Agenda item

This report sets out the proposals for appointing the external auditor to the Council/Authority for the 2018/19 accounts and beyond, as the current arrangements only cover up to and including 2017/18 audits.

The Committee received a report setting out the proposals for appointing the external auditor to the Council for the 2018/2019 accounts and beyond. Conrad Hall (Chief Finance Officer) presented the following three potential approaches to the appointment the external auditor to the Council:

(i)    A sector-wide procurement conducted by Public Sector Audit Appointments

(ii)  Establishing an independent auditor panel

(iii)Joining other local authorities to establish a joint auditor panel

Conrad Hall advised the Committee that the option recommended in the report was (i) A sector-wide procurement conducted by Public Sector Audit Appointments. He explained that Public Sector Audit Appointments (PSSA) was limited by guarantee incorporated by the Local Government Association and it would help the Local Authority maintain separation between the Council and the external auditor appointment. Among the key benefits presented were the opportunity to minimise conflict of interest, the benefit of purchasing services in bulk (better negotiation position to secure offers by more companies and reduce costs, while maintaining high levels of quality), the fact that PSAA would monitor contract delivery, lower procurement costs, and no need for the Council to establish an alternative appointment process locally.

Conrad Hall reminded the Committee that the current audit arrangements covered up to and including 2017/18 audits and if the recommended option was to be approved, the Council must ensure that its notice to opt in would be received by 9 March 2017. Committee Members were advised that although the Committee could not legally make the final decision, its view was obviously highly important and it would be taken into account at the next Full Council meeting.

Conrad Hall reminded the Committee  that it was not obliged to endorse the recommended option and spoke briefly of the other two options discussed in the document (see page 27 of the Agenda Pack). He highlighted that these followed a model used by private sector companies and informed the Committee of the costs and legal complexities associated with them, including the need to appoint an independent Audit Appointment Committee. 

The Chair thanked Conrad Hall for his report and expressed a view that he would recommend option (i). The Independent Member, Mr Sullivan, spoke of PSAA’s expertise and he expressed support for the economies of scale argument as he argued that buying in bulk would lead to stronger competition and a better price. Mr Sullivan commented on the fact that accountability would be better as well as PSAA would manage the contract performance. He said that the sector wanted similar arrangements to be made 5-10 years ago and he stated his support for the recommended option, suggesting that the Council strongly consider opting in. The Vice-Chair supported the views expressed by Mr Sullivan and Conrad Hall, highlighting the clear advantages of the proposal.    

The Chair asked Members of the Committee to bring further questions forward. There was a short discussion whether Local Authorities could appoint external auditors independently of PSAA and it was concluded that although this was possible in theory, a few Councils would select such an option and implement it in practice.

Members of the Committee voted on the proposal and it was unanimously decided to accept it.

RESOLVED that:

(i)            The contents of the External Auditor Appointment 2018/19 report be noted;

(ii)          The Council accepts Public Sector Audit Appointments’ (PSAA) invitation to ‘opt in’ to the appointment of external auditors for five financial years commencing 1 April 2018;

(iii)             The Audit Committee endorses the report to be sent to Full Council for approval.