Agenda Item No. 11


The Vale of Glamorgan Council


Audit Committee 13th July 2015


Report of the Operational Manager - Audit/Head of Audit


Update on the Internal Audit Shared Service


Purpose of the Report

1.         The purpose of this report is to update the Audit Committee on the Internal Audit Shared Service with Bridgend County Borough Council and propose an extension to the Partnership Agreement until 31st January 2018.


THAT the Audit Committee:

1.         Considers the current position as outlined in the report and supports a recommendation to Cabinet to extend the Internal Audit Shared Service Partnership for a period of two years to 31st January 2018.

2.         Supports a further recommendation to Cabinet to delegate authority to the Head of Finance/Section 151 Officer and the Operational Manager - Audit in consultation with the Leader and Managing Director to explore options for expanding the Internal Audit Shared Service.

Reason for the Recommendations

1&2.   To facilitate monitoring of the Internal Audit shared service for the Internal Audit function.


2.         The provision of Internal Audit is recognised by all councils as core to their effective governance, risk management, and control arrangements.  The requirement for councils to maintain appropriate and effective internal audit arrangements is set out in the Accounts and Audit (Wales) Regulations 2014.

3.         Cabinet at its meeting held on 14th March 2012 approved the proposal that the Vale of Glamorgan Council becomes a partner and hosts the Internal Audit Shared Service (IASS) with Bridgend County Borough Council and authorised the Head of Paid Service and the Section 151 Officer, in consultation with the Leader, to make the necessary detailed arrangements under delegated authority to establish the IASS, including admission of further interested parties if appropriate subject to an agreed Partnership Agreement and Contract.

4.         A formal Partnership Agreement was signed and sealed by both the Vale of Glamorgan Council and Bridgend County Borough Council on 1st February 2013; whereby an Internal Audit Shared Service would be provided by the Vale of Glamorgan Council as the Host Authority for a period of three years to Bridgend County Borough Council.

Relevant Issues and Options

5.         The Bridgend and Vale Internal Audit Shared Service (IASS) is now in its third year of the three year commitment.  In this short time considerable service developments and progress has been made.  Overall the performance of the Partnership has been very good in respect of both the delivery of the Audit Plan and the feedback from customers; all of which have been reported regularly to the respective Audit Committees and summarised in Appendix A

6.         The stated aim of the IASS is to provide a shared service solution, focused on a series of identifiable and measurable objectives, in which both Councils have an equal share in terms of control, direction and influence.

7.         As such the IASS continues to meet its objectives by:-

          Being affordable and representing value for money;

          Enhancing the professionalism and quality of audit services provided to both Councils through shared knowledge and best practice;

          Remaining flexible and responding to changing service requirements and priorities;

          Extending access to specialist audit services and other related disciplines to both Councils;

          Delivering efficiencies and economies of scale;

          Improving the investment in staff training and development and providing opportunities for career progression for staff within the service.

8.         Overseeing the IASS is the Joint Partnership Board comprising the respective Section 151 Officers (or their nominees) from each Council.  The Board monitors the performance of the IASS and ensures that it delivers the standards and expectations as set out in the Partnership Agreement.  Whilst the partners jointly oversee the performance of the IASS, the responsibility for the adequacy of the whole system of internal audit remains with the Councils themselves, who are responsible for approving audit plans and monitoring delivery via their respective Audit Committees.

9.         The individual Councils are responsible for overseeing the effectiveness of the internal audit function at Council level, and holding the Head of Internal Audit to account for delivery of the approved Audit Plan.  They are also responsible for the effectiveness of their governance, risk management and control arrangements, hold managers to account for delivery and receive regular progress updates on internal audit work; consider key themes and issues, and take them forward as necessary.

10.      The coming together of the two divisions saw the immediate need for a new organisational structure which reduced the number of full time equivalents (FTE) posts between the two divisions from 29 to a maximum of 24 under the new IASS.

11.      In respect of overall performance; in 2013/14 both Councils annual audit plans were achieved and the total cost of service was circa £193k underspent; this was primarily due to a further reduction in staffing numbers and the number of vacant posts being carried by the service for the period concerned. 

12.      In 2014.15 both Councils annual audit plans were achieved; although Bridgend received 93.5% of the original planned productive days.  Whilst this was a shortfall of 84 productive days; the overall impact was minimal as all high risk areas were covered and the Head of Audit was able to provide the necessary annual opinion on the Council's overall governance, risk management and internal control arrangements.  The overall total cost of the service was circa £135K underspent and this was due to vacant posts during the year.

13.      The budget for 2015-16 for the whole of the Internal Audit Shared Service is set and shows an overall reduction of 17% from the original budget set in 2013/14.  The Internal Audit challenge will be to continue to provide our annual assurance opinion in a climate where our clients want, and needs, to reduce costs and this includes internal audit costs.  We need to look at how we can deliver for less obvious resources and how we use data, rather than people, to deliver our audits.  Our plans and approach will require more flexibility; we will need to work even more closely with senior management to ensure our resources are employed to the greatest advantage.

14.      Both partners have indicated their desire to continue with the partnership and wish to extend the arrangement for a further two years.  The partnership has been successful and we consider that it will continue to be so.  Both partners have set challenging financial targets, and these will have a considerable impact on the audit resources that will be available to 2017/18.  We will continue to provide the flexibility to react, and be pro-active to changing needs.  Over the next three years we will continue to develop our working practices to deliver an excellent service whilst addressing the need to do more with less.  In addition, opportunities for extending the shared service to other neighbouring authorities will be explored, including the potential for expanding the specialist computer audit service.

Resource Implications (Financial and Employment)

15.      Specifically for the Vale of Glamorgan Council, since April 2013 the budget allocated to the Internal Audit Shared Service has been reduced from £553,311 to £427,245 which represents an overall reduction of circa 23%.  In addition, for the financial years 2013/14 and 2014/15 the overall budget has been underspent by £125,256 and £77,330 respectively for the Council.

Sustainability and Climate Change Implications

16.      None directly from this report.

Legal Implications (to Include Human Rights Implications)

17.      Provision of an adequate and effective Internal Audit function is a legal requirement under the Accounts and Audit (Wales) Regulations 2014.

18.      The IASS is underpinned by a legally binding Partnership Agreement and Contract to protect the interests of both Councils.

Crime and Disorder Implications

19.      Pursuing initiatives to prevent, detect and deter crime is encompassed within the terms of reference under which the audit function operates.

Equal Opportunities Implications (to include Welsh Language issues)

20.      None as a direct result of this report

Corporate/Service Objectives

21.      The work of internal audit is intended to assist in the achievement of all corporate and service objectives.

Policy Framework and Budget

22.      The proposals in this report are in accordance with the policy framework and budget.

Consultation (including Ward Member Consultation)

23.      No further consultation is proposed.

Relevant Scrutiny Committee

24.      Corporate Resources.

Background Papers



Contact Officer

Helen Smith - Operational Manager - Audit Tel: 01656 754901


Officers Consulted

External Audit Manager - Grant Thornton UK LLP


Responsible Officer:

Alan Jenkins - Head of Finance/Section 151 Officer