Internal Audit External Quality Assessment
The report provides an update to the Audit and Standards Advisory Committee on the findings of an external quality assessment that has been carried out of the Brent Internal Audit Service.
The Chair explained that Members and officers originally wanted the Council’s internal audit function to be reviewed externally. However, as the pan-London peer review mechanism administered by the London Borough of Croydon had not been able to provide an independently selected reviewer, the Audit and Standards Advisory Committee had previously agreed the review to be carried out by the newly recruited Internal Audit Manager who reported directly to the Council’s Chief Finance Officer in relation to this task.
Colin Garland (the Council’s Internal Audit Manager) introduced the report and reminded Members that having a professional, independent and objective internal audit service was one of the key elements of good governance in local government. He added that the principal objective of the review was to assess conformance to the Public Sector Internal Audit Standards (PSIAS). Mr Garland had used a questionnaire consisting of 75 questions which had been designed by the Global Institute of Internal Auditors (IIA Global) and he had spoken to senior stakeholders such as the Head of Internal Audit and Investigations, the Chair and the Vice-Chair of the Audit and Standards Advisory Committee, the Chief Finance Officer, the Chief Executive and a number of Strategic Directors.
Mr Garland explained the Chartered Institute of Internal Auditors used a scale of three ratings – ‘Generally Conforms’; ‘Partially Conforms’ and ‘Does not Conform’ to measure the effectiveness of Internal Audit against the PSIAS, with the outcome for Brent being ‘Generally Conforms’ (paragraphs 4.1 and 4.2 on pages 66 and 67 of the Agenda pack). Nevertheless, there were a few areas of improvement, such as revising the Key Performance Indicators with the external service provider and risk management, which had been outlined at Appendix 1 (pages 69 and 70 to the Agenda pack).
The Committee welcomed the report and expressed their satisfaction that Brent’s Internal Audit function had achieved a ‘Generally Conforms’ rating. However, Members asked whether a specific date for reviewing the actions marked as ‘ongoing’ could be set. They questioned whether the Council’s Internal Audit function would be successful in identifying a shortfall in resources which could lead to a situation such as the one at Northamptonshire County Council. This led a wider discussion whether the Members understood the role of external auditors; the provisions for them to meet with external auditors outside the formal Committee meetings; and their interactions with senior officers. Paul Dossett (Partner, Grant Thornton – External Audit) explained that although it was considered good practice to hold such meetings, Grant Thornton had not had a reason to request one. In relation to Members of the Audit and Standards Committee interacting with senior officers, Mr Hall noted that there was already substantial such interaction. For example, although it was unusual for Chief Executives (and sometimes even Chief Finance Officers) of other authorities to attend the meetings of their respective audit committees. Brent’s Chief Executive, with the exception of this meeting for which there was an unavoidable diary clash, had attended all other meetings of the Committee.
A Member enquired whether it would be possible for details of the discussions Mr Garland had had with various stakeholders to be circulated to the Committee so Councillors could be aware of the engagement levels among officers. Conrad Hall (the Council’s Chief Finance Officer) explained that sharing the notes of these conversations could impact senior officers’ willingness to speak freely to reviewers and advised that this would not be practical. Michael Bradley (the Council’s Head of Audit and Investigations) suggested that Mr Garland could attend an informal meeting with the Chair and the Vice-Chair to provide them with general feedback without breaking the rules of confidentiality.
Members felt that it would beneficial to hold an open and honest discussion about improving the performance of the Audit and Standards Advisory Committee. They noted that commissioning an external body to carry out an extensive review would not be feasible, but carrying out a self-assessment and identifying areas for improvement should be sufficient. Mr Hall suggested that he could provide a briefing note which could facilitate a conversation on assessing the committee’s own effectiveness. In addition, it might be possible to create an internal questionnaire and carry out preliminary work in order to provide a structured guidance for the self-assessment.
(i) The contents of the Internal Audit External Quality Assessment report, be noted;
(ii) An update against the actions related to the areas for improvement, including the ones marked as ‘ongoing’, be provided at the Committee meeting on 20 March 2019;
(iii) Providing that the pan-London peer review mechanism became operational again, a peer review of Brent’s Internal Audit function against the PSIAS be requested prior to the next due date in five years’ time;
(iv) A briefing note to facilitate a conversation on assessing the Committee's effectiveness be provided by the Chief Finance Officer to the Committee meeting in February 2019 or March 2019;
(v) The feasibility of creating an internal questionnaire and carrying out preliminary work in order to provide a structure and guidance for the self-assessment be considered; and
(vi) The Independent Members be involved in the self-assessment of the Committee’s effectiveness.
- 09. Internal Audit External Quality Assessment, item 9. PDF 89 KB
- 09a. Areas for Improvement, item 9. PDF 53 KB