Mutual inspiration: how collaboration can help internal audit in local authorities

High inflation and a cost-of-living crisis pose a double threat to local authorities – more people need their services, just when their own budgets are most stretched and services cost more to provide. It is hardly surprising that 2024 has already seen councils across the country struggling to remain solvent. Their difficulties lead to hard decisions that have real impacts on
peoples’ lives.

This makes internal audit’s role more important than ever. The more internal auditors can identify key risks and provide assurance and insights that enable better decisions, the more critical services can be preserved.

One way to do this is to collaborate with peers in other councils and local authorities. Shared resources and mutual support can help internal auditors to tackle issues that would otherwise require extra resources or skills.

We asked three leaders in local authority internal audit functions from the South West of England to explain how they work together formally and informally to maximise their impact and help each other to deal with increasing pressures.

Tony Rose is Head of Devon Audit Partnership, Holly Sykes is Head of Audit and Electoral Services (Chief Internal Auditor) at Cornwall Council and Andy Cox is Head of Audit and Assurance at One West (serving Bath and North East Somerset Council).

How do you collaborate?

Tony Rose: We started a partnership with One West several years ago and this has become much closer in the past few years, the relationship with Cornwall Council is more recent. These partnerships give us a chance to discuss common challenges and support each other and it’s been getting ever more useful,  I now find it essential.

We have around 45 staff and are delivering a greater variety of work for even more clients – for example, work on investigations, risk management and counter-fraud as well as internal audit. It’s vital to be able to talk to people who have experience in areas that are newer to us. Holly’s electoral services experience, for instance, can be invaluable when we look at local election processes for our partners.

We could all plug away within our own teams, but it’s far more useful to talk to others in the region who are facing similar challenges, for example, around specialist areas such as pensions and fraud.

Andy Cox: We have worked with Devon Audit Partnership since 2018, and in 2023 we formalised our Strategic Partnership through  a formal agreement to share resources, knowledge and expertise.

This removes ambiguity and I’ve found that it’s been helpful to explain and discuss the partnership with the audit committee to demonstrate among
other things what we’re doing to increase our capacity and resources.

Holly Sykes: Leading an internal audit team can be isolating, so it’s incredibly helpful to have a group of people to talk to who understand.

We all collaborate in the West of England Chief Auditors Group – along with others, including the Heads of Internal Audit at South Gloucestershire Council and Bristol Council. For me, this experience has been brilliant. It’s one of the best forums for what I do because it’s totally relevant. We all work in the same space, which means the discussions are targeted.

It’s important that the conversation is truly free and open. It’s about trusted collaboration, so we need frank discussions. And sometimes there are overlaps where we are looking at very similar clients.

Andy Cox: It’s not the same as merging into one organisation or one team dominating the others. All those who take part have chosen to keep their independence, but this is a way of sharing and exploring ideas as you would in a larger team with more resources and experiences.

Tony Rose: For example, we might highlight limited assurance reports, setting the scene by saying:  “We thought there was an issue here, and this is what we did – what do you think and what would you have done here?” We also discuss the common challenges we face, such as skills shortages and staffing limitations.  We’re all in the same boat, but we often have different solutions.

The group discussed the new Global Internal Audit Standards and what they mean for us. Collaborating meant that we could allocate different parts of the documents to different teams and then come back together to explain what we think, as well as then learn from the perspective of others. No one team has to do it all and we benefit from more opinions and insights.

What challenges can collaboration help?

Andy Cox: We’ve been having particular challenges around recruitment because there is lots of competition for skilled people in our region. This hasn’t been such an acute issue for Tony or Holly. So we’ve “borrowed” resources from them when necessary, for example, a specialist pension fund auditor. We pay for their time, but we’ve also provided IT audit management to assist Tony. It’s a two way partnership.

Holly Sykes: It helps that our salary scales are closely aligned and, since the lockdowns, much of our work is now done remotely, so asking people to support work in another team over longer distances is not a problem.

That support is often in the form of sharing ideas, and themes for audit work, which can ensure the context of an audit area is more widely understood.

Tony Rose: It also opens doors for people in the team to get promotion or new experience elsewhere. Much as I hate to see good people leave us, it can offer them progression opportunities and it also means that we don’t completely lose them, because we can ask for them back temporarily if necessary. Again, it’s about the value of collaborating.

How is your work changing?

Andy Cox: The financial challenges we face are not new, but increased demand for children’s and adult services, homelessness and housing all have a knock-on effect. Councils are therefore looking at different sources of money and ways to save and this affects our work. For example, there are grants being funnelled through the West of England Combined Authority, so we’re doing lots more assurance work on grants.

In addition to the increase in social care demand and costs, services contracted out are being brought back in-house, so we’re supporting this work and other programmes of work to save money. Far more of our work is now on these large-scale transformative projects, which is a change for us and makes collaborative discussions even more valuable.

Tony Rose: These constant large projects also make our work harder, our clients have less time for us, so we need to manage our skills and knowledge to operate as flexibly as possible. We must be in the right place at the right time to meet emerging needs. Everything we do has to be done faster, so we need to be able to allocate the right people to the right projects quickly while maintaining the quality we expect in our work.

Andy Cox: Flexibility is key. When I started my career a three-year internal audit plan was normal. Then we moved to one-year and then to rolling plans.

Holly Sykes: We also need to educate our audit committees about the need for changes such as rolling plans. They are politicians and can change after an election, so we need to communicate and educate and help new councillors to understand how we are planning more flexibly and why this matters to them.

This is always received very well and the members take the opportunity to learn about the work delivered by internal audit and how it supports the assurance framework of the Council.

Andy Cox: It can be hard for audit committees – it’s a cultural change. It’s much easier for them to monitor an audit review plan that is fixed at the beginning of the year.

Tony Rose: I say to the audit committees: “If this plan (in whatever format it takes) looks the same in six months’ time, then something’s gone wrong.” We need to educate and inform new councillors about what we do because it’s not easy to recognise when you are new to the area and it is a vital part of assurance in any organisation.

Holly Sykes: It’s all about relationship management. Before I worked for a local authority I didn’t appreciate how challenging the need to build relationships can be – but it’s also hugely rewarding. When a new audit committee starts to ask you challenging questions that show they really understand and appreciate what you do, it’s great.

Tony Rose: Another common issue for all local authority internal audit teams is the better use of data. We are all doing it, but slightly differently and some teams are ahead of others. It’s great if we can learn from each other, but it takes confidence to do something new, and having people you trust who can share their experience is vital. You can reassure audit committees by saying “this is what others are doing and it works this way and so this is how we’re going approach it”.

How do you expect your work to develop in the future?

Holly Sykes: In the future all local authorities and other public sector organisations are going to have to take on more risk and we will have a significant role to play. Demand for our services is already outstripping supply, which is positive, but we have to be very clever in the delivery. It means that we feel needed and know our function has a positive impact on the services councils provide.

Andy Cox: One common challenge is that we all need internal auditors with the experience and skills to take on more complex and new audit areas, and demand in these areas is increasing fast.

Tony Rose: All councils and local authorities are asking how they can do things differently to be more cost effective. We can bring an independent view to this, but anyone coming into the profession now must expect to be challenged in new ways . It’s not just about delivering our audit work and writing reports, we need people with courage and vision as well.

This is where groups and collaborations can be so vital as we can talk through issues and ask for ideas and possible solutions. I’ve been blown away by the constructive support I’ve received from other internal audit leaders and can’t thank them enough for this.

Interviewees in a nutshell

Andy Cox manages the internal audit service for Bath and North East Somerset Council and other clients of One West. One West began in 2016, following a two-year informal partnership between  Bath and North East Somerset Council and North Somerset Council. Since then, One West has grown and expanded its range of professional assurance services provided to local government, schools and academies and charities primarily across South
West England.

Holly Sykes is Head of Internal Audit at Cornwall Council and also leads its Electoral Services. She won the Audit & Risk Award for  Inspirational Leader in 2022. She also manages insurance and the council’s fraud investigations team. Her remit includes not only Cornwall Council, but also the Isles of Scilly Council, multi-academy trusts, and a group of companies owned by Cornwall Council responsible for managing an airport, road maintenance, facilities provision and a housing trust.

Tony Rose is Head of Devon Audit Partnership, soon to be Devon Assurance Partnership (DAP). Formed in 2009 by Plymouth, Devon and Torbay councils, DAP is celebrating 15 years in 2024. The partnership has grown and now incorporates North Devon, Mid-Devon, Torridge, South Hams and West Devon Councils along with Devon and Somerset Fire and Rescue.  DAP  also provides its assurance services to various bodies such as town councils, academy trusts, charities and the Government of Jersey.

This article was published in May 2024.