Agenda item

To consider a report (copy attached) by the Chief Internal Auditor on the Internal Audit Charter, Strategy and Quality Assurance Improvement Programme 2025-2026.

The Chief Internal Auditor introduced a report (previously circulated) on the Internal Audit, Strategy and Quality Assurance Improvement Programme 2025- 2026 to the Committee. The Strategy provided background to the Internal Audit service, but this year the annual plan had been removed and will be presented to the Governance and Audit committee as a separate document on 11 June 2026.

During the last twelve months the Institute of Internal Auditors had carried out a consultation with the auditing professions around the new Global Internal Audit Standards (GIAS) that came into force in January 2025. The GIAS guided the worldwide professional practice of internal auditing and served as a basis for evaluating the quality of the internal audit function.

To ensure that all Local Authorities complied with the new GIAS, the Chartered Institute for Public Finance and Accountancy (CIPFA) had reviewed the standards and produced the GIAS in the UK Public Sector in February 2025. Local Authorities had 12 months to review all their internal audit documentation and processes to conform to the GIAS in the UK Public Sector.

As the new legislation only came into force in February 2025, the Internal Audit Team had reviewed its QAIP against the Public Sector Internal Audit Standards (PSIAS), and during the next 12 months the team would review the QAIP against the GIAS in the UK Public Sector and would be fully compliant by March 2026.

Consistent with the GIAS in the UK Public Sector, an external assessment occurred at least once every five years to ensure continued application of professional standards. An external assessment was carried out in 2023-24 under the old PSIAS by Ceredigion County Council on a peer review basis organised through the Welsh Chief Auditors Group. The results of the review were discussed in the Governance and Audit Committee on the 12 June 2024.

During the last 12 months the Chief Internal Auditor had been working towards completing the action plan agreed to ensure full compliance and progress would be reported to the Governance and Audit Committee in quarterly internal audit updates.

The Chair thanked the Chief Internal Auditor for the report stating it was important that the Governance and Audit Committee complied with National Standards.

The Chair raised concerns regarding the Internal Audit Team being reduced with one position not being recruited for. Questions were raised around the Section 151 Officer assessing the internal audit resources and what would be the outcome if the GAC did not agree with the assessment. Reports had been received previously regarding investigations that were carried out but also stated that planned audit work was unable to be performed. The Chair proposed a further recommendation be included, requesting that before any decision was taken to recommend any reduction in Internal Audit resources, it was to be brought to the GAC first.

Members further discussed the risks which were noted within the report regarding the resources of the Internal Audit Team and referred to 10.1 of the report which stated:

‘Failure to deliver an adequate level of internal audit may mean that the Chief Internal Auditor could not provide an annual ‘option’ on the adequacy and effectiveness of the Council’s framework of governance, risk and control during the year’.

Members added that the Internal Audit Team were crucial to the Governance of the Council. Members shared the Chair’s concerns and were in agreement with the additional recommendation.

The Monitoring Officer explained that part of the purpose of the GAC was to oversee the Authorities internal and external audit arrangements and therefore the GAC were entitled to suggest, should there be any change to how audit resources were resourced, that they be consulted in respect of any of those changes.

The Chief Internal Auditor stated that concerns regarding workload and resources was discussed regularly in 1:1 meetings with the Section 151 Officer. There were currently options being considered to address the issue.

Members further commented that Internal Audit was crucial for providing assurance, never had public services been more criticised than in the current climate and internal audit were more valuable than ever before. The Monitoring Officer reassured the GAC that internal audit was valued within the Council. In the current climate the Council were looking at ways in which services could be delivered differently across all departments however, this would not be at the detriment of the importance of the Internal Audit Team. It was also noted that changes to |nternal Audit staff numbers need not necessarily mean a reduction in resources.

The Chair asked if due to the new GIAS there were any anticipated changes to the GAC Terms of Reference. The Chief Internal Auditor explained that he was unsure of any changes at present. There was an annual review of the GAC Terms of Reference due, and any amendments would be made at that time.

The Chair questioned if fees and charges would be brought to the next GAC meeting within the Medium-Term Financial Strategy. The Chief Internal Auditor confirmed that a specific stand-alone review of fees and charges would be included in the Annual Plan to be brought to the GAC in June 2025.

The Chair gave thanks to the Chief Internal Auditor for his report.

RESOLVED: that –

                  I.         the Committee approves the Internal Audit Charter, the Internal Audit Strategy 2025-26 and the QAIP and

                 II.         the Committee requests that any changes to Internal Audit resources were considered the GAC was consulted in a timely manner.