Meeting documents

To approve as correct records the Minutes of the meetings held on 27 March, 2017, and on 17 May, 2017, copies attached as appendices.

RESOLVED –

That the minutes of the meetings held on 27 March, 2017 and 17 May, 2017 be approved as correct records.

To consider the attached report.

Contact Officer:  Andrew Small (01296) 585507

The Committee received a report and overview of the stage that had been reached in the 2016/17 audit.  The auditors were continuing to have regular meetings with key officers as part of the ongoing audit process.  These had proved beneficial and helped to develop the understanding of the financial processes across a number of areas.

The auditors had already selected the samples for substantive testing of income and expenditure transactions for the first nine months of the financial year and shared these with the Council’s finance team.  As at the date of the Audit Committee the auditors had been on site for planning and interim testing for three weeks.

To ensure that the requirements of the Faster Close arrangements were met from 2017/18, the auditors had committed to undertaking as much early work as possible in 2016/17.  The early work that they had been able to complete as part of their interim visit included:

·                    walkthrough of all key financial systems.

·                    opening balances agreement.

·                    month 9 testing of income and expenditure.

·                    month 9 payroll substantive analytical review including starters and leavers.

·                    exit packages testing.

·                    precept testing.

·                    contracts testing.

·                    existence testing of property, plant and equipment.

Where month nine testing of key balances such as income and expenditure and payroll had been completed there would also be top up testing of the balances undertaken at the end of the year.  This would greatly reduce the time required to complete work at the year end.

Officers had also been informed of the year-end working paper requirements of the external auditors which would help to ensure a smooth delivery of the year end.

The Committees were informed that the interim reviews had not identified any issues that needed to be brought to Members’ attention.  The auditors were expecting to be on site from early July for approximately four weeks for the year end audit visit.

Members were informed that the additional work and further testing on one particular element of the closed 2015/16 Housing Benefit Subsidy claim, at the request of the DWP, had been completed and submitted.  DWP had resultantly decided to refund AVDC £46,000 although this still meant that the Council would have to pay an error amount of £330,000.

In response to a question, Members were informed that the external auditors met regularly with key officers to discuss issues raised in interim reviews, although it more usual to only report matters that exceeded the materiality threshold to the Audit Committee.

RESOLVED –

That the progress report be noted.

To consider the attached report.

Contact Officer: Kate Mulhearn (01296) 585724

The Committee received a progress report on assurance work activity undertaken against the 2016/17 Assurance Plan that had been approved by the Audit Committee in March 2016.  The following matters were highlighted:-

Final Reports issued since the previous Committee Meeting

The following reviews had been completed since the last Committee meeting:-

·                    Accounts Payable – the review identified that much work had been done to improve accounts payable processes and controls since the previous year’s "high risk" internal audit report.  Overall the controls in place were operating well, in particular the work-flow to enable "three-way matching" on the ledger system, which had been set up and was being utilised effectively.  There had also been more robust monitoring of monthly performance information which had led to a significant improvement in the speed of invoice payments and ensuring invoices received were connected to an approved Purchase Order.

The review had identified 3 low risk findings relating to receipting corporate credit card expenditure, reviewing current Purchase Orders and commitments on a regular basis, and expanding monthly KPI indicators and reporting them to the Strategic Finance Manager

·                    Council Tax and Business Rates – the report had been classified as low risk.  One medium risk had been raised relating to control weaknesses around validating evidence provided when applying Council Tax discounts and ensuring proper follow up to assess whether the discount was still applicable.

Two low risk findings had been found relating to lack of reporting collection rates of prior year arrears and no write off procedures, and a lack of monitoring Valuation Office properties in temporary or no valuation.

After completion of audit review but before finalising the report, the Council had sent out the annual Council Tax letters. The letters contained a numerical error in the precept calculation and whilst the error did not affect the final tax bill calculation for householders, the letters had to be resent to homes across the Vale at a cost of £24,000.  This issue had been reviewed and was considered to be a "one-off" oversight and not reflective of systematic failures in the annual council tax billing process.  However, the Council needed to learn lessons from this and ensure that the review process for letters was robust and could identify any errors in the future.

·                    Contract Management – The review had focused on the monitoring procedures for two of the Council’s contracts that were of significant importance both to the Council’s reputation and finances; Everyone Active (who managed two leisure centres) and Ambassador Theatre Group (ATG) (who managed the theatre).  Arrangements were in place to ensure regular contract management took place via monthly/quarterly meetings which held the contractors to account against conditions set out in agreed contracts.

Three medium risk areas of weakness had been identified which needed to be addressed to strengthen the contract management control environment.

·                    Safeguarding – the report had been classified as medium risk.

The compliance rate for completion of the mandatory level 1 e-learning module during the past five years had been 13%  ...  view the full minutes text for item 3.

To consider the attached report.

Contact Officer: Kate Mulhearn (01296) 585724

The Committee received an update on changes to ‘proper practice’ with regard to corporate governance, which included an introduction to the CIPFA Delivering Good Governance in Local Government Framework (2016).

The "Delivering Good Governance in Local Government: Framework", published by CIPFA in association with Solace in 2007, set the standard for local authority governance in the UK.  CIPFA and Solace reviewed the Framework in 2015 to ensure it remained ‘fit for purpose’ and had published a revised edition in spring 2016.  The new Delivering Good Governance in Local Government: Framework (CIPFA/Solace, 2016) applied to Annual Governance Statements prepared for the financial year 2016/17 onwards.

The concept underpinning the Framework was to help local government in taking responsibility for developing and shaping an informed approach to governance, aimed at achieving the highest standards in a measured and proportionate way.  The overall aim is to ensure that:

·                     resources were directed in accordance with agreed policy and according to priorities.

·                     there was sound and inclusive decision making.

·                     there was clear accountability for the use of those resources in order to achieve desired outcomes for service users and communities.

It was up to each local authority to:

·                     set out its commitment to the principles of good governance included in the Framework

·                     determine its own governance structure, or local code, underpinned by these principles

·                     ensure that it operated effectively in practice.

The new Framework set out seven governance principles, summarised below, and detailed the approach that should be taken to preparing the Annual Governance Statement (AGS). A copy of the Framework was attached as Appendix 1 to the Committee report.  The principles of good governance in the public sector were:

A.            Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law.

B.            Ensuring openness and comprehensive stakeholder engagement.

C.           Defining outcomes in terms of sustainable economic, social, and environmental benefits.

D.           Determining the interventions necessary to optimise the achievement of the intended outcomes.

E.            Developing the entity’s capacity, including the capability of its leadership and the individuals within it.

F.            Managing risks and performance through robust internal control and strong public financial management.

G.           Implementing good practices in transparency, reporting, and audit to deliver effective accountability.

Members were informed that the draft Annual Governance Statement would be reported to the next meeting in July 2017.

RESOLVED –

(1)          That the attached report and Appendix, "Delivering Good Governance in Local Government Framework (2016)" be noted.

(2)          That the purpose of the Annual Governance Statement and the responsibility of the Audit Committee for its review and approval be noted.

To consider the attached work programme.

Contact Officer: Kate Mulhearn (01296) 585724

The Committee considered the future Work Programme for 2017 which took account of comments and requests made at previous Committee meetings and particular views expressed at the meeting, and the requirements of the internal and external audit processes.

RESOLVED –

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

To consider the attached report.

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 (CRR). The CRR provided evidence of a risk aware and risk managed organisation and reflected the risks that were on the current radar for Commercial Board. Some of the risks were not dissimilar to those faced across other local authorities.

The risk register had been reviewed by Commercial Board on 15 March 2017 and subsequently updated for changes in May.  Since the previous Audit Committee meeting in March 2017 no changes had been made to residual risk ratings and one new risk had been added which had a High residual risk rating:

‘Failure to deliver the Connected Knowledge Strategy and achieve the Council's Digital objectives. Speed of implementation does not allow for adequate due diligence e.g. supplier/contract procedures, information risk assessments.’

As previously reported, the risks arising from the Brexit decision had been considered but at this stage there was still too much uncertainty about the specific implications on the strategic objectives and day to day operations of the Council to put anything meaningful on the CRR.

Management would review the situation as information became available and update the CRR accordingly.

The covering report and the CRR Update (Appendix 1) were in the open part of the agenda.  However, the CRR (Appendix 2) contains information on some risks relating to commercially sensitive decisions and, as such, was in Part 2 section of the agenda. Overall, there were 21 risks on the CRR (3 low risk, 4 moderate risk, 12 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 CRR, 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 CRR, both in specific and general terms. In particular, Members challenged the risk regarding the loss of key staff and were informed that now that Assistant Directors were in place they would be putting together Service Sector Risk Registers.

Members requested further information and were informed:-

(i)            Risk 4 (Commercial Companies) – that future Business Plans and performance would be scrutinised by the Economy and Business Development Scrutiny Committee.

(ii)           Risk 17 (Loss of Key Staff) – that Assistant Directors were developing transition plans to ensure business continuity for key services in their areas.

(iii)          Risk 21 (Connected Knowledge) – that this programme had its own governance arrangements and internal Risk Register.

(iv)         Risk 18  ...  view the full minutes text for item 6.

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. 11 – Risk Management Report

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 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.

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 report.

Contact Officer: Kate Mulhearn (01296) 585724

As part of the discussions at Minute 7, consideration was given to the Council’s Corporate Risk Register.