Agenda for Audit, Standards and Governance Committee on Thursday 15th September 2016, 6.00 p.m.

Agenda and minutes

Audit, Standards and Governance Committee
Thursday 15th September 2016 6.00 p.m.

Venue: Parkside Suite - Parkside. View directions

Contact: Amanda Scarce  Jess Bayley

Items
No. Item

17/16

Election of Chairman

Minutes:

Councillor S. R. Colella opened the meeting in his capacity as Vice Chairman of the Committee and invited Members to put forward nominations for the position of Chairman.

 

A nomination for the position of Chairman was received in respect of Councillor B. T. Cooper.

 

RESOLVED that Councillor B. T. Cooper be elected as Chairman of the Committee for the ensuing municipal year.

 

(Following the appointment of the Chairman the Committee agreed to hold a brief 10 minute adjournment, from 6.02 – 6.12 pm, to provide the Chairman with an opportunity to attend a briefing on the content of the agenda).

18/16

Apologies for Absence and Named Substitutes

Minutes:

Apologies for absence were received from Councillor S. R. Peters and Parish Councillor C. Scurrell.  It was confirmed that Councillor C. Hotham was attending as a substitute for Councillor Peters.

 

The Committee also noted that Councillors S. R. Colella, J. M. L. A. Griffiths and P. L. Thomas would need to leave the meeting early.

 

19/16

Declarations of interest and Whipping Arrangements

Minutes:

There were no declarations of interest nor of any whipping arrangements.

 

20/16

To confirm the accuracy of the minutes of the Audit, Standards and Governance Committee meeting held on 16th June 2016 pdf icon PDF 188 KB

Minutes:

The minutes of the meeting of the Audit, Standards and Governance Committee held on 16th June 2016 were submitted.

 

During consideration of the minutes reference was made to previous discussions about the Parish Council representatives on the Committee and it was noted that many Parish Councillors were co-opted rather than elected onto their Parish Council.  Members’ preference for elected Parish Councillors to serve on the Committee had been reported to Bromsgrove’s Area Committee of the Worcestershire County Association of Local Councils (CALC).  However, it was acknowledged that the appointment would ultimately be determined by CALC.

 

RESOLVED that the minutes of the meeting of the Audit, Standards and Governance Committee held on 16th June 2016 be approved as a correct record.

 

21/16

Standards Regime - Monitoring Officers' Report pdf icon PDF 150 KB

Minutes:

The Head of Legal, Equalities and Democratic Services presented the Monitoring Officer’s report.  Members were advised that since the previous meeting of the Committee a single Member to Member complaint had been received and this was in the early stages of investigation. 

 

Various Member training sessions had also been delivered during the period and further training was scheduled to take place later in the calendar year.  Specific reference was made to the training delivered on the subject of child sexual exploitation and safeguarding.  Members noted that this was an important area of responsibility and should be taken seriously.

 

The Committee also briefly discussed the county-wide Governance training event that was due to be delivered by the external auditors, Grant Thornton, in Redditch on 11th October.  Members questioned whether it might be more appropriate for this training to be delivered by an independent body with no links to the Council.  The Member Development Steering Group was therefore asked to investigate governance training arrangements at other local authorities and with the Local Government Association.  The Committee was advised that this could be raised at the next scheduled meeting of the group on 19th September 2016.

 

RESOLVED that

 

(1)       The Member Development Steering Group be asked to investigate arrangements in place at other local authorities to deliver Governance training; and

(2)       The report be noted.

 

22/16

Grant Thornton - Audit Findings Report 2015/16 (Appendix to follow) pdf icon PDF 77 KB

Additional documents:

Minutes:

Representatives from Grant Thornton presented the Audit Findings Report in relation to the final accounts 2015/16.  For this item the draft letter of representation, detailing the Financial Statement for the year ended 31st March 2016, was tabled for Members’ consideration (attached at Appendix 1 to these minutes).  During the presentation of this report the following matters were highlighted:

 

·                Grant Thornton had made no adjustments to the accounts, though had identified one area in respect of assets that could impact on the accounts if an adjustment was made.

·                The external auditors were anticipating that they would be issuing an unqualified opinion on the accounts.

·                The process followed by the Council to issue the accounts had improved significantly when compared to the previous year, in line with the Section 11 recommendations.

·                Further improvements could be made to the process to ensure that in future the Council could submit the accounts in line with new earlier deadlines from 2018.

·                Grant Thornton had identified weaknesses in the Council’s arrangements, particularly in respect of financial reporting, and were issuing a qualified ‘except for’ value for money conclusion. 

·                For the risk in terms of management over-ride of controls the testing of journals work undertaken by the auditors had required significant time due to the complexity of the Council’s ledger and cost coding arrangements. 

·                The risk in terms of the valuation of Parkside had identified no issues for the Council, which shared this asset with Worcestershire County Council.

·                Since the publication of the report more information had been received regarding the valuation of the former Council House site and the external auditors were satisfied with this detail.

·                Grant Thornton had reviewed the assumptions, qualifications and controls used by the actuaries for staff pensions. 

·                When considering operating expenses no problems had been identified for 2015/16 but an issue had been identified for the previous year in relation to an invoice for £4,000.  Following further investigation Grant Thornton had discovered no further mistakes and this was not considered to be a systemic problem. However, this investigation had highlighted challenges in respect of invoices being recharged and included on the general ledger.

·                External auditors had noted that the volume of invoices to Redditch Borough Council for shared services was such that improvements could be made to streamline the process.

·                Three assets had been identified for which the Council received charges though the ownership status was unclear. 

·                These three assets comprised low cost housing that had been transferred to BDHT in the early 2000s.

·                Legal Services had undertaken some initial investigations and determined that additional time was required to provide further clarification regarding legal ownership arrangements.

·                These were separate to five other assets detailed in the statement of accounts which had been reclassified by the Council as operational assets, having previously been listed as investment assets, following consultation with Grant Thornton.

·                The external auditor’s approach to undertaking the Value for Money (vfm) assessment had changed in 2016/17 in line with national requirements.

·                For the Financial Outturn and Medium Term  ...  view the full minutes text for item 22/16

23/16

Statement of Accounts 2015/16 (post audit) (Appendix to follow) pdf icon PDF 89 KB

Additional documents:

Minutes:

The Executive Director of Finance and Corporate Resources and the Financial Services Manager presented the Statement of Accounts 2015/16 and in so doing raised a number of points for the Committee’s consideration.

 

·                A set of accounts had been circulated for the consideration of all Members in July 2016.

·                The documentation provided in the Committee’s agenda pack contained the post audit set of accounts.

·                The external auditors had issued an unqualified judgement on the accuracy of the accounts. Grant Thornton were satisfied that, on the basis of materiality, the Council’s accounts were accurate.

·                The general fund balance as at 31st March 2015 was £4.274 million. This had fallen to £4.159 million as of 31st March 2016 due to use of funding from balances.

·                The Council had £7.417 in usable reserves.

·                Information had been provided in respect of the Artrix; the Council was obliged to supply this information because it had voting rights at the venue.

·                Provisions had been made for potential appeals against business rate settlements as this could have a potentially significant impact on the Council going forward.

·                A typographical error had been identified in the covering report to the accounts; the Committee was being asked to recommend the accounts for the approval of Council, not the Cabinet.

 

Members subsequently discussed a number of points in detail:

 

·                The differences in accounting practices for local authorities compared to businesses and the need for the Council to follow CIPFA guidance.

·                The net worth of the Council and the extent to which this compared with other local authorities.

·                The trend for fluctuations in pension fund liabilities over time in response to changing circumstances, such as assumptions around changes to interest rates.

·                The impact of the Council’s budgetary position on borrowing costs. 

·                The option for the Council to borrow from the Public Works Loan Board.

·                The pension fund liabilities and arrangements in place to address these.  Officers advised that the Council had an agreement in place to pay off the liabilities over a period of 21 years, though the timeframes could be negotiated if considered appropriate.

·                The potential for a local authority not to contribute to paying off pension liabilities in any given year.  Members were informed that this would not be considered advisable.

·                The inclusion of the value of Parkside on the balance sheet and the provision of this valuation by qualified professionals.

·                The need to complete the process for shared ownership of Parkside with Worcestershire County Council.  Members were advised that this was close to completion and that it was considered accurate to list the building as a Council asset.

·                The impact of the delay in purchasing new vehicles following the decrease in the value of the pound in recent months.  Officers agreed to obtain further information on this subject following the meeting.

·                The potential stamp duty requirements for Parkside and the extent to which this had been budgeted for in the Council’s reserves.  Officers confirmed that, whilst no figure had been included in the reserves for this, further information was awaited  ...  view the full minutes text for item 23/16

24/16

Quarter 1 (April to June 2016) Financial Savings Update pdf icon PDF 129 KB

Additional documents:

Minutes:

The Executive Director of Finance and Corporate Resources presented the Financial Savings Update for the period 1st April to 30th June 2016.  During consideration of this item she highlighted the following matters:

 

·                This was a new report concerning financial savings which had been introduced in response to the Section 11 recommendations.

·                Full year savings identified by the Heads of Service had been included in the report.

·                No concerns had been identified to date with regard to the potential for the Council to achieve proposed savings during the year.

·                Officers would welcome any suggestions from Members about the content and presentation of the report.

 

Members proceeded to discuss the content of the report raising a number of issues in so doing:

 

·                The inclusion of the reduction in Members’ Allowances in the list of savings detailed in the report.  Members suggested that as this reduction in Councillor numbers had been known for a couple of years this should have been budgeted for and should not appear in the figures.

·                Potential alternative uses of the £44,000 listed as savings from the reduction in elected Members on the Council.

·                The preference of the Finance and Budget Working Group for savings to be listed in the figures once.

 

Following consideration of the item the Committee

 

RESOLVED that the report be noted.

25/16

Section 11 Progress Update Report pdf icon PDF 73 KB

Additional documents:

Minutes:

The Financial Services Manager provided an update on the progress that had been achieved with implementing the Section 11 recommendations.  Many of the recommendations relating to the final accounts had been implemented and the Council had adopted a more robust approach to submitting the statement of accounts compared to the previous year.  In addition a new financial planning module was due to be introduced shortly which would provide fourth tier managers with more control and flexibility in the use of their budgets.

 

RESOLVED that the report be noted.

 

26/16

Internal Audit Monitoring Report pdf icon PDF 393 KB

Minutes:

The Services Manager for Worcestershire Internal Audit Shared Service presented the Internal Audit Monitoring Report.  The report outlined residual summary reviews for 2015/16 and provided an update on the internal audit work and performance in the period 1st April to 31st July 2016.

 

Significant progress had been achieved to date in respect of the internal audits scheduled for 2016/17.  Any of these internal audits which resulted in medium or high priority recommendations would be reported to the Committee during the course of the year.  In the majority of cases the assurance level identified through the internal audit process had been significant.  Unfortunately in the case of consultancy and agency assurance had been assessed to be limited, though Internal Audit had been assured that action was being taken by Officers to address this.

 

In respect of the Key Performance Indicators (KPIs) for the Internal Audit Service there had been significant improvements in performance in relation to KPI 4 since the report was published.  Members were advised that the Internal Audit team remained on track to deliver planned audits in 2016/17 as detailed in the Internal Audit Plan for the year.  A number of reports were in draft form or in the process of being finalised and would be reported for Members’ consideration at the following meeting.

 

At the end of this item Members requested further clarification on the level of assurance for the full system audit of debtors, as this had been recorded as both moderate and significant in the report.  Officers agreed to provide this information for circulation electronically outside the meeting.

 

RESOLVED that the report be noted.

27/16

Risk Champion - Verbal Update Report (Councillor Phil Thomas)

Minutes:

A written statement was read out to the Committee on behalf of the Council’s Risk Champion, Councillor P. L. Thomas.  In this statement Members were advised that Councillor Thomas had been arranging meetings with Heads of Service to discuss departmental risk registers.   This followed consideration of the Council’s Corporate Risk Register, which had enabled Councillor Thomas to understand the corporate risks faced by the Council and would help to clarify the links back to the departmental level.

 

Councillor Thomas had also met with the Executive Director for Finance and Corporate Resources to discuss corporate risks.  During this meeting actions undertaken by managers to address these risks had been considered.  It would be possible to update Members in more detail about this at the following meeting when it was suggested that the Committee should receive a report about action in respect of the Corporate Risk Register over the preceding 6 month period.

 

RESOLVED that a monitoring update regarding the Corporate Risk Register be added to the Committee’s Work Programme for consideration in December 2016.

 

28/16

Audit, Standards and Governance Committee Work Programme pdf icon PDF 84 KB

Minutes:

Members considered the content of the Audit, Standards and Governance Committee’s Work Programme.

 

Officers confirmed that all of the additional items that had been proposed for the consideration of the Committee at a later date would be added to the Committee’s Work Programme.

 

Minutes Appendix 1 pdf icon PDF 120 KB