Terms of Reference
Statement of Purpose
1. Our audit committee is a key component of Allerdale Borough Council’s corporate governance. It provides an independent and high-level focus on the audit, assurance and reporting arrangements that underpin good governance and financial standards.
2. The purpose of our audit committee is to provide independent assurance of the adequacy of the risk management framework and the internal control environment. It provides independent review of Allerdale’s governance, risk management and control frameworks and oversees the financial reporting and annual governance processes. It oversees internal audit and external audit, helping to ensure efficient and effective assurance arrangements are in place. Governance, Risk and Control
3. To review the council’s corporate governance arrangements against the good governance framework, including the ethical framework and consider the local code of governance.
4. To review the Annual Governance Statement prior to approval and consider whether it properly reflects the risk environment and supporting assurances, taking into account internal audit’s opinion on the overall adequacy and effectiveness of the council’s framework of governance, risk management and control.
5. To consider the council’s arrangements to secure value for money and review assurances and assessments on the effectiveness of these arrangements.
6. To consider the council’s framework of assurance and ensure that it adequately addresses the risks and priorities of the council.
7. To monitor the effective development and operation of risk management in the council.
8. To monitor progress in addressing risk-related issues reported to the committee.
9. To consider reports on the effectiveness of internal controls and monitor the implementation of agreed actions.
10.To review the assessment of fraud risks and potential harm to the council from fraud and corruption.
11.To monitor the counter-fraud strategy, actions and resources.
12.To review the governance and assurance arrangements for significant partnerships or collaborations.
13.To approve the internal audit charter.
14.To review proposals made in relation to the appointment of external providers of internal audit services and to make recommendations.
15.To approve the risk-based internal audit plan, including internal audit’s resource requirements, the approach to using other sources of assurance and any work required to place reliance upon those other sources.
16.To approve significant interim changes to the risk-based internal audit plan and resource requirements.
17.To make appropriate enquiries of both management and the Assurance, Risk and Audit Manager to determine if there are any inappropriate scope or resource limitations.
18.To consider any impairments to independence or objectivity arising from additional roles or responsibilities outside of internal auditing of the Assurance, Risk and Audit Manager. To approve and periodically review safeguards to limit such impairments.
19.To consider reports from the Assurance, Risk and Audit Manager on internal audit’s performance during the year, including the performance of external providers of internal audit services. These will include:
a) updates on the work of internal audit including key findings, issues of concern and action in hand as a result of internal audit work
b) regular reports on the results of the QAIP
c) reports on instances where the internal audit function does not conform to the PSIAS and LGAN, considering whether the non-conformance is significant enough that it must be included in the AGS.
20.To consider the Assurance, Risk and Audit Manager’s annual report:
a) The statement of the level of conformance with the PSIAS and LGAN and the results of the QAIP that support the statement – these will indicate the reliability of the conclusions of internal audit.
b) The opinion on the overall adequacy and effectiveness of the council’s framework of governance, risk management and control together with the summary of the work supporting the opinion – these will assist the committee in reviewing the AGS.
21.To consider summaries of specific internal audit reports as requested. 22.To receive reports outlining the action taken where the Assurance, Risk
and Audit Manager has concluded that management has accepted a level of risk that may be unacceptable to the authority or there are concerns about progress with the implementation of agreed actions.
23.To contribute to the QAIP and in particular, to the external quality assessment of internal audit that takes place at least once every five years.
24.To consider a report on the effectiveness of internal audit to support the
AGS, where required to do so by the Accounts and Audit Regulations
25.To provide free and unfettered access to the audit committee chair for
the Assurance, Risk and Audit Manager, including the opportunity for a private meeting with the committee.
26.To support the independence of external audit through consideration of
the external auditor’s annual assessment of its independence and review of any issues raised by PSAA.
27.To consider the external auditor’s annual letter, relevant reports and the report to those charged with governance.
28.To consider specific reports as agreed with the external auditor.
29.To comment on the scope and depth of external audit work and to
ensure it gives value for money.
30.To commission work from internal and external audit.
31.To advise and recommend on the effectiveness of relationships
between external and internal audit and other inspection agencies or
32.To review the annual statement of accounts. Specifically, to consider
whether appropriate accounting policies have been followed and whether there are concerns arising from the financial statements or from the audit that need to be brought to the attention of the council.
33.To consider the external auditor’s report to those charged with
governance on issues arising from the audit of the accounts.
34.To report to those charged with governance on the committee’s findings, conclusions and recommendations concerning the adequacy and effectiveness of their governance, risk management and internal control frameworks, financial reporting arrangements, and internal and external audit functions.
35.To report to full council on a regular basis on the committee’s performance in relation to the terms of reference and the effectiveness of the committee in meeting its purpose.
36.To publish an annual report on the work of the committee.
Support officer: Gayle Roach. 01900 702502