Meeting documents

To approve as correct records the Minute of the meeting held on 25 July, 2016 attached as an appendix.

RESOLVED –

That the minutes of the meeting held on 25 July, 2016, be approved as a correct record.

To consider the report attached as an appendix.

Contact Officer: Kate Mulhearn (01296) 585724

The Committee had received a report on the current position with the draft Statement of Accounts for 2015-16 to the July meeting, prior to the accounts being submitted to the external auditors.

The Audit Commission’s Code of Audit Practice required the external auditors to report to ‘those charges with governance’ on the work carried out to discharge the external auditors statutory and audit responsibilities, together with any governance issues identified.

The Committee received a report summarising the auditors findings from the 2015-16 audit which was substantially complete, subject to the satisfactory completion of the outstanding items included in Appendix B.  It included the messages arising from the audit of the financial statements and the results of the work undertaken to assess the Council’s arrangements to secure value for money in the use of resources. The report highlighted the following key findings:-

(i)            Financial Statements – it was expected to issue an unqualified opinion, subject to the satisfactory clearance of any outstanding work. The audit results demonstrated that the Council had adequately prepared the financial statements.

(ii)           Value for Money – it was expected to conclude that the Council had put in place appropriate arrangements to secure economy, efficiency and effectiveness in the use of resources.

One significant risk had been identified for this criteria which was ‘Balanced budget and long term financial planning’.  The Council’s finances continued to be under significant pressure in the medium term, and in the 2016/17 MTFP had identified a budget gap of £5.6m by 2018/19.  However, the assumptions within the MTFP had been assessed and there were not matters to be reported.

(iii)          Whole of Government accounts – it was expected to issue an unqualified confirmation to the National Audit Office regarding the Whole of Government accounts submission, and that there were no issues to report.

(iv)         Audit Certificate – it was expected to issue the audit certificate at the same time as the Audit Opinion, which demonstrated that the full requirements of the Audit Commission’s Code of Audit had been discharged for the relevant audit year.

During their work, the external auditors had identified three significant audit risks and a number of other audit risks. These had been reported to Members in the Audit Plan. An explanation of the approach taken by the external auditors to look at these and how they had gained audit assurance on them was also included in the report. The identified issues were:-

Significant Audit Risks (including fraud risks)

·                     Property, Plant and Equipment (PPE) (Valuations) – Due to the complexity in accounting for PPE, the cyclical approach to valuations, and the material values involved, there was a higher risk that asset valuations contained material misstatements.  An error identified in the previous year had required amendment.  However, testing this year had not identified any issued relating to the valuation of PPE.  The Council had used an appropriate valuer and the results of the valuations were in line with the Code and the Council’s accounting policies.

·                     Risk of Management Override –  ...  view the full minutes text for item 2.

To consider the report attached as an appendix.

Contact Officer:  Kate Mulhearn (01296) 585724

The Committee received a progress report of activity undertaken since July 2016.  Internal audit work was being undertaken in line with the annual internal audit plan that had been approved by the Audit Committee in March 2016 and was summarised at Appendix 1.  The report highlighted the following matters:-

(i)            Final reports – only one review had been concluded since the July meeting, relating to Housing Benefits, with the full internal audit report attached at Appendix 3.  Overall, it had been found that the controls and processes over housing benefits were operating effectively to provide a reasonable assurance over the accuracy and efficiency of claims handling.  There were a number of areas where action was needed to improve the integrity of financial information and performance monitoring processed.  There was also a need to consider the Council’s level of overpayment and the approach to recovery.

(ii)           Internal Audit work in progress – the Internal Audit Plan 2016/17 and progress tracker was included at Appendix 2 to the Committee report.  The following reviews were in progress:-

·                     Debt Recovery – work had commenced to identify the level of debt for each revenue stream, the ageing profile and to establish the existing recovery processes.  This included housing benefits, Council tax, business rates and all other income streams.

·                     Safeguarding – the review was in progress.  Section 11 arrangements were due to be agreed in October 2016.

·                     Information Governance Effectiveness – this review was on hold pending the outcome of a separate piece of work performed by IT security experts "intel".  The review would pick up on any identified areas of risk or recommendations identified.

(iii)          Overdue Recommendations and Follow Up Work –

·                     Update on financial systems (Accounts Payable and Accounts Receivable, General Ledger and Budgetary Control) – the Commercial AVDC Financial Systems and Processes Review Board was continuing to monitor the implementation of actions identified in the 2015/16 reports on these areas.  While progress had been made in all areas there had been some delays in implementing actions relating to monitoring and reporting commitments.  Completion dates had been revised to allow the required work to be undertaken.  Financial systems would again be subject to internal in Q3 and Q4 which would further help to provide assurance over the implementation and operation of financial controls.

·                     Housing Allocations (January 2016) (Medium priority recommendation to be completed by 31 March 2016) – the Bucks Home Choice Allocation policy was still undergoing the review process and was currently with the Chiltern / South Bucks District Council’s Housing Manager for comment.  The aim was to complete the review in the autumn 2016.

·                     Taxi Licensing (October 2015) (Medium priority recommendation to be completed by 31 March 2016) – a policy had been drafted and would be finalised along with the new document management storage system for Environmental Health and Licensing.  Implementation was expected by the end of December 2016.

(iv)         Commercial AVDC and Internal Audit – The Council was progressing through a fundamental restructure and business transformation programme.  The Business Assurance  ...  view the full minutes text for item 3.

To consider the report attached as an appendix.

Contact Officer:  Kate Mulhearn (01296) 585724

The Audit Committee had a role to monitor the effectiveness of risk management and internal control across the Council.  As part of discharging this role the committee was asked to review the Corporate Risk Register.  The Corporate Risk Register provided evidence of a risk aware and risk managed organisation and reflected the risks that were on the current radar for Transition Board.  Some of the risks were not dissimilar to those faced across other local authorities.

The risk register was reviewed on a two monthly basis by Transition Board and reported to the Audit Committee.  It had been reviewed and the risks and ratings updated by Transition Board on the 31 August 2016.  At the same time, further consideration had given to how effectively the risks were being managed and where further action was required.

The covering report and the Corporate Risk Register Update (Appendix 1) were in the open part of the agenda.  However, the Corporate Risk Register (Appendix 2) contains information on some risks relating to commercially sensitive decisions and, as such, was in Part 2 section of the agenda.

Since the previous review in July 2016 one new high risk (Unmanaged loss of key staff) had been added to the register and the residual risk assessment for two of the risks (Approach to commercialisation does not generate desired levels of income, and Health and Safety) had been increased from moderate to high.

The risks arising following the Brexit decision had also been considered.  However, at this stage there was too much uncertainty about the specific implications on the strategic objectives and day-to-day operations of the Council to put anything onto the Corporate Risk Register.  Management would continue to review this situation as information became available and update the Register accordingly.

Overall, there were 17 risks on the Corporate Risk Register (3 low risk, 5 moderate risk, 7 high risk and 2 extreme risks) and these were considered by Members.  Information on the risk matrix and risk ratings (impact and likelihood) was explained further in the Committee report.

To facilitate discussion about the detail of the Corporate Risk Register, the Committee resolved to exclude the public from the meeting under Section 100 (A) (4) of the Local Government Act, 1972, on the grounds that the item involved the likely disclosure of commercially sensitive information as defined in Paragraph 3 of Schedule 12A of the Act. The disclosure of such information might prejudice negotiations for contracts and land disposals or transactions. Members challenged robustly some of the assumptions made in the Risk Register, both in specific and general terms.

Members requested further information on the Register and were informed:-

(i)         That as the partnership with AVE was shown as extreme risk, staff would be working to ensure that the partnership did deliver and achieved the Council’s objectives.

The members of the committee acknowledged the commitment shown by the transition board.

RESOLVED –

That the current position of the Corporate Risk Register be noted.

To consider the report attached as an appendix.

Contact Officer:  Tony Skeggs (01296) 585273

The Accounts and Audit Regulations state that Members should only approve the accounts when they have been made aware of the findings of the audit and hence were able to make a better informed decision.

Following on from the report on the draft accounts to the July meeting, Members received a report updating them on the audit process and the changes made to the accounts in accordance with the external auditor’s recommendations. The auditors’ comments and findings from their work on the 2015/16 accounts had already been reported to Members in the Annual Governance Report (AGR).

Subject to being satisfied with the revised accounts and that the auditor’s comments had been correctly responded to, the Committee was required to authorise the Chairman to sign them on the Audit Committee’s behalf, together with the Director with responsibility for Finance, in order to comply with the 30 September statutory deadline. However, it was requested that the Committee delegate to the Head of Finance, in consultation with the Chairman or Vice Chairman, the ability to make such changes to the accounts that are considered necessary in order to achieve the statutory deadline.

As already reported by the external auditors, during the course of the audit it had been identified that the current service pension costs had been charged to Non Distributed Costs rather than the individual service areas.  The Statement of Accounts attached to the latest Committee report had been amended to reflect the correct position.

Other minor changes had been made to Note 34.1 where there had been a casting error and the prior year did not agree to the audited accounts from last year.  Note 34.2 had also been updated to reflect three exit packages that had been agreed during 2015/16 but were not due to be paid until 2016/17.  These had originally been omitted from the disclosure note.

The pensions note 37 had also had a couple of amendments to correctly reflect the actuary’s report.

In the Related Party Transactions note of the draft statement of accounts submitted to the Committee in July there had been a number of Members listed as not having returned their disclosure return.  Since that meeting all but two of the current members had completed their disclosures.  Completion of these disclosures was an audit requirement.

There was a requirement to report significant event that occurred after the balance sheet date and before the sign off date.  Since the Committee in July, there had been no significant event that required reporting in the accounts.

Having considered the final Statement of Accounts for 2015/16, it was –

RESOLVED –

(1)          That the final outturn position of the Council’s Statement of Accounts 2015/16 be noted.

(2)       That approval be given to the Chairman of the Audit Committee to sign off the Statement of Accounts for 2015/16 on the Committee’s behalf.

(3)       That approval be given to the Director with responsibility for Finance, in consultation with the Chairman or Vice Chairman, to make such changes as considered necessary to  ...  view the full minutes text for item 5.

To consider the report attached as an appendix.

Contact Officer:  Kate Mulhearn (01296) 585724

The Committee considered the future Work Programme for 2016-17 which took account of comments and requests made at previous Committee meetings and particular views expressed at this meeting, and the requirements of the internal and external audit processes.  Members were also provided with a timetable of training events for future meetings.

RESOLVED –

That the future Work Programme as discussed at the meeting be approved.

Future meetings are planned as follows:-

·                    6.30pm on 14 November 2016

·                    6.30pm on 23 January, 2017

·                    6.30pm on 27 March, 2017

The next meeting of the Audit Committee would be held at 6.30 pm on 14 November, 2016, in the Olympic Room at The Gateway, Gatehouse Road, Aylesbury.

The following matter is for consideration by Members "In Committee".  It will therefore be necessary to

RESOLVE –

That under Section 100(A)(4) of the Local Government Act, 1972, the public be excluded from the meeting for the following item of business on the grounds that it involves the likely disclosure of exempt information as defined in the Paragraph indicated in Part 1 of Schedule 12A of the Act:-

Item No. 12 – Corporate Risk Register

The public interest in maintaining the exemption outweighs the public interest in disclosing the information because the report contains information relating to the financial or business affairs of organisations (including the Authority holding that information) and disclosure of commercially sensitive information would prejudice negotiations for contracts and land disposals or transactions.

RESOLVED –

That under Section 100(A)(4) of the Local Government Act, 1972, the public be excluded from the meeting for the following items of business on the grounds that they involved the likely disclosure of exempt information as defined in the Paragraph indicated in Part 1 of Schedule 12A of the Act:-

Corporate Risk Register (Part 3)

The public interest in maintaining the exemptions outweighed the public interest in disclosing the information because the documents contained information relating to the financial or business affairs of organisations (including the authority holding that information), and disclosure of commercially sensitive information would prejudice negotiations for contracts and land disposals/transactions.

To consider the attached confidential information.

Contact Officer:  Kate Mulhearn (01296) 585724

As part of the above discussions, consideration was given to the Council’s Corporate Risk Register.