Agenda item

TRANSFER OF INTERNAL AUDIT SERVICE

A report by Adrian Sibley, Section 151 Officer

Minutes:

The Committee received a report by the Section 151 Officer, regarding a proposal to transfer the internal audit function to Lincolnshire County Council.

 

The Council’s internal audit function was currently undertaken through Lincoln City Council.  Transferring the function to Lincolnshire County Council (LCC) would provide a greater level of resilience and consistency in approach across the Strategic Alliance.

 

Officers recommended that the Committee send this recommendation to Cabinet to effect the transfer.

 

Whilst there were no specific issues highlighted with the current service provision, there was an increasing need for specialist audit capacity specifically around areas such as fraud and ICT, and with a relatively small team, it was difficult to develop the required range of expertise.

 

More generally, a shared approach would allow the following benefits to be secured:

 

·           Streamlined service with single set of personnel for both Councils within the Alliance and PSPS

·           Combining all oversight work for both Councils into one principal officer thereby merging liaison meetings, management team and committee attendance and reports

·           Combined audit reviews providing assurance across the Alliance that would potentially reduce the number of days on each audit as there would be one audit report and closure process rather than two

·           Shared intelligence and highlighting of inconsistent practices.

·           A reduced day rate allowing annual savings of around £3,000.

·           Reduced impact on PSPS as not having two sets of auditors reviewing the same systems.

·           Access to other expertise from the Assurance Lincs offer (Risk, Fraud, Health and Safety and Audit specialisms)

·           Increased resilience provided by a larger team to mitigate against sickness, loss of key staff etc.

 

The provisional date for the transfer of the internal audit service, subject to necessary approvals and agreed contractual terms, was 1st July 2021. Whilst it was not currently proposed to make any changes to the level of audit days, this would be reviewed during the year as the risk environment changed and efficiencies could be achieved.

 

The Section 151 Officer stressed that the proposal purely concerned realigning the internal audit function between the two authorities under one manager to achieve a greater degree of consistency and resilience built into the service.  The small budget saving was incidental and the proposal did not involve PSPS.  The Portfolio Holder for Finance had considered the proposal and was satisfied with this approach.

 

In response to questions, the Section 151 Officer reported that City of Lincoln had not been approached to take on the internal audit work for both authorities purely due to LCC’s greater degree of resilience.

 

Boston’s treasury management function had transferred to PSPS, but was carried out by separate staff currently.  Discussions had taken place with respect to the payroll function, but due to the timing of the PSPS proposal, it would remain with North Kesteven District Council for the current year.  

 

Action: AS

Advise Councillor Dani of any potential fraudulent activity relating to Government grants paid to businesses to assist with the impact of the pandemic.

 

Councillor Alison Austin and the Chairman declared that they served as Members of Lincolnshire County Council, but had not had any input to the proposal.  It was confirmed that this did not preclude them from taking part and voting on the officer’s recommendation to put the proposal to Cabinet for approval.

 

Members recognised the advantages of the proposal in terms of capacity, specialism and consistency.  They then proposed a vote of thanks to the current internal auditors for the work they had done for the Council over the years.

 

RESOLVED: That it be recommended to Cabinet that the Council’s Internal Audit function be transferred to Lincolnshire County Council. 

 

Supporting documents: