ITEM CMDF3
CABINET MEMBER FOR FINANCE – 17 FEBRUARY 2009
PROVISION OF INTERNAL AUDIT SERVICES TO THAMES VALLEY POLICE AUTHORITY
Report by Assistant Chief Executive & Chief Finance Office
Introduction
1. In September 2008, Thames Valley Police Authority (TVPA) contacted the County through the Oxfordshire Treasurers Association network, to consider an opportunity for a collaboration to provide internal audit services from April 2009. The opportunity was arising from the expected retirement of the TVPA Chief Internal Auditor early in 2009/10.
2. As this provides several benefits for the Council and the Internal Audit Team, agreement has been reached with TVPA for the provision of the internal audit services for a three year period commencing 1 April 2009.
3. In accordance with the Financial Regulations (E3) and the Financial Procedure Rules (77), “approval of the Cabinet should be obtained before any negotiations are concluded to work for third parties”; unfortunately whilst Chairman of the Audit Committee and the Cabinet Member for Finance have been kept informed as this matter has progressed, formal approval has not been obtained in error. Having recognised the mistake this report is seeking to correct that situation at the earliest opportunity.
Outline of the Collaboration
4. The aim of the collaboration is for the management of the internal audit provision at TVPA to be carried out by the OCC Internal Audit Service (OCCIAS) from 1 April 2009.
5. TVPA will retain two posts for the delivery of their internal audit plan, but this resource will be managed by OCCIAS. One post is currently vacant, and OCCIAS will be responsible for providing cover for that vacancy, with the actual cost passed on directly to TVPA. Similarly should there be a requirement for provision of specialist internal audit work, for example IT audit, OCCIAS will be responsible for procuring and managing that work, but the actual costs will be charged to TVPA.
6. The duration of the collaboration is initially for three years, with the facility to extend for up to two additional years by agreement.
7. The collaboration has been discussed with the Chairman of the Audit Committee and with the Audit Working Group who were supportive of the proposal
Benefits to OCC
8. OCC and TVPA currently work in partnership in delivering outcomes to the Oxfordshire community, for example through the Local Area Agreement and the Safer Communities Partnership. With Oxfordshire being the lead administering authority the collaboration of the internal audit service will enable greater assurance to be provided on the key risks relating to the partnership objectives and performance management, as OCCIAS will be the direct assurance provider to the partnering body.
9. Having a joined up internal audit service across the two organisations should be more efficient and effective as it will avoid duplication of work to provide the same assurance.
10. There will be staff development opportunities at Chief Internal Auditor, Audit Manager, Principal Auditor and Auditor levels within the current OCC Internal Audit Team, through working in a new area with different governance arrangements, systems and processes.
11. The income generated will be used to create an additional auditor post, and to increase the audit manager days available. The direct provision to TVPA will be 146 audit days; however the additional post and increase in audit manager capacity will generate an extra 200 chargeable days, so therefore a net gain of 54 chargeable days for internal audit activity in OCC. This will enable an increase in delivery of compliance audit work that internal audit is able to undertake, an area of need identified through the Internal Audit planning process for 2009/10
Risks
12. The provision of services to a third party requires professional indemnity cover, and is an insurable risk. The cover to be provided is for £1million.
13. The key operational risk is one of capacity within the existing audit team, and the potential impact on the quality of service provided to OCC. Only 7 days are being provided by the Head of Internal Audit, therefore there is not expected to be any reduction is control at a senior level. Bringing in additional resource funded by the income generated ensures that service delivery to OCC will remain unaffected.
Financial and Staff Implications
14. The direct provision by OCCIAS will be 146 staff days, of which 7 days will be by the Assistant Head of Finance (Audit); 79 days by an Audit Manager / Principal Auditor, and 60 days by an Auditor.
15. The direct provision will generate income of £45,000 per annum, which will be used to establish a new Auditor post within OCCIAS (providing an extra 185 chargeable days), and cover the costs of increasing the audit manager days available (increasing the chargeable days by 16).
RECOMMENDATION
16. The Cabinet Member for Finance is RECOMMENDED to approve the provision of internal audit services through collaboration between Oxfordshire County Council and Thames Valley Police Authority.
SUE SCANE Assistant Chief Executive & Chief Finance Officer
Background papers: Nil
Contact Officer: Ian Dyson, Assistant Head of Finance (Audit)
February 2009
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