Agenda item
The Future of Local Audit
Minutes:
The Committee considered a report of the Corporate Director (Resources), circulated with the agenda papers, which provided an update on the Government’s plans for the future of local external audit and the potential impact of this on Tower Hamlets; and set out a proposed response to the Government consultation on this matter.
Peter Hayday, Interim Service Head - Financial Services Risk & Accountability, introduced the report and highlighted a number of key points. The three main areas covered by the consultation were:-
· Regulation of local public audit;
· Commissioning local public audit services (including proposals to change the membership arrangements for the Audit Committee, under which the committee might include a majority of Independent (i.e. non-Councillor) members); and
· Scope of audit and the work of auditors
Members expressed initial views on the draft response to the Government consultation included at Appendix A to the report as set out below:-
- A number of Members were not convinced that proposed abolition of the Audit Commission and the move to private sector provision of audit services were likely to be beneficial or result in significant savings and those Members felt that the Government’s proposals were therefore misjudged. They felt that the existence of the District Auditor had been beneficial to the market and may also have helped to moderate fee levels.
- In relation to the scope of work of the auditors, all Members who expressed a view felt that the value for money work – including benchmarking and spreading best practice - was a valuable part of the auditor’s role currently and that any proposal to entirely remove it would not be beneficial. They therefore favoured option 2 or 3 as set out at page 133 of the report.
- Question 5: The National Audit Office (NAO) would be the most appropriate body to maintain the register of local public auditors.
- Question 6: This would be a matter for the NAO to ensure
- Question 7: Any potential auditors should have to demonstrate knowledge and experience of the public sector and the relevant skills to undertake value for money work in that sector.
- Question 12: The language used in the draft (‘… clogged with …’) should be reviewed.
- Question 14: It was noted that some authorities, especially outside London, may experience difficulty in recruiting Independent Members. This was not necessarily be the case in Tower Hamlets but there was a need to consider possible remuneration arrangements.
- Question 24: There would be a need to encourage firms to enter the market but either a seven year maximum term or a maximum of two consecutive 5-year appointments would seem sufficient to achieve this.
- Question 28: Yes, the new framework should put in place provision to prevent auditors from seeking to limit their liability in an unreasonable way.
- Question 38: Although it was desirable to modernise the ‘right to object’ to the accounts, this right should not be removed or diminished.
Members wished to give further consideration to the draft response and forward any further comments for inclusion after the meeting. The officers undertook to seek an extension to the 30th June deadline for responses to facilitate this.
RESOLVED
That the Committee note the report.
That the Council’s response to the DCLG consultation document be amended in the light of the comments listed above and that the officers seek an extension to the deadline for Consultation responses to enable any further Member comments to be incorporated following the meeting;
That the Corporate Director (Resources) be authorised to further amend the Council’s response in the light of any additional comments received from Members of the Committee and, following consultation with the Chair, to agree the final version for submission to the DCLG.
Supporting documents: