficiency savings to contribute to the PIR; and
•Service reviews and been successful in identifying cashable efficiency savings that, over the medium term, will contribute to the PIR.
It was explained that the findings of the review would be discussed with officers to agree an action plan to address the key issues. Work with officers would continue to constructively challenge the delivery of action plans.
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| AU.68 | Heather Thornton, Assistant Audit Manager, KPMG, presented a report setting out a review that had been undertaken which assessed the operation of social needs transport in the borough.
The objective of the review was to provide assurances to the Council on the areas in which it was performing effectively and to clearly identify the key issues where further action was required. The review considered the following areas:-
•Accessibility of the SNT services
•Funding and financial arrangements
•Procurement options
•Responsibility for the service
The review also aimed to highlight areas of good practice.
It was explained that the Council had set up a best value review panel to review the social needs transport and to drive forward changes felt necessary to improve the existing arrangements. It was anticipated that work of the next stage of KPMG’s review would be to assess the work of the best value review panel.
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| AU.69 | Rashpal Khangura representing KPMG, presented a report updating Members on the ongoing work of KPMG.
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