Agenda Item
8
Introduction to 2011/12 Audit Plans – The roles of External and Internal Audit
North Norfolk District Council (the Council) has a responsibility to put in place proper arrangements for
the governance and stewardship of its resources. Internal Audit is an important part of these
arrangements. In the course of discharging its responsibilities, Internal Audit is required to deliver a
service which meets the professional standards laid down in the CIPFA Code of Practice for Internal
Audit in Local Government in the United Kingdom 2006.
Under the Audit Commission Act 1998 and the Code of Audit Practice the external auditor appointed by
the Audit Commission is responsible for reviewing and reporting on the Council's:
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Financial statements and Governance Statement;
Arrangements for securing economy, efficiency and effectiveness in its Use of Resources; and
Grant certification (if required).
Internal Audit evaluates the effectiveness of the control environment in achieving the organisation's
objectives. In part fulfilment of these responsibilities, Internal Audit carry out reviews of systems and
key controls, including evaluating and testing those controls.
The external auditor does not have a role in directing the work of Internal Audit, nor does it have a direct
role in the quality assurance process.
Although internal and external auditors carry out their work with different objectives in mind, many of the
processes are similar in respect of the review of the controls in place over the Council’s financial
systems. Therefore, it is appropriate that they should work together closely.
Every effort is made to ensure effective co-operation between the two bodies, in order to minimise
duplication of effort and maximise the benefits and value achieved from the Council's total audit
resource. An open and constructive relationship is thus cultivated between the two bodies, audit plans
are shared and wherever possible, reliance is placed upon each other's work.
The Audit Commission has rigorously emphasised this need for co-operation in a number of its
publications:
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The Code of Audit Practice 2005 states that external auditors should establish effective coordination arrangements between internal and external audit and seek to place maximum
reliance on the work of Internal Audit wherever possible;
It Takes Two (published in 1996) is a good practice guide to assessing and improving cooperation between internal and external auditors; and
The Managed Audit Good Practice Guide 1995 promotes a more efficient audit encouraging
reliance on the control environment, which includes Internal Audit.
Internal and External Audit have agreed a working protocol (December 2011) which sets out the general
approach and principles to ensure that auditing resources are used to best advantage, whilst associated
costs to the authority are kept to a minimum.