Agenda item

To consider a report by the Head of Business, Planning and Performance (copy enclosed) on a proposed change of line management for the Head of Internal Audit and a relocation of the team from Finance and Assets to Business Planning and Performance.

A report by the Head of Business, Planning and Performance (HBPP), which provided details of a proposed change of line management for the Head of Internal Audit (HIA) and a relocation of the team from Finance and Assets (FA) to Business Planning and Performance (BPP), had been circulated previously.

The HBPP introduced the report which provided information on a proposed change in service structure affecting Internal Audit (IA).  An assurance was provided that this would not compromise the effectiveness of the IA function.

The configuration of services delivered by SLT had developed continuously to maintain the focus on the Council’s objectives, and to keep pace with operational demands.  The need to realise savings had created unprecedented challenges for the Council, with particular pressures set for the next 2 financial years.  The challenge for support services entailed working out how to do things as efficiently as possible. It would be critical that services were proactive, and actively prepared for reductions in resources by aligning and streamlining processes wherever possible, looking for synergies and commonalities which could allow rationalisation and orientating service configuration firmly around the Council’s priorities.

The IA function was currently part of FA with the HIA reporting to the HFA.  However, there was an increasing overlap with the work of BPP, especially as IA had moved towards ‘service improvement’ as a significant focus.  The focus on improvement was a useful innovation for the Council, but the overlap with the Improvement Team in BPP had developed to the point where the issue of potential duplication had been raised.  It would be important in the current financial climate that ‘corporate’ demands on customer facing services were addressed and kept to a minimum.

Integrating the work of the two functions more closely would eliminate this issue, and would provide additional benefits as detailed in the report.  This could be accomplished by the AT becoming part of BPP, with the HIA being line managed by the HBPP.  This would maximise the opportunities for programme alignment and for sharing work, particularly research, and help to minimise the ‘burden’ on front-line services.  Benefits would be most obvious in the area of improvement and performance related work, but benefits derived from cohesion are likely across both teams’ programmes.  Most of the current arrangements would remain as they are though, including important safeguards on independent action:

·                     A key element of the Internal Audit programme would remain focused on financial and internal control, directed by the Section151 officer.

·                     The independence of the role would continue to be guaranteed as the HIA would still retain a reporting link through to the Section 151 Officer and the Chief Executive.

·                     The Committee would continue to oversee the function as a whole, including the IA report and the production of the Annual Governance Statement.

It was explained by the HBPP that the move would streamline the Council’s improvement work by potentially creating opportunities for efficiencies in the future, reducing the burden on front-line services and enhancing the Council’s ability to support transformational change whilst protecting core audit functions.

In response to questions from Mr P.Whitham relating to the provision of a structure chart and reporting process, the HIA referred to the Internal Audit Charter, which would be amended a submitted to the Corporate Governance Committee for approval, along with the Internal Audit Plan.  The Committee were informed that it had been anticipated that the changes would be implemented from the 1^st January, 2014, and details of the relocation plans were provided.  Confirmation was provided that compliance with best practise, such as Chartered Institute of Internal Auditors, would be attained.

The report incorporated details of the consultations process carried out and the steps taken to address any possible risks.

RESOLVED – that Corporate Governance Committee notes and supports the proposed review of Internal Audit management arrangements.