Waverley Borough Council Committee System - Committee Document
Meeting of the Executive held on 06/04/2004
Internal Audit Charter
Internal Audit Charter
This Charter sets out the purpose, authority and principal responsibilities of the Internal Audit service at Waverley Borough Council. It has been prepared in such a way that the requirements of the Code of Practice for Internal Audit in Local Government in the United Kingdom are embodied within the service’s operations.
Definition of Internal Audit
Internal Audit is an assurance function that primarily provides an independent and objective opinion to Waverley on the control environment comprising risk management, control and governance by evaluating its effectiveness in achieving the organisation’s objectives. It objectively examines, evaluates and reports on the adequacy of the control, environment as a contribution to the proper, economic, effective and efficient use of resources in the pursuit of the Council’s aims and objectives.
Objectives of Internal Audit
The main objectives of internal audit are to:-
ensure that the authority’s policies and procedures are appropriate, applied, complied with and reviewed to meet change;
provide management and staff with assurance or otherwise as to how well systems of control and risk management are working;
provide management and staff with advice and support when requested in the development of systems and risk management and in dealing with matters that arise in the course of Council activities.
In addition, Internal Audit:-
provides support to the Director of Finance in the discharge of his statutory responsibilities;
liaises with the Council’s external auditors and any other review organisations to ensure efforts are co-ordinated and maximise mutual reliance;
appraise the measures taken by Waverley to detect and prevent fraud and to investigate reported incidents of suspect financial irregularity involving Council members, partners, officers and clients.
It is not the responsibility of Internal Audit to control the risks faced by Waverley, to establish and maintain systems of internal control or to ensure that fraud and irregularity are detected. Internal Audit exists to give assurance to management on how well management’s controls are working and to make appropriate recommendations.
Scope of Internal Audit
Internal Audit work will encompass all activities undertaken by Waverley’s own members and staff, of its contractors and partner organisations, its customers and clients, both current and former.
Internal Audit will therefore have access to all Council members and staff, to its contractors and partner organisations (through contractual and informal means), to the Council’s external auditors, external review bodies and police and other external agencies as appropriate. This right of access supplements the powers bestowed upon Internal Audit by the Council’s Financial Regulations and the purpose of this access is to obtain such information, evidence and explanations as necessary to fulfil its responsibilities.
Independence and objectivity
The Director of Finance directly manages the Audit Manager. Unrestricted access by Internal Audit to employees, members and partners of the Council will enable its independence to be maintained, and will enable a proper assessment of the systems of internal control to be made. Internal Audit has the right to report to management and members in its own right and therefore enables full reporting of the assessment of internal control.
Internal Audit is independent of the activities it audits. The Internal Audit service will seek to maintain its independence at all times in order that it maintains its ability to provide an independent appraisal function. Where this is not possible, whether because the Internal Audit service has been or performs a role in any systems, or because Internal Audit personnel have had responsibility in any shape or form for the delivery of a service or design of a system of control, then the Audit Manager will be advised by the relevant Internal Audit staff and declare the potential for a conflict of interest.
Where the independence of the Internal Audit is impaired in such a way, the Audit Manager will ensure that the relevant persons are made aware and that where members of the Internal Audit staff are performing part of a system, will ensure that it is known that they are not performing as internal auditors in those circumstances and make appropriate recommendations to achieve a truly independent view.
The Audit Manager will report at least annually upon the achievement of Internal Audit plans, achievements, progress on the implementation of recommendations, audit resourcing issues, arrangements for co-operation between the Internal Audit service and the external auditor (and other external review bodies) and an annual report to those charged with governance within Waverley.
In addition, appropriate performance indicator information will be reported and published as required by the Director of Finance.
The work of Internal Audit is assessed annually by the external auditor and appropriate comments are contained within the annual Management Letter.
The Internal Audit Section will strive to work with management in the resolution of any matters arising from audit reviews, fraud and irregularity investigations, requested support and advice work and any other project in which Internal Audit is involved.
Efforts will be made to ensure there is adequate liaison with the external auditor and other external review bodies and to ensure the potential for mutual reliance (including use of each other’s work) is maximised.
Staffing, training and development
Waverley will ensure that its internal auditors are equipped with the necessary skills and knowledge to undertake their duties. Training needs will be assessed and appropriate training arranged to meet needs. At times when other skills or specialisms are required to fulfil the Audit Plan, the Audit Manager will address this with the Director of Finance in order to arrange for the provision of these skills.
Planning and management of audit reviews and reporting
The Audit Manager will prepare strategic plans in accordance with the Audit Strategy that set out the work of the Internal Audit service over a period of three to five years. This plan is reviewed annually and relevant changes made in the light of changing needs and risks.
From the strategic plans, the Audit Manager will develop an operational plan covering a shorter period. This will be reviewed in the light of audit findings, changes in the risks faced by the Council and requests received for advice and support. Amendments will be made to the plan as deemed to be appropriate by the Audit Manager. Therefore, the plans will be regarded as flexible rather than a fixed expression of audit policy. The required planning and monitoring arrangements will be implemented to enable reports to be made to those charged with governance.
Draft reports will be discussed with relevant managers prior to finalisation, so as to ensure factual accuracy and that recommendations are relevant and appropriately constructed. Final reports and associated action plans will then be issued to the relevant Chief Officer and senior staff and copied to the Chief Executive. Follow-up review of the implementation of recommendations will be made and progress will be reported upon to those charged with governance.
Due professional care and quality assurance
Audit staff members will take due care in their work, adopt an objective attitude free from prejudice and bias, declare any interests, decline offers of gifts or hospitality, make fair conclusions based on all the available reliable evidence, maintain confidentiality, be alert to signs of wrongdoing and the circumstances where there is the possibility that wrongdoing could occur.
The Audit Manager will implement appropriate measures to ensure the evidence found supports the draft audit report and its conclusions and that recommendations are appropriate. Application of standard audit procedures, practices and standards will also be verified.