Agenda item

To receive a report from the Deputy Chief Executive and Director of Corporate Operations advising the Audit Committee on the results of a review of the Audit Committee’s working practices in the light of recent guidance issued by CIPFA and the commitment in the Annual Governance Statement 2022-2023 to review the Audit Committee’s Terms of Reference.

The Committee received a report from the Deputy Chief Executive and Director of Corporate Operations advising on the results of a review of the Audit Committee’s working practices in the light of recent guidance issued by CIPFA and the commitment in the Annual Governance Statement 2022-2023 to review the Audit Committee’s Terms of Reference.

The Chairman noted that he was invited to meet with the Monitoring Officer and Chief Internal Auditor on 31 January to review the proposed changes. Whilst supportive of the training proposals outlined, based on the Chairman’s feedback about the wider changes it was agreed to postpone the date of the introduction of any update to the Committee’s Terms of Reference until after the County Council Elections in May 2025.

It was noted that the report presented didn’t seek approval for any specific changes to the membership of the Committee, but outlined a proposal to commence consideration of the changes.

Through discussion and in response to Member’s questions it was heard that:

·         CIPFA guidance recommended that an Audit Committee should consist of no more than eight members, with the current Committee size being nine. If two independent co-opted member roles were introduced, as recommended in the guidance, then there would be a need to reduce the number of elected members on the Committee to six. Whilst following the guidance was strongly recommended by CIPFA, it was noted that it was not legislative requirement.

·         The report made suggestion that the Audit Committee produce an annual report to Full Council, to be introduced from September 2024, to demonstrate how the Committee engaged with the Full Council, as suggested in the guidance. The Chairman proposed that the date of the first report be changed to November 2024, to allow external audit to be concluded before reporting to Full Council. This was agreed unanimously by all those present.

·         In addition to the annual report, the Audit Committee had the ability to raise any significant matters of concern to Full Council through a report from the Committee, and it was agreed that this would be made clear within the revised Terms of Reference when brought in front of the Committee for consideration.

·         Debate was held around the proposed introduction of independent co-opted members of the Committee, with comments both in support and against. Noted was the positive contribution of independent co-opted members on other HCC and external committees, but with concern raised over the ability to recruit and retain suitably skilled co-optees, given the level of allowance available and the training requirement, as well as recognising the variety of skills and experience that elected Members already brought to the Committee and the need to meet proportionality. Members confirmed that they were supportive of the principle of adding independent Members to the Committee. The Chairman noted that the training demands and Member experience could influence the selection of the elected Membership, adding that this would be discussed with the Leaders of the political groups.

·         There was no defined term for any independent co-opted membership, however to provide consistency it was suggested consideration be given to appointing for a four year term to run across administration cycles.

·         Members discussed the rationale given by CIPFA in suggesting eight Members, with their view being that a smaller committee would be easier to train and that it would allow Members to become subject experts in audit matters. However, Members were not persuaded by CIPFA’s arguments and expressed the view that there should remain 9 elected Members on the Audit Committee.

·         The proposed training would not require significant time commitment, but was intended to be informative and support the Committee to better fulfil its role. It was suggested that a skills need assessment would be undertaken, with a view to potentially commencing the training within the current year. The Committee noted their keenness to start the training as soon as possible.

·         It was heard that revised Terms of Reference would be drafted and brought back to the Committee at a future date, with the Committee to then be invited to recommend the Terms of Reference to Cabinet for, consideration for recommendation to Full Council.

RESOLVED:

·         That the Audit Committee notes and considers the guidance issued by CIPFA in relation to revised Terms of Reference for the audit committees discussed in Paragraphs 10-19.

·         Notes and considers CIPFA’s guidance on appointing two co-opted independent members to the Audit Committee and on the ideal size of audit committees.

·         That the presentation of an Annual Report from the Audit Committee to the County Council is approved with the first Report to be submitted to the County Council in November 2024.

·         That the new approach to training and development set out in paragraphs 23-29 is approved.

·         That the arrangements for the Chairman and Vice Chairman to meet in private with the Chief Internal Auditor and the external auditor as set out in Paragraphs 30-32 are approved.