To consider the presentation.

The Panel received a presentation from KPMG on the new arrangement and options for the appointment of Auditors for the audit of the 2018/19 accounts.  This was accompanied by a report that set out procurement options, that included the option of accepting an offer from the Public Sector Audit Appointments (PSAA) board which required a recommendation from the Panel to Council.

KPMG’s presentation showed the four options before the Panel with pros and cons for each; the four options were:

·         Roll forward incumbent - a short term option if you wanted to continue with your current auditor.

·         Stand-alone tender - Tendering for your audit service as a stand-alone contract.

·         Combined tender - Collaborative procurement with one or more other authorities.

·         Sector led - Opting into national collaborative procurement by a third party.

The Panel were informed that the key question was how much autonomy as a local authority you wanted.  If the Panel wished to recommend that the Council accepts the offer from PSAA then there was a deadline of 8^th March 2017.

The Chairman reported that appointing PSAA would decrease the authorities choice but would mean that national fully qualified auditors would be appointed. The fees would be lower and no risk associated with this decision, however the perception would be we have no control. KPMG informed that with either option only a small selection of accredited auditors would be chosen. 

Cllr C Rayner questioned what reassurances would we get  with the appointment of the external auditors and with the delivering differently programme questioned if the authority was spending a sufficient amount for audit work during a period of change.  KPMG informed that pages 11 and 12 of the presentation showed the key considerations for appointing auditors.  With regards to price it said that the fees must be sufficient to provide a good quality service taking account of the scale, nature and risk profile of your organisation.

(Cllr Dr L Evans joined the meeting)

Councillor Rayner mentioned that going with the reports recommendation to appoint PSAA did not give sufficient time to consider the other options.  He felt that we should stay with KPMG whilst looking at the other options with a decision being made in a years time.

The Chairman asked that if RBWM decided not to opt for PSAA before March 2017 would there be an opportunity to join later.  KPMG informed the Panel that if RBWM opted in before March 2017 then this would be for five years.  With regards to joining after March they were not aware of any reasons why this would not be possible.

The Chairman questioned what the benefits of not appointing PSAA would be and Cllr Rayner said it would give the Panel time to do due diligence prior to being locked into a five year contract.

The Chairman also asked that as the authority was going to be about 50% smaller due to delivering differently would the audit fees reduce.  The Panel were informed that it was expected that fees would be based on historical data and would increase by inflation.  It was not known what would happen to fees when an authority’s size changed.

Cllr Saunders reported that as going trough our own tender process seemed to be one of the less favourable options we were left with going with the low risk option of using PSAA, which other Councils were choosing, and thus the question was why should we do anything differently.  The other option would be to roll forward with our current auditors. 

Cllr Saunders mentioned that although officers and himself, as Lead Member, were recommending the default option of joining PSAA it was important to remember that we may be offered new auditors which from experience was a difficult first year as both parties formed an understanding.  An effective audit needed to consist of intelligence, integrity and a good  relationship.  The question was do we go down the path of least resistance or stay with our current auditors who we have a good relationship. 

Cllr Rayner recommended that we stay with our current auditors for at least one more year.

The Chairman asked how many years we could stay with our current auditors and KPMG replied that the Government had not set such a timescale but they would not recommend more then three years. 

Councillors Smith and Dr L Evans also recommended that we stay with our current auditors as a preferred option.

The Head of Finance and Deputy Director of Corporate and Community Services informed the Panel that there may still need to be a procurement exercise to appoint our current auditors and questioned if we would still need a separate audit panel.  KPMG replied that they would expect that a separate independent audit panel would still be required.

The Strategic Director of Corporate and Community Services said that as the Panel’s decision related to the appointment of external auditors with the authorities current auditors being present that the discuss and decision should be taken under Part II – Private meeting.