Agenda and minutes

To approve as correct the minutes of the meeting held on 25 September 2014 and authorise the Chairman to sign them.

The minutes of the meeting held on 25 September 2014 were agreed as a correct record and signed by the Chairman.

To receive the attached report.

PricewaterhouseCoopers (PWC) the council’s External Auditors had delivered their annual audit latter to the committee summarising the result of their 2013/14 audit. The Committee was advised that there were no changes between the information provided at their last meeting when they had considered the report to those charged with Governance – International Standard of Auditing (ISA) 260.

The Committee’s attention was brought to some variances in the proposed fees. These were:

·         Overruns incurred during the final audit (£8,063);

·         Additional targeted work undertaken in respect of oneSource to inform PWC’s value for money conclusion (£6,666).

·         Changes in the Audit Commission certification regime, which required PWC to obtain audit comfort over Council Tax Support awarded and Business Rates income in the statement of accounts from additional audit procedures over these items, rather than by relying on certification work undertaken over the respective grant claims (£1,300 for Business Rates, £0 for Council Tax Support; and

·         Additional audit work in relation to the additional risk in relation to pooled investment vehicles and the Pension Fund Annual Report (£3,645).

PWC indicated that they were currently in the process of agreeing the fees described above, that were in addition to the scale element, with the Audit Commission, and would report the final position in due course.

PWC’s fee for certification of claims and returns was yet to be finalised for 2013/14 and would be reported to those charged with governance at a later date within the 2013/14 Annual Certification Report.

The Committee noted the report.

To receive the attached report.

Officers informed the Committee that the Council had successfully closed its accounts and prepared its Financial Statements for 2013/14. There were a number of technical changes required under the Code of Practice and for local reasons in 2014/15. The priority for the closure programme was to ensure that all key activities had been captured in the timetable and roles and responsibilities identified and understood.

The following key issues would need to be addressed during the 2014/15 closedown.

·         Voluntary Aided and Foundation Schools

In October 2012, the Chartered Institute of Finance and Accountancy (CIPFA) had published a Financial Reporting Advisory Board Paper on the Exposure Draft of the Updated Code of Practice on Local Authority Accounting 2011/12 and the 2012/13 Code. This had recommended that Foundation and voluntary aided schools should not normally be recognised on the balance sheets of local authorities as their assets were not usually deemed as being owned by the authority. Arising from this, and on the direction of the Council’s auditors PricewaterhousCoopers, the Council had removed these schools from its balance sheet.

However, following adoption of IFRS 10 Consolidation of Financial Statements, CIPFA was now of the view that “the single entity financial statements were also defined as including the income, expenditure, assets, liabilities, reserves and cash flows of the local authority maintained schools in England and Wales within the control of the local authority”. Local authority maintained schools were defined as community, voluntary controlled, voluntary aided, foundation, community special, foundation special and nursery schools; accordingly, voluntary aided and Foundation schools would need to be brought back on to the Council’s balance sheet for 2014/15.

Officers are considering with the auditors the presentation of prior year figures, and liaising with the valuers over current values of the assets involved.

·         Infrastructure Assets

Infrastructure assets included roads, highways, bridges and street furniture. These assets were currently recorded on the Balance Sheet on a Depreciated Historic Cost (DHC) basis. The Whole of Government Accounts guidance had included a requirement to record such assets on a Depreciated Replacement Cost (DRC) basis since 2012/13. It would be necessary to identify all such assets, with appropriate measurements, and then establish the cost of replacing these assets at current prices (in accordance with The Code of Practice on Transport Infrastructure Assets). Valuations would need to be updated regularly in order to ensure compliance with The Code.

Recognition of infrastructure within the Council’s accounts had now been deferred to 2016/17. But it would represent a change in accounting policy from 1 April 2016 and would require full retrospective restatement in accordance with the requirements of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IAS 1 Presentation of Financial Statements as adopted by The Code.

Officers were therefore establishing information collection arrangements to apply full retrospective restatement resulting from the measurement of transport infrastructure to enable the Council to establish opening balances of the assets for 1 April 2015 and comparative information on transactions in the preceding year, i.e. 2015/16.

The  ...  view the full minutes text for item 21.

To receive the report.

The Committee received the report from officers on the work of the Internal Audit team during the period 30 June to 28 September 2014. The Internal Audit & Corporate Risk Manager reported that the team currently had one vacancy as an auditor had been seconded to undertake fraud work. Additionally a second member of the team commenced maternity leave in October 2014. The result of thIs was that as at the end of September there was a shortfall of 100 days in the time required to deliver the 2014/15 work plan. Due to the restructure there were no plans to address this by employing agency workers, but the shortfall would be closely monitored and other options to reduce the shortfall would be considered and implemented.

Officers advised that by the end of September 12 assignments had been completed with eight in progress. Work had also been undertaken to review Public Health expenditure in order to give the Chief Executive an assurance for the sign off of the Public Health Grant for 2013/14.

The tale below details the final reports issued in quarter 2:

Seven risk based systems audit were nearing completion as was one school audit.

Officers also provided details of changes to the approved 2014/15 audit Plan and an update on outstanding recommendations.

The Committee sought clarification on a number of the audit reports.

Firstly the committee expressed concern that there were no agreements in place at MyPlace for the replacement of equipment being used within MyPlace. Officers agreed to take this away and look at ways of remedying this potential problem.

Secondly the Committee expressed concern that in some areas only two people were involved in the BACS process. Whilst management had made arrangements to ensure both staff were not on leave at the same time, there were no safeguards against unplanned absences. The audit report concluded that the lack of business continuity arrangements in place was sufficient to put system objectives at risk. The Committee supported this conclusion.

The final area identified by the Committee related to the audit of Gas Safety Regulations – Home Ownership. Back in 2012 an executive decision had been taken that leaseholders of council housing properties would be required to provide an annual gas safety certificate. 

At the start of the review  ...  view the full minutes text for item 22.

To receive the attached report.

Officer advised the Committee that Governance was about how councils ensure that they were doing the right things, in the right way, for the right people, in a timely, inclusive, open, honest and accountable manner.  It comprised the systems and processes, and cultures and values, by which councils were directed and controlled and through which they account to, engage with and, where appropriate, lead their communities.

Good governance leads to good management, good performance, good stewardship of public money, good public engagement and, ultimately, good outcomes for citizens and service users.  Good governance enabled the Council to pursue its vision effectively as well as underpinning that vision with mechanisms for control and management of risk.

High standards of conduct and leadership were at the heart of good governance, placing responsibility on members and officers to demonstrate leadership by behaving in ways that exemplify high standards of conduct, and so set the tone for the rest of the organisation.

Regulation 4(3) of the Accounts and Audit (England) Regulations 2011 required all relevant bodies to prepare an Annual Governance Statement (AGS) which must accompany the Annual Statement of Accounts.  The purpose of the AGS was to communicate to stakeholders the standards of Corporate Governance the organisation demonstrates and identify any significant issues that had arisen in year, and what was planned with regards to addressing these issues.

The process to develop the AGS was well established and had been running successfully for a number of years.  The review of arrangements had also considered this process and two conclusions had been reached:

1)     The issues on the AGS, over time, had become very high level and ultimately difficult to remove.

2)     The paper based approach to obtaining assurances from Senior Management needed to be reviewed. 

The new Group sought to address both these issues.  It was hoped that through: active participation of representatives throughout the year; seeking input from Senior Management on the resolution of live governance issues and the group reviewing key assurances around compliance with the Governance Framework the AGS could become a live document that was developed in year as part of business as usual without the need for an additional process to be completed.

The Committee noted the report.

To receive the attached report.

The Committee received a report covering the work of the Internal Audit Corporate Fraud Team and the Investigations Team for the period 1 July to 30 September 2014.

Officers advised that at the end of September the Service Review had moved onto the ‘To Be’ phase of the process looking at requirements of the service going forward.  It was still envisaged that the implementation of changes implemented following this review would lead to the delivery of savings which would contribute towards the achievement of the oneSource business case. 

The timetable for transfer of resources to the Department of Work and Pensions to join the Single Fraud Investigation Service was now working towards the transfer date of 01 April 2015.  This process would be run in conjunction with the formal change management process affecting the teams in both council’s, which had been expected to begin November 2014.

The report showed the current workload of the fraud team:

Details of successful cases were provided for the Committee’s information.

The Benefits and Housing Tenancy Investigations Team had also been busy. Details of the caseload was set out below:

Details of a number of successful prosecutions were provided for the Committees information.

The Committee noted the report.

The Committee resolved to excluded the public from the meeting during discussion of the following item on the grounds that if members of the public were present it was likely that, given the nature of the business to be transacted, that there would be disclosure to them of exempt information within the meaning of paragraph 3 of Schedule 12A to the Local Government Act 1972 which could reveal information relating to the financial or business affairs of any particular person (including the authority holding that information) and it was not in the public interest to publish this information.

The Committee have received an update on the position of Treasury Management for the second quarter of 2014/15. The Committee have noted that the Council still have ample cash flow available but that this position would change towards the end of the financial year.

The Committee have noted the report.