Issue - items at meetings - AUDIT COMMISSION: PROGRESS REPORT 2011/12

Report of the Audit Commission (copy attached)

RESOLVED- That the Audit Committee notes the report and progress made.

82.1         The Committee considered a report of the Audit Commission that provided a summary of the progress made and any significant issues arising against the 2011/12 external audit. The Audit Manager provided a verbal supplement stating that their audit had again identified a number of payroll transaction errors however; these were not found to be of material impact and there was no indication of fraudulent activity. The audit had also established that documentation could not be accessed quickly and easily.

82.2         The Chair noted that Ernst & Young were successful in procuring the contract for the outsourcing of work currently undertaken by the Audit Practice in the South East region. He asked if representatives from Ernst & Young would be meeting with council officers in the near future.

82.3         The Audit Manager replied that although the consultation process was still in progress, it was likely that there would be a meeting on Wednesday 2 May and this issue would be discussed with the new external audit providers and resolved.

82.4         Councillor Wealls noted that there would be a 40 per cent reduction in the fee charged by the Audit Commission under the outsourcing measures. He enquired how much of the saving was due to outsourcing.

82.5         The Audit Manager replied that he could not give an accurate figure. Although an element of the reduced fee would be due to outsourcing, the majority was due to a reduction in resources which were now 50 per cent less than at the time of the 2010 announcement by central government that the Commission would be outsourced.

82.6         Councillor Sykes noted that 75 per cent of the scoring system for the outsourcing of the Audit Commission was based on service cost. He asked if the work undertaken by the firm would be as comprehensive as the current operation.

82.7         The Audit Manager answered that the scope of the incoming firms work would be similar but tightly specified and he would predict that additional work would be charged for.

82.8         The Director of Finance supplemented that the majority of the work undertaken by the Audit Practice concerned the financial statements. She believed that the Finance Department would need to continue to deliver information on time and to a high standard to avoid additional work. The Director of Finance stated that her main concern was the discontinuation of the data provided by the Commission on other authorities Value for Money (VFM) work which was very useful for benchmarking performance. She added that there was a possibility that the savings made by the Council arising from abolishing the Audit Commission would need to be spent on methods to continue this.

82.9         Councillor Ann Norman stated her belief that the work undertaken by the current Audit Manager and District Auditor was of the highest standard. She asked if the same personnel would continue to service the Council for the incoming firm.

82.10    The Audit Manager replied that the current personnel would certainly remain in place for 2011/12. Although he was aware that Ernst & Young were reluctant to make changes in the short-term, he did not know of their intentions for after this period.

82.11    The Chair agreed that the work undertaken by the Audit Commission had been very beneficial to the Audit Commitee. He asked if Officers could communicate the sentiments of the Committee to Ernst & Young at their proposed meeting.

82.12     Councillor Ann Norman asked what work had been done towards new methods of benchmarking with other authorities on VFM methods.

82.13     The Director of Finance answered that dialogue was underway between the authorities in the South East region on this matter however, as Brighton & Hove was a unitary authority, it would problematic gathering comparative data locally. Accordingly, the Council would liaise with other authorities nationally and nearby unitary councils such as Southampton.

82.14    RESOLVED- That the Audit Committee notes the report and progress made.