Agenda item

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

To not proceed with the Business Case for the establishment of a Shared Audit Service, for the matter to be considered at a later date.

By way of a report by the Head of Resources (a copy of which is appended in the Minute Book) the Cabinet considered the Business Case for the Shared Audit Services between Huntingdonshire District Council, Cambridge City Council and South Cambridgeshire District Council.

It was explained that the rationale for the establishment of the Shared Audit Service differed to those Shared Services that had previously been agreed between the three partner Councils as it provided the opportunity to deliver a more resilient and responsive service rather than the generation of savings being the main focus. The employing authority for the Shared Audit Service would be South Cambridgeshire District Council.

The opening staff budget for the Shared Audit Service would be circa £425k combining the 2016/17 staffing budgets for the three authorities.  The ratio of the budget contribution initially for the Council would be 40%, formed by the saving distribution and additional costs incurred, if any, such as redundancy, pay protection and savings of £51.9k had been targeted for 2017/18.

The Shared Audit Services would generate a minimum saving target of 11% of net revenue budget. In the first year there would be the requirement for the Council to contribute £10k to the initial set-up costs, which would be met from the Special Earmarked Reserve and reimbursed within a year.

The governance principles and decision-making processes in existence at the three Councils would remain, meaning that Internal Audit matters at Huntingdonshire District Council would continue to be reported to the Corporate Governance Committee.

The Shared Audit Service, including a new Senior Audit Manager post, was expected to be in operation from April 2017.

At 7.08pm, Councillor S Cawley entered the meeting.

Having been invited to address the Cabinet, the Chairman of the Corporate Governance Committee presented its recommendation to the Cabinet, the matter having been considered by the Committee at its meeting on 27 September (Minute No.27 of the Corporate Governance Committee refers).

It was explained that the Committee were concerned as it appeared that the decision had already been made and the report and Business Case prepared to fit the decision.

All Members of the Committee except one had expressed an opinion on the matter and there was consensus that the Council had a high quality audit service that could be diluted with the requirement to support the other local authorities within the Shared Service Partnership.

At 7.10pm, Councillor D Brown entered the meeting.

The Chairman of the Corporate Governance Committee noted that the Executive Councillor for Strategic Resources had stated that the 3C Shared Service Partnership arrangement would not be allowed to affect the sovereignty of the Council.  However, it was felt that the decision to proceed with the Shared Audit Service would have a profound effect long-term on the sovereignty.

The Committee were also concerned that the decision to proceed with a Shared Audit Service would affect the efficiency and morale of staff and to date there had been no consultation with affected staff.  Currently the Internal Audit Team was motivated and worked well for the Council.

The Committee had noted that different performance standards and cultures existed across the three authorities.  The Council employed its own Audit and Risk Manager whilst both Cambridge City Council and South Cambridgeshire District Council obtained this service from Peterborough City Council.

Within the Business Case for the Shared Audit Service more risks were identified than benefits.  In addition it had previously been reported to the Cabinet that savings had not yet materialised from the 3C Shared Service Partnership arrangement.

In conclusion the Chairman of the Corporate Governance Committee stated that the Committee recommended to the Cabinet to not proceed with the Business Case for the establishment of a Shared Audit Service.

The Cabinet agreed that the Corporate Governance Committee had made a persuasive argument and the different performance standards and cultures across the three authorities.  If the Council wanted the transformation agenda to succeed it needed to concentrate on this matter, particularly as the Council already had a successful Internal Audit Service.

The Cabinet concurred that the case for financial savings was poorly identified and the case of resilience was not strong enough to warrant the argument for proceeding with the proposal.

The Cabinet concluded that the Business Case did not sufficiently outline the problem of resilience that it was supposed to address.  Resilience might be an issue for partner authorities.  However, the Cabinet agreed that this was not an issue for Huntingdonshire District Council.

In considering the recommendation of the Corporate Governance Committee, the Cabinet agreed that the matter be considered at a later date.  Whereupon it was

RESOLVED

to not proceed with the Business Case for the establishment of a Shared Audit Service, for the matter to be considered at a later date.