Terms of Reference – Audit Committee
To have delegated powers to:
Governance, risk and control
(a) review the council’s corporate governance arrangements against the
good governance framework, including the ethical framework, and
consider the local code of governance;
(b) monitor the effective development and operation of risk management
in the council;
(c) monitor progress in addressing risk-related issues reported to the
committee;
(d) consider reports on the effectiveness of internal controls and
monitor
the implementation of agreed actions;
(e) consider reports on the effectiveness of financial management
arrangements, including compliance with CIPFA’s Financial
Management Code;
(f) consider the council’s arrangements to secure value for money and
review assurances and assessments on the effectiveness of these
arrangements;
(g) review the assessment of fraud risks and potential harm to the
council
from fraud and corruption;
(h) monitor the counter fraud strategy, actions and resources;
(i) review the governance and assurance arrangements for significant
partnerships or collaborations.
Financial and governance reporting
Governance reporting
(j) review the Annual Governance Statement (‘AGS’) prior to approval and
consider whether it properly reflects the risk environment and supporting
assurances, including the head of internal audit’s annual opinion;
(k) consider whether the annual evaluation for the AGS fairly concludes
that governance arrangements are fit for purpose, supporting the achievement of
the authority’s objectives;
Financial reporting
(l) monitor the arrangements and preparations for financial reporting to
ensure that statutory requirements and professional standards can be met;
(m) review the annual statement of accounts. Specifically, to consider
whether appropriate accounting policies have been followed and whether there
are concerns arising from the financial statements or from the audit that need
to be brought to the attention of the council;
(n) consider the external auditor’s report to those charged with
governance on issues arising from the audit of the accounts;
Arrangements for audit and assurance
(o) consider the council’s framework of assurance and ensure that it
adequately addresses the risks and priorities of the council;
External audit
(p) support the independence of external audit through consideration of
the external auditor’s annual assessment of its independence and review of any
issues raised by PSAA or the authority’s auditor panel as appropriate;
(q) consider the external auditor’s annual letter, relevant reports and
the report to those charged with governance;
(r) consider specific reports as agreed with the external auditor;
(s) comment on the scope and depth of external audit work and to ensure
it gives value for money;
(t) consider additional commissions of work from external audit;
(u) advise and recommend on the effectiveness of relationships between
external and internal audit and other inspection agencies or relevant bodies;
(v) provide free and unfettered access to the audit committee chair for
the auditors, including the opportunity for a private meeting with the
committee;
Internal audit
(w) approve the internal audit charter;
(x) review proposals made in relation to the appointment of external
providers of internal audit services and to make recommendations;
(y) approve the risk-based internal audit plan, including internal
audit’s resource requirements, the approach to using other sources of assurance
and any work required to place reliance upon those other sources;
(z) approve significant interim changes to the risk-based internal audit
plan and resource requirements;
(aa) make appropriate enquiries of both management and the head of
internal audit to determine if there are any inappropriate scope or resource
limitations;
(bb) consider any impairments to the independence or objectivity of the
head of internal audit arising from additional roles or responsibilities
outside of internal auditing and to approve and periodically review safeguards
to limit such impairments;
(cc) consider reports from the head of internal audit on internal
audit’s performance during the year, including the performance of external
providers of internal audit services. These will include:
(i) updates on the work of internal audit, including key findings,
issues of concern and action in hand as a result of internal audit work;
(ii) regular reports on the results of the QAIP;
(iii) reports on instances where the internal audit function does not
conform to the PSIAS and LGAN, considering whether the non-conformance is
significant enough that it must be included in the AGS;
(dd) To consider the head of internal audit’s annual report, including:
(i) the statement of the level of conformance with the PSIAS and LGAN and
the results of the QAIP that support the statement (these will indicate the
reliability of the conclusions of internal audit);
(ii) the opinion on the overall adequacy and effectiveness of the
council’s framework of governance, risk management and control, together with
the summary of the work supporting the opinion (these will assist the committee
in reviewing the AGS);
(ee) consider summaries of specific internal audit reports as requested.
receive reports outlining the action taken where the head of internal audit has
concluded that management has accepted a level of risk that may be unacceptable
to the authority or there are concerns about progress with the implementation
of agreed actions;
(ff) contribute to the QAIP and in particular to the external quality
assessment of internal audit that takes place at least once every five years;
(gg) consider a report on the effectiveness of internal audit to support
the AGS where required to do so by the accounts and audit regulations (see
Appendix A);
(hh) provide free and unfettered access to the audit committee chair for
the head of internal audit, including the opportunity for a private meeting
with the committee;
Accountability arrangements
(ii) report to those charged with governance on the committee’s
findings, conclusions and recommendations concerning the adequacy and
effectiveness of their governance, risk management and internal control
frameworks, financial reporting arrangements and internal and external audit
functions;
(jj) report to full council on a regular basis on the committee’s
performance in relation to the terms of reference and the effectiveness of the
committee in meeting its purpose;
(kk) publish an annual report on the work of the committee, including a
conclusion on the compliance with the CIPFA Position Statement.
Quorum: 3