Agenda item

DECISION

That the transfer of the internal audit function from Lincoln City Council to Lincolnshire County Council be approved.

Portfolio Holders and Officer

JN/AS

REASON FOR DECISION

The Portfolio Holder for Finance presented a report, which sought approval of the transfer of the Council’s internal audit function, currently undertaken through Lincoln City Council, to Lincolnshire County Council (LCC) in order to achieve a greater level of resilience and consistency in approach across the Strategic Alliance and ensure ongoing conformity with the professional standards.

The requirement for an internal audit service was set within the Accounts and Audit Regulations 2015.  The Service was currently provided through a contractual arrangement for around 140 days of cover with Lincoln City Council. However, there were concerns around resilience and, now that there was a shared working arrangement with East Lindsey District Council, through both the Alliance and a shared back office provider, there was a real benefit in aligning the internal audit function.

Transferring this service to Lincolnshire County Council would achieve a consistent and streamlined approach across the Alliance.  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 potentially reducing the number of days on each audit as there would be one audit report and closure process rather than two

·         Allow shared intelligence and highlight 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 1 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 Leader commended the move and LCC’s internal audit function for its reputation for thoroughness.

OTHER OPTIONS OR ALTERNATIVES CONSIDERED

The current service provided by the County Council for East Lindsey District Council could transfer to Lincoln City Council.  However, there is not the same level of capacity at the City

Council to provide the additional resilience.

The service could be provided by private sector organisations. There is, though, a lower level of expertise for Local Authority functions in the private sector and previous soft market testing has shown that the cost would be significantly higher.

RECORD OF ANY CONFLICT OF INTEREST

None.

RECORD OF ANY DISPENSATION GRANTED

None.