Agenda item

Report of Monitoring Officer.

The Committee considered the report of the Monitoring Officer regarding the composition of the Audit and Governance Committee, in light of the revised best practice guidance.

The Committee was invited to consider its current composition including whether to co-opt an independent member to assist in delivering an independent assurance on risk management, internal controls, the financial reporting and annual governance processes.

The Chartered Institute of Public Finance and Accounting (CIPFA) updated its practical guidance on audit committees in December 2013. The guidance detailed best practice suggestions regarding how to ensure that audit committees were balanced, objective and independent of mind, in addition to being well equipped to discharge its role. Currently there were no statutory requirements in place to dictate the composition of audit committees in England, therefore the recommendations in the guidance were a matter of best practice only.

The guidance also provided best practice guidelines in relation to members of the executive sitting on audit committee. It noted that this practice created a potential risk of the committee being deterred from challenging or holding to account the executive. It recommended that this practice should be avoided unless other compensating arrangements were put in place to ensure independence. It was clear that where an executive member did sit on the audit committee, they should not act as its Chair.

Given the size of the authority and the limited number of elected members available to serve on committees, members of the executive sat on, but did not chair the Audit and Governance Committee.

The Committee’s composition would be reviewed following the upcoming council elections, taking into account members’ established interests and expertise and whether it fell within the committee’s remit.

The guidance stated that the co-option of independent members to audit committees may be beneficial. It noted that “the injection of an external view can often bring a new approach to committee discussions”. The guidance also stated that a co-opted member could bring additional knowledge and expertise and reinforce the committee’s independent and political neutrality. It did however warn about an over reliance on independents by other committee members and noted that should they not possess organisational knowledge or context this could impact adversely on the usefulness of their contribution.

In terms of the chair of the committee, the guidance stated that the committee should be led by a strong, independently minded Chair but stated that it was not a requirement for this Chair to be co-opted, as opposed to an elected member.

Details of the Audit and Governance Committee’s terms of reference were contained in the report. Currently within its existing rules the authority could co-opt an independent member should they determine that doing so would enhance its delivery of a function.

The Monitoring Officer advised the Committee that should they consider co-opting an independent person, regard would need to be given to Section 13 of the Local Government Housing Act 1989 which related to the voting rights of non-elected members. Where decisions were being made by the committee in any capacity other than purely ‘advisory’ any co-opted member would not be able to vote.

Under the Local Government Act 1972 and in accordance with the constitution of the authority, any member who chaired the committee would have a casting vote in their capacity of chair. Therefore if a co-opted member were appointed Chair they would be able to exercise a casting vote when the Committee was tied. The Monitoring Officer advised that it would be possible to set up a structure where a co-opted Chair would not be permitted to vote, unless the vote was tied and considered to introduce a level of complexity to proceedings that did not necessarily meet the requirement for a Chair to be independently minded.

Should the Committee decide to introduce a co-opted member, the recruitment of such a person would be subject to a dedicated, publicly advertised recruitment process.

All co-optees appointed to a Council committee are members of the authority and would therefore be bound by the same Code of Conduct as elected members.

In response to a question from the Committee, the Monitoring Officer clarified that an existing Council appointed independent person who assisted the Committee in its discharge of its Standards-related matters would be unable to fulfil the post of co-opted member without resigning from their post of independent person.

The Committee discussed the current composition of the Committee, the numerical difficulty of appointing members to the Committee and ensuring that none were executive members. This would potentially become increasingly difficult following the Borough Elections in May 2015. The Committee debated the issue exploring options including moving the Committee’s audit functions to the Scrutiny Committee or reverting back to separate committees for audit and standards.

The Committee agreed that co-opting an independent member to the Committee was a measure that it felt would assist them in discharging its responsibilities and noted moreover that this could be done within the existing rules.

As this was the last meeting before the Monitoring Officer left the authority, the Committee unanimously expressed its thanks to her for all her hard work and support to the Committee and wished her the best of luck for the future.

RESOLVED (Unanimous) The Committee gave delegated authority to the Senior Head of Corporate Development and Governance, acting in consultation with the Chair of Audit and Governance Committee, to take all steps necessary to recruit and co-opt an independent member to the Committee for a fixed term, in accordance with the guidance.