Agenda item

(Governance & Development Management Portfolio Holder) To consider the attached report (C-039-2016/17).

(1)        That the creation of a Shared Internal Audit Service with effect from 1 April 2017 (“the Commencement Date”), or such other date as agreed between Epping Forest District Council, Harlow District Council and Broxbourne Borough Council on the basis set out in the report, be approved;

(2)        That the appointment of Broxbourne Borough Council as host authority be approved;

(3)        That the Council entering into an Administrative Collaboration Agreement under Section 101 of the Local Government Act 1972 with the partner authorities be approved;

(4)        That authority be delegated to the Director of Governance, in consultation with the Portfolio Holder for Governance and Development Management, to agree the terms of the Administrative Collaboration Agreement which would include the provision to allow other councils to join the Shared Service in the future; and

(5)        That the transfer of staff to Broxbourne Borough Council as Host Authority on the terms set put in the Administrative Collaboration Agreement from the Commencement Date be agreed.

The Portfolio Holder for Governance & Development Management presented a report on the Internal Audit Shared Service.

The Portfolio Holder stated that, due to the success of the current internal audit arrangements with Broxbourne Borough and Harlow District Councils, approval was being sought to form an Internal Audit shared service between the three councils, with Broxbourne Borough Council being the Host Authority. The delivery of the shared service would be via a Delegated Function Model. Under this option, one Council (the Host Authority) undertook the functions of another Council under delegated powers as set out in an Administrative Collaboration Agreement entered into under Section 101 of the Local Government Act 1972. The Host Authority would employ all staff and the current Internal Audit Team would transfer to Broxbourne Borough Council under TUPE arrangements. The main benefits from sharing Internal Audit services would be to improve business resilience and produce efficiency savings. The Audit and Governance Committee had been made aware of the shared service concept when it considered the Internal Audit Strategy and Plan for 2016/17 at its meeting held on 31 March 2016.

The Cabinet welcomed the report, and the anticipated benefits and efficiency savings from the proposal.

Decision:

(1)        That the creation of a Shared Internal Audit Service with effect from 1 April 2017 (“the Commencement Date”), or such other date as agreed between Epping Forest District Council, Harlow District Council and Broxbourne Borough Council on the basis set out in the report, be approved;

(2)        That the appointment of Broxbourne Borough Council as host authority be approved;

(3)        That the Council entering into an Administrative Collaboration Agreement under Section 101 of the Local Government Act 1972 with the partner authorities be approved;

(4)        That authority be delegated to the Director of Governance, in consultation with the Portfolio Holder for Governance and Development Management, to agree the terms of the Administrative Collaboration Agreement which would include the provision to allow other councils to join the Shared Service in the future; and

(5)        That the transfer of staff to Broxbourne Borough Council as Host Authority on the terms set put in the Administrative Collaboration Agreement from the Commencement Date be agreed.

Reasons for Decision:

The Shared Internal Audit Service was expected to improve business resilience, provide career opportunities for staff, strengthen the independence of the Internal Audit function and produce efficiency savings.

Other Options Considered and Rejected:

To continue with the current arrangements; however, the Internal Audit units at all three Councils had limited capacity to respond to peaks in demand and staff absences.

To outsource the Internal Audit function; however, an in-house team added value through attendance at project and business groups, and offering advice.

To join another partnership; however, this would result in the loss of the excellent working relationships developed with Harlow District and Broxbourne Borough Councils, and a loss of control of the Internal Audit provision.

To set up an arms-length Local Authority Trading Company (LATC) with Harlow District and Broxbourne Borough Councils; however, set up and on-going costs would be prohibitive in the short term.