Minutes Appendix A
NNDC Audit Committee (AC) – Quick Guide for New Members
AC Role
In simple terms, the AC is not political nor is it an executive body but it acts on
behalf of Full Council to gain assurance that:
1. NNDC does what it’s required and authorised to do in delivering services
and in governing itself effectively and efficiently.
2. In doing this, NNDC manages risks and internal controls to safeguard it’s
resources and assets and that it achieves best value for money.
AC Members act as the eyes and ears of Full Council to gather information
from a wide range of sources which offer such assurances and evaluate the
degree of confidence that can be placed on them. This requires a good
understanding of what NNDC is meant to do and an accurate oversight of
what it’s actually doing; where there are differences it’s your role to verify and
constructively challenge that situation to assess whether that’s acceptable or
needs to be remedied.
Note: the new Members welcome and introduction pack shows the AC
reporting to Cabinet, on a line diagram, this is incorrect as the AC reports
directly to Full Council where its Minutes are formally received.
The Roles of Internal & External Audit:
Internal Audit (IA) is commissioned by NNDC to provide an independent
examination of what NNDC does and how it does it and compare this with the
requirements of regulations, internal plans and good practice guides etc to
support and enable management to develop and operate most effectively. IA
is a bought in service, mostly delivered by Deloitte, provided by a consortium
run by SNDC; it’s about 300 days of work and costs circa £128k.
External Audit (EA) is arranged through the Audit Commission (will it exists!)
to provide an overall independent examination of NNDC and how it uses its
resources, including those it handles on behalf of central government
departments. EA is currently provided by Price Waterhouse Coopers under
contract to the Audit Commission; it’s about
days work, costing circa
£167k, is paid for by NNDC.
Collectively, the work of IA & EA costs almost £300k and the content is
decided by agreement of an Annual Audit Plan; much of the results of that
work support the Annual Governance Statement and the Sign Off of the
Annual Statement of Accounts.
Sources of Information
Most information will come in the form of written and oral reports from internal
and external auditors, as well as senior management; however, there are
many other sources to be called on, for example:
Minutes Appendix A
Day to day contact with staff and delivered services.
Service satisfaction surveys.
The degree of staff turnover and the trend of exit interview findings.
The number, range and degree of complaints and a review of their
investigation findings.
Reference to thematic studies and reports of other organisations.
Ombudsmen Complaint findings.
Whistle-blowing reports
AC Member Competencies
In terms of skills and experience required of AC Members, the Annual
Statement of Accounts is the only report which requires an understanding of
finance and accounting conventions; however, just before this comes to the
AC there is a tutorial/briefing session which covers all the relevant issues. The
remaining duties require: common sense, an enquiring mind, a sense of fair
play and awareness of how large organisations should operate. It’s vital that
Members don’t get drawn down into detail and that they keep a quite high
level overview of subjects, unless it’s necessary to bottom out a line of
concern. Hopefully, such occasions will be infrequent but when they arise it’s
equally important that Members aren’t simple put off if they sense there are
devils in the detail.
AC Meetings
The AC normally meets 4 times a year; certain meetings are timed around the
need to deal with events like the Annual Statement of Accounts and the
Annual Governance Statement which have to be done within set timescales.
Meetings are normally aimed to be completed within 2 hours and start times
may need to be changed if Member availability becomes difficult. If Members
wish to gain more information than that presented then often there are more
detailed reports or one to one sessions available with Officers on request. The
AC Chairman will meet with EA and IA annually and the AC may decide to
meet on their own if appropriate
AC Meetings Agenda and Content.
The work of audit comprises of core or regulatory elements, those which have
to be done annually, and risk based or discretionary elements which are
agreed taking account of risk levels or time since last audited. The work plan
of audit is set in an Annual Audit Plan which is agreed between EA, IA, NNDC
Officers and the AC and this is an important document which sets out the
work content coverage, the degree of reliance between related tasks, a
reflection of perceived risk exposure and the cost of the work. The AC
Chairman attends Pre Agenda meetings to ensure items of business are
ready to be dealt with and add anything which Members feel appropriate.
Further Training
This quick guide is aimed just to get new Members up and running sufficiently
to cope with early meetings but further more detailed training will be given
later in this year and periodically thereafter.
Nigel Dixon, Audit Ctte Chairman
4 June 2011