Corporate Services department

1
Partnerships And 3rd Party Assurances Neil
Hunter
2
Aim of Session

• To discuss
• The System of Internal Audit
• Implications for Partnerships
• Partnerships the control environment
• Third Party Assurances

3
Some Drivers for 3PA

• Accounts and Audit Regulations 2006, Regulation 4
  - Relevant body should conduct a review at least
  once a year of its system of internal control
• Are partnerships/outsourced services part of the
  system of Internal Control?
• Accounts and Audit Regulations 2006, Regulation 6
  - Relevant body should conduct an annual review
  of how effective its internal audit systems are
• Code of Practice for IA in LG in the UK
• 1.2.1 Scope of IA remit includes the orgs entire
  control environment
• 10.4.2 (a) HOA annual report (timed for SIC) must
  include opinion on the adequacy effectiveness of
  control environment

4
(No Transcript)
5
More Drivers for 3PA?

• Key lines of enquiry for use of resources 2008
• 4.1 (manage business risk) level 3 - The risk
  management process specifically considers risks
  in relation to significant partnerships and
  provides for assurances to be obtained about the
  management of those risks.
• 4.2 (Sound ICE) level 2 - The Council has
  identified its significant partnerships and has
  appropriate governance arrangements in place for
  each of them.
• 4.2 level 4 - Governance arrangements with
  respect to partnerships are subject to regular
  review and updating and
• The Council obtains assurance on a risk basis of
  the viability of its significant
  contractors/partners business continuity plans.

6
And Finally..

• If we are agreed that Partnerships form part of
  the organisations internal control environment
  then the Annual Governance Statement must include
  those key partnerships

7
What is a partnership? Where may you need
Assurance?

• Audit Commission define as An agreement between
  two or more independent bodies to work
  collectively to achieve an objective
• Helpful?? Probably need to have an organisational
  scored toolkit - may include
• Does partnership take decisions on behalf of
  organisation
• Organisation contributes 100K or more?
• Specific Reference in Organisations corporate
  priorities
• Partnership manages a corporate risk

8
(No Transcript)
9
Areas where assurances may be required

• - Local Area Agreements
• Shared Services, PTA?
• Outsourced Services e.g. payroll
• Childrens Services
• ALMOs
• Voluntary Sector, e.g. Meals on Wheels, Homecare??

10
Audit Commission - Governing Partnerships

• Key Findings
• Local Partnerships improve peoples quality of
  life but
• Bring risks as well as opportunities
• Governance can be problematic
• May not deliver good value
• Need clear accountability between partners
• Key partnerships will score highly on a Corporate
  Risk Register (and a risk based audit plan)

11
Control Environment Questions

• Has the Organisation defined what a Partnership
  is?
• Does the Organisation have a central list of
  Partnerships?
• What formal policies does the Organisation have
  in place?
• Gateway/approval process?
• Option appraisal
• Business Case
• Responsibility for each Partnership
• Process to ensure Partnerships are relevant and
  support organisational objectives?
• How does your organisation monitor and actively
  manage performance of key partnerships?

12
Control Environment Questions

• How does your organisation monitor and actively
  manage performance of key partnerships?
• Is there a risk register of key partnerships?
• Business continuity
• Risk ownership
• Assurance that risks are being managed
• Is benefit realisation actually reviewed
  success/continuation of Partnership?
• All very obvious but.....
• How does your Organisation ensure?
• Appropriate governance arrangements are adopted
  by the Partner (and complied with)?

13
Possible Assurances

• Risk Based Assessment of key partnerships
  appropriate assurances!
• None take the risk
• Assurance on outcome monitoring controls PIs,
  Customer Outcomes (CAA)
• Assurance from appropriate Audit Committee or
  Governing Body
• Assurance from other appropriate audit body or
  review body internal and/or external audit?
• But need agreement for independent audit/open
  book reviews in key partnerships?
• CIPFA COP Compliant
• Your organisations own IA service

14
Possible monitoring issues

• Remains relevant, continues to support objectives
• Risk register
• Benefit realisation
• Performance management, PIs
• Are agreed payments linked to specified outputs?
• Are overhead costs appropriate?
• Customer satisfaction
• Audit arrangements (open book review?)

15
Risks

• Organisation not aware of key partnerships
• Partner resistance to giving assurance
• Partners auditors resistance to giving adequate
  assurance
• Review body not equipped to CIPFA Code of
  Practice standard
• Audit Committee or Governing Body not adequately
  trained
• Organisations monitoring procedures not sound or
  not working in practice
• Cost of control?? Assurance should add value
  and not (just) tick a box

16
And Finally

• Any Questions?

17
Reference Material

• Stronger and Prosperous Communities (the local
  government white paper DCLG)
• Local Area Agreements, Audit Guide, Audit
  Commission
• Governing Partnerships Audit Commission
• Code of Practice for Internal Audit in Local
  Government in the UK CIPFA
• Good Governance in Local Government
  (CIPFA/SOLACE)

18
(No Transcript)