Agenda item

To present the Business Case for the Shared Audit Services between Huntingdonshire District Council, Cambridge City Council and South Cambridgeshire District Council.

The Committee considered a report by the Head of Resources (a copy of which is appended in the Minute Book) to which was attached a Business Case to establish a Shared Internal Audit Service between the Council, Cambridge City and South Cambridgeshire District Council. Attention was drawn to an update in the level on savings identified in Appendix 2 of the Business Case, whereby the figures had been amended for Cambridge City to £24,546, Huntingdonshire to £21,337 and South Cambridgeshire to £6,336 to bring them in line with the protocol utilised for the identification of savings in accordance with the previous shared service models.

The Head of Resources advised the Committee that the employing authority would be South Cambridgeshire District Council for the Shared Audit Service (SAS) and drew Members attention to Appendix A of the report that highlighted the benefits of the proposal. The savings identified had been targeted at £51.9k for 2017/18 and the Council’s liability for the initial set up costs would be £10k to be funded from Special Earmarked Reserves.

Arising from a comment from Councillor Mrs S Conboy on the high level of non-productive time recorded, the Internal Audit and Risk Manager confirmed that the level had been high across the three authorities and advised Members of how the target to reduce levels by March 2019 would be achieved. Councillor Mrs Conboy further highlighted her concerns with the proposal urged that consideration be given to prioritisation of the Council’s risks, together with allowance of a ‘break clause’ in the contract.

In response to a question from Councillor Ms L A Duffy on why South Cambridgeshire had been nominated as the employing authority, the Head of Resources had confirmed that they had put themselves forward for the role. Councillor Ms Duffy further drew attention to the suggested resilience that would ensue with the SAS and reported upon her concerns that the high quality of audit service that the Council had currently supplied could be diluted with the requirement to support the other local authorities. The Head of Resources confirmed that when the Council had entered into an agreement to share services with the other authorities it had been considered that the Internal Audit Service would be a prime service to share, creating greater resilience but not necessarily generating savings.

Councillor T Hayward commented upon his concerns for not being the lead authority and how the SAS may not have the advantage of understanding how the Council works and functions, comparing such a scenario to External Audit if the service is extended further to include Peterborough City Council. The Head of Resources confirmed that there had been no proposals to include Peterborough and had expected the level of internal audit service provided to be of the standard that is currently being provided.

Councillor D Dew referred to the previous services that had been implemented as a shared service at the authority and commented that the Council currently had no evidence to support the success of these services to proceed further with another service, making particular reference to the staffing issues recently experienced in the Building Control Service. In concurring with the sentiments of Councillor Dew, Councillor R J West referred to the different performance standards across the three authorities with differing productivity levels and his concern for the timescale of two years to achieve standard working practices when the Council currently had an Internal Audit Service that met our requirements.

In referring to the reasoning behind the previous shared service agreements on a financial basis, Councillor R Fuller outlined his concerns for the SAS proposal that had not concentrated on the financial justification but rather the resilience. In so doing, Councillor Fuller stated that he had not been made aware of any issues with the current Internal Audit Service and could not support the justification in the Business Case.

In supporting the comments that Members had made previously, Councillor E R Butler confirmed that the savings identified did not warrant the argument for proceeding with the proposal. Councillor Mrs R E Mathews further highlighted concerns with the proposal and made particular reference to the external independent review and external assessment that the Council had achieved previously but the other authorities had not been at the same standard and not been reviewed in the same way.

In concluding the discussion, the Chairman supported the views of the Committee and invited Members to attend the meeting of the Cabinet on the 20th October 2016 to support the Chairman in presenting their comments. Whereupon, the Committee

RESOLVED

(a)  that the Cabinet be recommended not to proceed with the Business Case for the establishment of a Shared Audit Service; and

(b)  that the Chairman be requested to attend the meeting of the Cabinet  on the 20th October 2016 to present the comments of the Committee.