Agenda item

To provide Members with information about the new Global Internal Audit Standards and Application Note: Global Internal Audit Standards in the UK Public Sector due to come into effect in 2025, and a consultation being conducted by CIPFA in connection with a new Code of Practice for the Governance of Internal Audit in UK Local Government.

Discussion:

The Internal Audit Manager introduced the report, she highlighted in January 2024 the Institute of Internal Auditors (IIA) published new global internal audit standards which were scheduled to come into effect in January 2025. In conjunction with this, the IIA have also introduced Topical Requirements to ensure a consistent methodology is used when undertaking audits of certain functions.

In the UK Public Sector the Relevant Internal Audit Standard Setters (RIASS) agreed to use these new global standards and have developed an application note: Global Internal Audit Standards in the UK Public Sector which contained additional interpretations and requirements which the Council will need to comply with from 1 April 2025.

The Chartered Institute for Public Finance and Accountancy (CIPFA) as the RIASS for local government, were undertaking a consultation on a planned Code of Practice for the Governance of Internal Audit in UK Local Government’ to support local authorities and it was proposed that the Chief Audit Executive would provide a response on behalf of the Council.

The Internal Audit Manager added that the Internal Audit team were undertaking a self-assessment to identify and address any gaps in practice related to the new requirements set out in the global internal audit standards and application note. In addition domain three of the new standards specifically refers to Governing and the Internal Audit Function and this would provide new requirements for the Audit Committee acting as the Board.

The following issues were discussed:

Roles – in response to a request to clarify the roles outlined in the report, the Internal Audit Manager stated that the role of Chief Audit Executive was undertaken by the Head of Internal Audit and Counter Fraud at Medway Council, senior management referred to the Corporate Management Team (CMT) and the Audit Committee was the Board.

New standards – it was asked how closely current practice reflected the new standards. The Internal Audit Manager commented that she would be able to provide more detail once the self-assessment had been undertaken; however, the indications were that no fundamental changes in procedures or practice were required. Some administrative changes would be necessary, and training would be provided as needed.

Resourcing – in response to a question around whether additional resources would be required to comply with the new standards, the Chief Finance Officer explained that in reviewing budgets for the forthcoming year the Internal Audit Team has not requested additional resources to undertake the changes required by the new standards.  In addition, the as part of Annual Governance Statement the Chief Audit Executive is required each year to confirm that he had enough resources to undertake the role and he had not indicated this would be an issue of concern.

The Internal Audit Manager added that the majority of day to day processes would remain the same and there would not be significant changes required. There would need to be a review of the of the Charter and Quality Assurance & Improvement Programme and the Internal Audit Strategy, but this would be for management rather than Internal Auditors.

Decision:

The Committee noted the information regarding the changes to the Internal Audit Standards and the associated requirements.