The Lichfield District Council Audit Committee met on 11 September 2025, and among the topics discussed, members recommended to the Cabinet that the future delivery of Internal Audit should be through an outsource type arrangement. The committee also reviewed the risk management update and approved updates to the council's risk management policy, and endorsed the contents of the Counter Fraud update report.

Internal Audit Delivery Options

The committee recommended to the cabinet that future delivery of internal audit should be through an outsource type arrangement, as the existing shared service agreement with Tamworth Borough Council is nearing its expiration. Rebecca Neill, Interim Audit Manager, presented a report outlining the options.

Members raised concerns about the cost implications of outsourcing, but Ms Neill explained that delivery would be within the existing budget. Informal talks with the current co-source provider indicated that extending co-source to include management would be affordable, although a compliant procurement open to the market would be required.

Members also questioned whether Local Government Reorganisation (LGR) might resolve the lack of available audit professionals. Ms Neill agreed that LGR would reduce demand for multiple heads of audit, but emphasised the continued need for auditors. She stressed the flexibility of the recommended outsourced arrangement, which allows switching on and off of provision, meeting moral obligations associated with recruiting internal teams ahead of LGR uncertainty.

Risk Management Update

The committee reviewed the risk management update and approved the update to the council's risk management policy. Rebecca Neill, Interim Audit Manager, presented the routine risk management update, highlighting the new application and incorporation of the council's risk appetite statement, with a scoring range and assessment of whether current risks are inside or outside appetite. She noted that SR7, the threat to the council's ICT systems of a cyberattack, was deemed the only risk currently outside the appetite score, validating recent internal audit reports and external experience.

Anthony Thomas, Director - Finance, Regulation and Enforcement & Section 151 Officer, explained that the elevated risk, SR8, concerning government changes to planning policy, is likely due to the sheer volume of changes and inherent uncertainties, specifically citing the housing target set for the council and the 5-year land supply¹.

Members also expressed concern about losing control over the Birmingham Road Site (BRS) space and income due to LGR, given large promises made regarding that income. Mr Thomas agreed that this was part of the factor driving the current approach. Ms Neill agreed to introduce the implications of LGR on the BRS site's income and timelines as a risk to SR1 (Risks arising from Local Government Re-organisation) for Leadership Team consideration.

Internal Audit Counter Fraud Update Report

The committee endorsed the contents of the Internal Audit Counter Fraud Update Report. The report provided an update on counter fraud measures, including the National Fraud Initiative (NFI).²

As reported in the 2024/25 Annual Internal Audit Report, two allegations of potential fraud were received during the year in relation to a Covid grant claim and council tax. Both were investigated and no further action was required. No whistleblowing reports were received during the year 2024/25.

The committee agreed that the review cycle for all fraud related policies would be four years with minor amendments delegated to the Audit Manager (Shared Service)/Principal Auditor to undertake. As the Audit Committee approved a recommendation to Cabinet for change in future service delivery of Internal Audit, the preferred option being an extension of the co-source arrangements to include Head of Internal Audit functions, it is suggested that this delegation is transferred to the Director - Finance, Regulation and Enforcement (Section 151).

All fraud related policies have also been amended in line with the proposed new arrangements:

• Counter Fraud and Corruption Policy Statement, Strategy & Guidance Notes
• Confidential Reporting (Whistleblowing) Policy
• Anti-Money Laundering Policy
• Prevention of the Facilitation of Tax Evasion Policy

Open Internal Audit Recommendations

The committee reviewed the update on the status of open internal audit recommendations as at 31 July 2025, as detailed in the Open Internal Audit Recommendations document.

The committee applied previously approved criteria for inviting managers to provide a briefing on the actions they are taking to manage the implementation of their assigned recommendations. Based on the data, the Director of Finance (LWMTS) was invited to the committee to discuss their open actions.

Review of Financial Procedure Rules

The committee provided views on the revised Financial Procedure Rules and recommended to the council to approve the revised rules, as detailed in the Financial Procedures Rules Report.

The Financial Procedure Rules set out the financial governance arrangements for the council and apply to every member and officer of the council, and to anyone acting on the council's behalf, including LWMTS employees. The rules are based on the model Financial Procedure Rules created by the Chartered Institute of Public Finance and Accountancy (CIPFA).³

Following an internal audit on inventories in 2025, it was recommended that the Financial Procedure Rules were updated to reflect comments made by the internal auditors.

Audit Committee Skills Audit

The committee considered the recommended tool for conducting their annual skills audit, as detailed in the Audi Committee Skills Audit document.

The Chartered Institute of Public Finance and Accountancy (CIPFA) offers comprehensive guidance tailored to audit committees in local government and the police. Their 2022 edition of Audit Committees: Practical Guidance for Local Authorities and Police includes a knowledge and skills framework within its appendices and effectiveness evaluation. It is recommended that the committee adopt the above as their recommended model and that all committee members use this to complete their annual skills audit, which will inform the Audit Committee training programme.

Work Programme

The committee reviewed the work programme for the municipal year, as detailed in the Audit Work Programme 2025-26 V5 document.