Audit Committee 1 June 2005

1. Audit Committee 1 June 2005 Overview of the Audit Function in the Council and Role of Audit Committee

2. Agenda • Audit Framework • Internal Audit • External Audit • Audit Committee • Audit Working Group

3. Audit Framework • From Statute and Regulations • S151 1972 LGA • Accounts & Audit Regulations 1996, updated 2003 • LGFA 1982 and 1988 – established Audit Commission • Audit Committee

4. Internal Audit • Required by statute • Independent appraisal function • Review of the internal control system • 2003 Regulations enhanced requirement for Internal Control and Risk Management • Ensuring the proper, economic, efficient & effective use of resources • Provide assurance to Council and s151 officer • Accounts & Audit Regulations require IA to be “adequate and effective”

5. Internal Audit (2) • Currently provided through mixed in-house and external fieldwork contract • Performance criticised by External Review in 2004 • Structure being changed to improve effectiveness and increase profile • Report to s151 officer, management and Audit Working Group

6. External Audit • Required by Statute • Independent examination of activities and accounts of the authority • Responsibility of Audit Commission to appoint auditors • Appointed auditor – KPMG – Will Carr • Relationship Manager – Andy Burns

7. External Audit (2) • Satisfy themselves: • Accounts are prepared in accordance with regulations • Proper practices have been observed in compilation of accounts • Proper arrangements are in place to secure economy, efficiency and effectiveness in its use of resources • Follow Code of Audit Practice

8. Objectives include assessment of: ·Whether or not the statement of accounts presents fairly the financial position of the authority and its income and expenditure for the year in question and complies with the legal requirements ·The authority’s arrangements for achieving value for money from its resources ·The general financial standing of the authority ·The council’s financial systems ·Fraud prevention and detection arrangements ·Arrangements for ensuring the legality of transactions ·Arrangements for collecting, recording and publishing information on performance required by statute. Code of Audit Practice

9. External Audit • Report to Audit Committee and Audit Working Group: • Audit Reports • Annual Audit and Inspection Letter • May also report to Cabinet and Council if required

10. Audit Committee • Remit changed: • following Executive arrangements formed as Best Value Committee, • then became Best Value and Audit Committee • now Audit Committee, with Best Value considered under the remit of each Scrutiny function • Provides assurance on the risk, control and governance arrangements

11. Audit Committee (2) • Work of Committee • Accounts: • receive Statement of Accounts • subsequently, Annual Audit and Inspection Letter • CPA and Performance Measures • Review Statement of Internal Control • Review work on Risk Management • Consider both Internal and External Audit Plans • Consider detailed work of Audit working Group • Review progress on Financial Management Implementation Plan

12. Audit Working Group • Set up in 2004 • 3 Members plus independent Chairman • Meets in private to consider • detail of reports from Internal and External Audit and matters arising from them • Internal control and associated systems • risk management • Best Value Performance Indicators