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Minutes of the 255th Board Meeting 
Thursday 13 December 2007
Boardroom, 1st Floor Millbank Tower 
9.30am to 12.20pm
 
 
Commissioners present: 
Staff in attendance: 
Michael O’Higgins (Chairman) 
Gareth Davies 
Steve Bundred (Chief Executive) 
Tracey Dennison 
Bharat Shah (Deputy Chairman) 
Martin Evans 
Jim Coulter 
Jenny Grey 
Dr. Jennifer Dixon 
Roger Hamilton 
Sheila Drew Smith 
Ian Hickman (for part) 
Cllr. Stephen Houghton 
Julie Hope 
Cllr. Peter Jones (for part) 
Andy McKeon 
Sir Thomas Legg 
Siobhan O’Donoghue (minutes) 
Dame Denise Platt 
Jo Parry (for part) 
Professor Peter Smith (for part) 
Dave Stewart 
Jenny Watson 
Marcine Waterman (for part) 
Cllr. Chris White 
Jo Whitehead 
Peter Wilkinson 
 
 
Welcome, Apologies and Announcements 
 
1. 
The Chairman welcomed the Board to the meeting and the following announcements 
were made: 
a. 
The former Commissioner, Iris Tarry, had died recently.  MDs paid tribute to her 
time at the Commission, and the Board expressed their condolences.  The Chief 
Executive would write to her family. 
b. 
Apologies had been received from Commissioners Brian Pomeroy and Dr Raj 
Rajagopal. 
c. 
Jo Whitehead, RD, Southern Region was welcomed to the meeting. 
d. 
The Local Government Minister, John Healey, had been invited to speak at the 
Board meeting but had been unable to attend due to illness. 
e. 
The previous evening’s Board dinner had been enjoyable and useful.  The issues 
around the efficiency agenda and the timeliness of studies that were raised would 
be taken forward by staff. 
f. 
In the absence of the Audit Committee Chair, Sheila Drew Smith drew the Board’s 
attention to the main issues that were discussed at the previous day’s Audit 
Committee meeting: the formal minutes would be included with the papers for the 
January 2008 Board meeting. 
 
Minutes of the last Meeting and Away day – 8 November 2007 
 
2. 
The minutes of the 254th Board Meeting were approved as a correct record. 
 
3. 
The Board approved the minutes of the last Meeting as a correct record. 
 
Report 
of 
the 
Chief 
Executive 
       CP 
95-07 
 
4. 
National Audit Office and NLGN White Paper:  The Chairman and Chief Executive 
would be meeting with John Tiner, who was leading the Public Accounts Commission’s 
review of Corporate Governance of the National Audit Office, on 20 December 2007.  
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This review, however, had a relatively narrow focus and it was likely that HM Treasury 
would want a more fundamental and widespread rethink of current public audit 
arrangements.  In light of this, it was felt to be a timely opportunity for Board members 
to express their views on how the Commission should approach such a discussion: 
[Section36(2)(c)] 
 
5. 
Investors in People:  The latest assessment had now been completed and the final 
report was available.  This would be circulated to any Board member who wished to 
see it. 
 
6. 
Meetings with Government Ministers and Others:  Amongst other issues raised at 
meetings with Ministers, the flooding report had been discussed with the Local 
Government Minister, John Healey; and the Health Secretary, Alan Johnson, whose 
constituency was in a flood-affected area.  The publication of the study had been 
brought forward and it would now be published on 14 December 2007. 
 
7. 
[Section 36(2)(b)(i)]  
 
8. 
There had also been a positive meeting with Ed Miliband, the Cabinet Office Minister.  
He valued the contribution that the Commission could make, and in particular, hoped 
that the Commission would be able to encourage three-year funding agreements with 
the third sector, in light of the three-year financial settlements for local government. 
 
9. 
Dinner with Parliamentarians:  The Chairman, Deputy Chair, Chief Executive and 
Commissioner Cllr. Peter Jones had held a dinner recently with a number of 
Conservative parliamentarians, which had been successful and most useful. [Section 
36(2)(b)(i)] 
 
10.  The Board noted the report and approved the amendment to the Code of Data 
Matching Practice. 
 
Data Matching Strategy and Code of Data Matching Practice 2008 
 
CP 96-07 
 
11.  The MD, Audit introduced the report that presented the draft Code of Practice for data 
matching for the Board’s approval.  The Code was subject to a statutory consultation 
process, and this was expected to begin in January 2008.  Along with the equivalent 
codes for Northern Ireland and Wales, the draft Code was currently with the Information 
Commissioner, and we awaited his comments. 
 
12.  The report also detailed the Commission’s draft Data-matching Strategy, that set out 
how the new powers conferred on the Commission by the Serious Crime Act 2007 
might be used to extend the existing National Fraud Initiative, and to use data-matching 
techniques in areas not related to fraud.  These new powers had significant implications 
and would essentially add a new stream to the Commission’s business.  It would be 
important to use the powers cautiously in the first instance and focus on working with 
central government departments and agencies, the public audit bodies in the home 
countries, and private sector bodies, such as the Council of Mortgage Lenders, before 
moving beyond fraud detection work. 
 
13.  The Board welcomed the report and considered the significant implications of the new 
Strategy:[Section 36(2)(b)(ii)]. 
 
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14.  In summary, the Board was excited by the potential of the new powers and welcomed 
the Data-matching Strategy.  There was even scope for being more ambitious in what 
we might hope to achieve.  However, funding and pricing issues, and external 
membership of the Strategy Board should be looked at again. 
 
15.  Subject to its comments above, the Board: 
a. 
asked for a more ambitious strategy for developing the Commission’s 
National Fraud Initiative;  
b. 
approved the draft Code of Data Matching Practice, subject to any changes 
required by the Information Commissioner; and 
c. 
delegated authority to the Chief Executive to approve the final version of 
the Code, for consultation. 
 
CPA 2008 – Single Tier and County Councils 
 
 
 
 
CP 97-07 
 
16.  The MD, Local Government introduced the consultation document on the proposed 
approach to CPA 2008.  The approach reflected the principles of stability and minimum 
change, as requested by councils and the LGA.  Discussions were ongoing on how to 
best deal with those authorities affected by local government reorganisation, and those 
affected by the summer floods.  The Board noted the consultation document, and 
commented on the following issues: 
a. 
The protection of corporate assessment scores would be removed for the final 
CPA categorisation and this might affect some overall star ratings.  However, it 
was likely that only a handful of authorities would be affected, with an even 
smaller number at risk of their star rating being changed as a result. 
b. Assessments 
of 
those 
authorities that had been affected by the 2007 summer 
floods would be done sympathetically.  However, it was important not to 
suppress reporting on these authorities: the extent of the impact should be 
understood, and be made public. 
c. 
The approach to those authorities affected by local government reorganisation 
would also be on a case-by-case basis. 
d. 
The reference within the consultation document to the last star rating for adult 
social care was not strictly accurate, and should be reworded. 
 
17.  The Board: 
a. 
agreed the approach to consulting on the last round of CPA national 
reporting for ST&CC; and 
b. 
agreed that the final national CPA reporting would be in February 2009. 
 
[Secretary’s Note:  [Section 36(2)(c)] 
 
Learning the Lessons from the Recent Procurement of Audit Services 
CP 98-07 
 
18.  The MD, Audit presented the report that summarised the results of a ‘learning the 
lessons’ review, that had been carried out following the recent major procurements of 
audit services.  The review, which had been requested by the Board at its March 2007 
meeting, had found that the overall exercise had been a great success in achieving its 
objective, but that there were some practical improvements and strategic decisions that 
could be made to inform the next round of procurements, from 2011/12.   
 
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19.  The Board welcomed the review and noted the results.  The Board felt that the 
following issues might be considered in advance of further procurement exercises: 
a. 
It was vital that the Commission retained the corporate memory and continuity 
of experience.  This would need some further consideration. 
b. 
Thought should be given to more ‘modern’ procurement methods, such as 
partnering. 
c. 
There was room for improvement in terms of how we applied the economics of 
the audit market to our in-house audit practice.  Would it be for the Board to 
drive the preferred market share and shape, or should it be left to unfold 
naturally? 
d. 
Key stakeholders should be kept informed, but we should not feel bound by their 
views. 
 
20.  The issues raised in the review and in the Board’s discussion would also be considered 
in preparing the next Strategic Plan, due in 2009.  The MD, Audit would also seek the 
views of the Chair of the Selection Panel, outside the Board meeting. 
 
21.  The Board noted the results of the review and endorsed the analysis of the 
lessons learned, to inform the planning for the next procurement exercise from 
2011/12 
 
Audit 
Issues 
          CP 
99-07 
 
22.  The MD, Audit presented the report which sought the Board’s agreement on various 
operational issues, and also reported on a number of regulatory and professional 
practice matters.  The Board noted and approved the Directory of Audit Appointments 
for 2008/09, in light of the Board’s decision in March 2007 to award further contracts to 
PwC and KPMG as part of the second procurement exercise.  The appointment 
exercise had been complex and the Board noted these difficulties, and that a small 
percentage of audited bodies were not happy with the proposals to change, or not 
change, their appointed auditor.  
 
23.  The other significant regulatory and professional issues for the Board’s attention were 
reported, as follows: 
a. 
Transport for London (TfL):  The auditor’s report was now in the public domain 
on the TfL website and had also been considered at the meeting of the London 
Assembly on 12 December 2007. 
b. 
[Section 33]. 
c. 
[Section 33]. 
d. 
[Section 33]. 
e. 
[Section 33]. 
f. 
The Board also noted the launch of the Audit Manual, which was a landmark in 
the development of the Commission’s audit practice.  The manual would be 
downloaded on all auditors’ laptops and automatically updated via the 
Commission network. 
g. 
[Section 33]. 
 
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24. 
The Board: 
a. 
approved the new Directory of Audit Appointments, as set out in 
Appendix 1; 
b. 
approved the appointment of auditors to a number of Town Councils, as 
set out in Appendix 3; 
c. 
approved the appointment of Andy Perrin as the appointed auditor to 
North Level District Internal Drainage Board; 
d. 
approved the appointment of Mazars LLP as the appointed auditor to 
Portchester Crematorium Joint Committee; 
e. 
approved the appointment of Lee Budge as the appointed auditor to 
Somerset Waste Partnership Joint Committee; 
f. 
approved the other changes in appointed auditors, as set out in Appendix 
3; and, 
g. 
noted the other issues set out in the report. 
 
Update on Audit Professional Developments 
 
 
 
         CP 100-07 
 
25.  The MD, Audit presented the report which was part of a regular series.  It updated the 
Board on various regulatory developments that could potentially impact on the 
Commission’s audit regime and practice, and audited bodies.  The report also 
contained a summary of relevant issues that were raised in the Financial Reporting 
Council’s follow-up report on promoting audit quality. 
 
26.  The significant issue to note remained the intention to produce the Whole of 
Government Accounts (WGA) on the basis of International Financial Reporting 
Standards (IFRS).  There were still concerns around the implementation timetable.  
Although local government bodies were afforded a longer-term preparation for IFRS, 
health sector bodies would be required to prepare IFRS-based accounts for 2008/09.  
Furthermore, it was anticipated that there would be a requirement for PFI schemes to 
be brought back on to the balance sheet, which had significant implications. 
Discussions were taking place with Monitor and the Department of Health to try and 
raise awareness of these issues.  The Commission’s auditors were also currently 
undergoing training. 
 
27.  The proportionate approach to applying IFRS was welcomed.  The Commission should 
try to highlight the benefits of IFRS, but also think about how it should position itself.  If 
necessary, we should be prepared to challenge the application of IFRS in its entirety, if 
we felt that this was not appropriate.  
 
28.  Further to the information in the report, the MD, Audit highlighted the following issues: 
a. 
The introduction of International Education Standard 8, and the extent and 
manner to which it would be adopted, would be monitored closely. 
b. 
The length of audit rotations and the rotation of audit partners had been raised 
again.  The Board felt that where a district auditor had been at a body for some 
time, the rotation term of the lead auditor should also be looked at. 
c. 
The concentration of audit around 31 March year ends, and the threat to audit 
quality that this might pose, had been raised.  The Commission also recognised 
these pressures and was looking into possible ways of reducing them. 
d. 
Preparations for the Audit Inspection Unit’s assessment of the Commission 
were going well. 
 
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29.  The Board noted the update on professional developments.   It was agreed that it 
would be useful to receive a regular summary of the key risks relating to 
professional developments as part of the standing Audit Issues report to the 
Board.  The Board also felt that it would be useful to consider the wider issues of 
management information about the practice, perhaps as part of the regular Board 
Performance Report. 
 
30. 
The Board noted the report and: 
a. 
requested that a summary of how the audit practice addressed risks 
arising from professional developments be included in the monthly 
Audit Issues paper; and 
b. 
requested that the Commission consider how best to report to the 
Board on operational risks and practice-wide management information. 
 
Brand Refresh Update 
 
 
 
 
 
 
 
         CP 101-07 
 
31.  The MD, Communications, presented the work to date of the brand refresh project, 
which had been approved as part of the corporate communications strategy by the 
Board in March 2007.  The timing of the refresh was fortunate in that it coincided with 
the 25th anniversary of the organisation and other refresh projects, including the 
website.  The aim of the refresh was to increase the impact of the Commission across 
its communications, and also to get better value from the investment in them.  The 
refresh would also seek to protect and capitalise on the Commission’s strengths, and 
counter the more negative aspects and perceptions about our brand.  Following a 
tendering exercise, a branding and design agency had carried out research, including: 
a visual audit; staff interviews and questionnaires; and a review of the most recent 
stakeholder research.  The summary results had been circulated to the Board in 
advance of the meeting.  Using the theme of ‘bright outcomes’, the agency had then 
developed a number of design approaches that were presented to the Board at the 
meeting.  The Board noted the presentation, and in discussing the brand refresh made 
the following suggestions and comments:[Section 36(2)(b)(ii)] 
 
32.  The Board: 
a. 
reviewed the findings of the visual audit and perceptions study; 
b. 
commented on the selected design route; and 
c. 
requested more information on the design brief and the extent to which 
the agency had met these requirements. 
 
Information Bulletin & Chairman’s Speaking Engagements   CP 102-07 and CP 103-07 
 
33.  The Board noted the Chairman’s Speaking Engagements and the Information Bulletin 
without comment. 
 
34.  The Board received the Information Bulletin and the Chairman’s speaking 
engagements for information. 
 
Any Other Business 
 
 
 
 
 
 
 
        Verbal 
 
35.  The Board noted the Housing Minster’s recent announcement of a review of the 
Housing Revenue Account subsidy system.  This was welcome news, and might reflect 
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on some of the issues that were made in the Commission’s 2005 publication Financing 
Council Housing. 
 
Date of Next Meeting 
 
36.  The next Board Meeting would be held at 9.30am on Thursday 24 January 2008, in the 
Boardroom, Millbank Tower. 
 
Siobhan O’Donoghue 
December 2007 
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