Report of Audit Manager
To
AUDIT COMMITTEE
On
10 May, 2013
PUBLIC SECTOR INTERNAL AUDIT STANDARDS
1
SUMMARY
1.1
The Audit Manager has completed the checklist produced by the Chartered
Institute of Public Finance and Accountancy (CIPFA) for assessing
compliance with the Public Sector Internal Audit Standards (PSIAS) and
CIPFA’s Local Government Application Note and has produced an action
plan which is enclosed as Appendix 1 to address those areas where the
Council’s current arrangements are not fully compliant.
RECOMMENDATIONS
i)
That the action plan to address the areas where the Council’s arrangements
are not fully compliant with the PSIAS and Local Government Application
Note is endorsed
ii)
That a progress statement in implementing the agreed action plan is
presented to the Audit Committee on 12 July 2013
BACKGROUND
3.1
The Relevant Internal Audit Standard Setters have adopted a common set of
PSIAS from 1 April 2013, which encompass the mandatory elements of the
Global Institute of Internal Auditors’ (IIA Global) International Professional
Practices Framework (IPPF) as follows:
 Definition of Internal Auditing
 Code of Ethics
 International Standards for the Professional Practice of Internal
Auditing
3.2
Additional requirements and interpretations for the UK public sector have
been inserted in such a way as to preserve the integrity of the text of the
mandatory elements of the IPPF.
3.3
The PSIAS apply to all public sector internal audit service providers.
3.4
The Code of Ethics promotes an ethical, professional culture. It does not
supersede or replace internal auditors’ own professional bodies’ codes of
ethics or those of the employing organisation. Internal auditors must also
have regard to the Committee on Standards in Public Life’s Seven Principles
of Public Life namely Selflessness, Integrity, Objectivity, Accountability,
Openness, Honesty and Leadership.
3.5
The PSIAS and CIPFA’s Local Government Application Note together
supersede the 2006 CIPFA Code of Practice for Internal Audit in Local
Government in the UK. The Application Note has been developed as the
sector-specific requirements for local government organisations within the
UK Public Sector Internal Audit Framework.
3.6
Within the PSIAS, the terms “board” and “senior management” must be
interpreted in the context of the governance arrangements within each
individual organisation. It is expected that the Audit Committee will fulfil the
role of the “board” in the majority of instances but it is still the responsibility of
each organisation to consider every occurrence of the term “board” and
“senior management” within the PSIAS and decide which Committee or other
appropriate group best fits the role in that situation, keeping in mind the need
to preserve the independence and objectivity of the internal audit function.
3.7
CIPFA has developed a comprehensive checklist for assessing compliance
with the PSIAS and the Local Government Application Note which the Audit
Manager has completed.
3.8
Due to the fact that the Council’s Internal Audit Service is currently fully
compliant with the 2006 CIPFA Code of Audit Practice, the majority of the
requirements of the new PSIAS are already achieved without any need to
change existing practices. However, there are certain developments which
will need to be introduced during 2013/2014 to ensure full compliance. These
are detailed in the enclosed action plan along with responsibilities for
implementation and target completion dates.
3.9
To ensure effective monitoring of the delivery of the action plan, progress
statements will be presented to future meetings of this Committee.
OPTIONS AVAILABLE
4.1
The options available are to either endorse the proposed action plan to
ensure full compliance with the PSIAS or suggest amendments to it
5
RISK ASSESSMENT OF RECOMMENDATIONS AND OPTIONS
Risk
Risk Assessment
Risk
Level
Low
Risk Management
Legal
Full compliance with the
PSIAS and Local
Government Application
Note are required to
meet the statutory
requirements of the
Accounts and Audit
Regulations 2011
Financial
Areas of non-compliance Low
with the PSIAS and Local
Government Application
Note would reduce the
level of assurance that
the Council’s External
Auditors could place
upon the work of Internal
Audit potentially resulting
in a significant increase
in the fees charged
Implementation of the Audit
Manager’s action plan within
2013/2014 will ensure full
compliance
Reputation
Instances of nonLow
compliance with the
PSIAS and Local
Government Application
Note would need to be
formally reported which
could adversely affect the
Council’s reputation for
having excellent
governance
arrangements
Implementation of the Audit
Manager’s action plan within
2013/2014 will ensure full
compliance
Implementation of the Audit
Manager’s action plan within
2013/2014 will ensure full
compliance
6
ALIGNMENT TO COUNCIL PRIORITIES
6.1
The need to maintain an effective Internal Audit Service is fundamental to
any Council as it endeavours to achieve its priorities and the need to
implement its recommendations is a key factor in it providing an effective
service.
7
IMPLICATIONS
(a)
Relevant Legislation
Regulation 6 of the Accounts and Audit regulations 2011 specifically requires
that a relevant body must undertake an adequate and effective internal audit
of its accounting records and of its system of internal control in accordance
with the proper practices in relation to internal control.
The Department for Communities and Local Government (DCLG) has stated
that the PSIAS and Local Government Application Note constitute proper
practices to satisfy the requirements for larger relevant bodies as set out in
the Accounts and Audit Regulations 2011.
(b)
Human Rights
The Human Rights Act 1998 is not engaged as no particular individual is
directly affected by the decision
(c)
Equality and Diversity
An initial impact assessment has been completed and it concludes that the
proposed actions are fair and equitable in their content and are not
discriminative on the grounds of equality and human rights
(d)
Climate change and environmental sustainability
The proposed actions in the report do not have any environmental
implications and have no effect on the climate
(e)
Crime and Disorder
There are no implications for crime and disorder
(f)
Budget/Resource
There are no implications
8
COMMENTS OF STATUTORY OFFICERS
Head of Paid Service – No comments
Monitoring Officer – No specific comments
Section 151 Officer – The action plan sets out the work necessary to ensure
that the Council meets the new standards. It is important that this compliance
is achieved to maintain and improve the Council’s internal audit approach
and function and to enable the external auditors to place reliance on this
9
CONSULTATION
9.1
No other consultation has been carried out
10
BACKGROUND PAPERS
Self assessment of the Council’s compliance with CIPFA’s Checklist for
Assessing Conformance with the PSIAS and the Local Government
Application Note – Located in Audit Manager’s office
Report Author
Designation
Telephone
E-mail
-
Adrian Pullen
Audit Manager
01623 463017
apullen@Mansfield.gov.uk