Agenda Item No.












Committee were updated on the progress to develop a full shared service for Internal Audit with Bridgend County Borough Council (Bridgend CBC).


Cabinet had approved the implementation of a temporary shared service arrangement for Internal Audit Manager with Bridgend CBC in December 2009, effective from 1st January 2010.  Further specific reports on progress had been submitted to the Audit Committee with regular updates also provided by the Head of Accountancy and Resource Management in his capacity as Head of Internal Audit in providing an opinion on the adequacy of the Council’s internal control arrangements. 


A three-phase Business Case had been developed, with the third phase being endorsed by the two Councils’ Joint Working Programme Board in May 2011.    Phase 3 would realise the option for the provision of a fully integrated Internal Audit Shared Service (IASS).  With the success experienced by sharing the Internal Audit Manager (phase 1), it was considered that the next natural progression would be to integrate all staff in one location and second staff from Bridgend CBC to the Vale (phase 2).  This had been successfully achieved and had been fully operational since May 2011 with staff from both the Vale of Glamorgan Council and Bridgend CBC coming together and being located at the Innovation Centre situated on the boundaries of both Councils in Ewenny, Bridgend. 


Phase 3 of the Business Case was to create an IASS which would deliver a full, professional internal audit service to meet the needs of the Councils and the requirements as defined in the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for Internal Audit in Local Government in the United Kingdom 2006. 


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


As such, the IASS should achieve the following objectives:




·                    is affordable and which represents value for money

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

·                    is flexible and can respond to changing service requirements and priorities

·                    extends access to specialist audit services and other related disciplines to both Councils

·                    delivers efficiencies and economies of scale

·                    improves the investment of staff training and development and provides opportunities for career progression for staff within the service.


In order to meet this, the phase 3 Business Case recommended that:


·                    there should be a single employing authority which should be the Vale of Glamorgan Council

·                    staff currently employed by Bridgend County Borough Council should be TUPE (Transfer of Undertakings - Protection of Employment Regulations) transferred to the Vale of Glamorgan Council

·                    a new staffing structure should be implemented to ensure the IASS was fit for purpose and fit for form

·                    the new staffing structure should be implemented after all staff were employed by the Vale of Glamorgan Council

·                    a legal Partnership Agreement based on Section 101 / 102 of the Local Government Act 1972 should be entered into between the two Councils to delegate the function and formalise the provision of services and basis for cost apportionment.


Both Councils would be required to sign up to the terms and conditions of this document for a set period of time (proposed minimum of three years) in order to demonstrate commitment. 


Overseeing the IASS would be a Joint Partnership Board comprising the respective Section 151 Officers (or their nominees) from each Council.  The Board would monitor the performance of the IASS to ensure that it delivered the standards and expectations set out in the partnership agreement. 


Whilst the partners would jointly oversee the performance of the IASS, the responsibility for the adequacy of the whole system of internal audit would remain with the Councils themselves, who would remain responsible for approving audit plans and monitoring delivery via the Councils’ respective Audit Committees. 


The individual Councils would continue to be 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 would also be 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 as well as considering key themes and issues and to take them forward as necessary.


Initial indications of the level of service required had been considered, and this information had been used to determine the indicative costs of the service.  The costs would be shared in proportion to the level of service required on a full recovery basis with the overall position being cost neutral in terms of the existing budget.


The coming together of the two divisions had also identified a need for a new organisational structure to be implemented as part of the process.  This would have the impact of reducing the number of full time equivalent posts between the two divisions, at present 29 to a maximum of 24 under the new IASS. 




(1)       Approves the proposal that the Vale of Glamorgan Council hosts and becomes a partner in the Internal Audit Shared Service (IASS) with Bridgend County Borough Council.


(2)       Authorises 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.


Reason for recommendations


(1&2)  To facilitate monitoring of the proposal to establish a shared service for the Internal Audit function."




Attached as Appendix - Report to Audit Committee: 23rd February, 2012