Local Authority Internal Audit Virtual Forum

21 April 2021  


Please note:

  • All Institute responses are boxed and highlighted blue
  • Where the Chair comments in that capacity, the box is highlighted in yellow
  • For confidentiality, the identities of all delegates/attendees are anonymised 

CEO welcome

Thank you for joining us for our session on ESG - covering environment, social and governance matters. Our speakers today are Paul Callum, Consultant for RSM (a retired Detective Superintendent) and Steven Ford, Head of Environmental Growth, Climate Change and Heritage for Cornwall County Council.

We are also joined by Liz Sandwith, our Chief Professional Practices Advisor, Derek Jamieson, our Regional Director, and our chair Piyush Fatania, Head of Audit, Risk, Assurance and Insurance Services for Gloucestershire County Council, and member of the Institute’s Council.


Chair's opening comments

Welcome to our Local Authority Internal Audit Forum.

Internal audit is so much more than ‘tick and bash.’ Today’s topic demonstrates the playground for the modern internal auditor. A new, emerging and evolving area where we can add value with our insights and professional skills.


Key takeaways

Paul Callum, RSM

  • The latest World Economic Forum Global Risk Report warns of climate change, social unrest, cyber attacks and exacerbated inequality. The timescale for addressing these global risks is reducing.
  • Understanding ESG can be a challenge in itself. CSR, sustainability, UN Sustainable Development Goals, etc.
  • ESG is widely used in the investment sector – the only FTSE organisations to show share value growth in the last year are those with strong ESG credentials. Across all sectors this is important due to the link to pension funds.
  • Governance over-arches the whole ESG agenda – think about a trinity of risk management ‘risk objectives, risk appetite and risk strategy.‘ They're all interconnected.
  • Social is often the poor relation within ESG – but ignore it at your peril.
  • Typically, this includes health and safety, product safety, employment conditions, diversity and inclusion, and community engagement.
  • Good policies and procedures on these topics should be a staple of all local authorities.
  • Social is more than this. Society and the business world are starting to confront major issues around inequity, unfairness and discrimination (#MeToo, Black Lives Matter, etc).
  • As barriers blur between work, home and society, organisations, LAs are expected to understand what the ‘S’ looks like within their organisations. For example, a predominantly male workforce will in all probability include domestic abusers and sex offenders – to what extent does an organisation have a duty of care and responsibility to the wider society through training, awareness and support to change cultures and perspectives.
  • What does the ‘S’ look like in your organisation?
  • Think back to the risk management trinity and take a long-term view to improvement.
  • Each LA risk profile for ESG will be unique.
  • Modern Slavery is very real in the UK, exploiting not just global supply chains but the welfare system within LAs.
  • Compliance with section 54 is a significant risk for LAs and other public sector organisations.
  • Modern slavery statements must be more than a generic template to be of value.
  • All public sector suppliers should complete the MSAT (modern slavery assessment tool). It is important to bear in mind that it is a self-assessment with no oversight. What due diligence is undertaken within your LA?

Steven Ford, Cornwall County Council

  • The climate emergency will dwarf the pandemic challenges we have been facing.
  • We are already seeing the effects of climate change here in the UK.
  • Identifying what we can do as an organisation, our place-based focus within our LA, is only one part of the agenda – it is important to also identify what we can influence and that is a very broad agenda.
  • In Cornwall, we have three strategic strands that we bring together: Climate emergency, ecological emergency and climate adaption.
  • The LA strategy is about embedding action based on Katy Raworth's notion of  "doughnut" economics.
  • Monetising the carbon reduction strategy has created a powerful message.
  • The strategy is data led and uses data in reporting to create accountability and drive action.
  • Governance links all the way from the LA (place-based) up to national cabinet level.
  • Action also focuses on engaging with the community to deliver targets and lasting change.
  • Joint working is in place to drive innovation and change within all the major carbon usage sectors.

This is not a challenge where we can put our head in the sand – how we deal with this will be a defining matter for the next generation.

Click here for Steven’s inspirational slides about how your LA can start achieving the UK's accelerated climate targets.


Chair's closing comments

These are meaty issues. It is the modern world of auditing and we should all be thinking about the services we are providing and whether have the skills and understanding to undertake audit reviews of these and other challenging topics. Often dealing with innovative solutions.


Institute's comments

The shortlist has been announced for our annual Audit & Risk Awards. Registration is free. 

Our Ireland region's event on 17 June, ‘Cost containment in the public sector’ is free for members and features speakers from local authorities, government and the NHS.

Our next LA Forum meeting is on 26 May and will look at the HIA-audit committee chair relationship. We will focus on the role that internal audit can and should play in the support of effective governance, with both parties sharing their perspectives. If anyone would like to share their experience of how their relationship in this regard has perhaps been impacted over the last 13 months, please reach out to me.

Thank you for attending.

As always, if you have any ideas or suggestions for what we might include in future agendas, please contact Liz Sandwith on email at: liz.sandwith@iia.org.uk


Q&A and chat box comments 

• I've done one review of Climate Action for XXX. It was a bit of a challenge to get buy-in to do the audit, with stakeholders saying that they needed more time to make progress before we looked at it (I think they would have liked 20 years...). The review was not all that I wanted but covered strategy development. It was quite generic but I will be doing some assurance work each year, starting with strategy implementation. Other reviews will include looking at some of the various projects within the climate action programme. We have a strategic risk around climate – I used this as a primary justification for doing the audit. If the organisation recognised this as a key risk, then how could we not provide assurance.

• At XXX, we are just scoping an audit and commencing fieldwork soon in this area – looking at strategies and governance in place.

• We are going to start scoping a review. It will probably focus on the data, looking at the evidence to back up what the LA is reporting against its targets and in external reporting.

• Our LA has taken the decision that climate change is a risk ‘to watch’ rather than to put it on the risk register.