Meeting documents

To approve as a correct record the Minute of the meeting held on 12 June 2017, copy attached as an appendix.

RESOLVED –

That the minutes of the meeting held on 12 June 2017 be approved as a correct record.

A verbal update on the progress made with audit work will be provided at the meeting.

Contact Officer: Andrew Small (01296) 585507

The Committee received a verbal update from the external auditors and were informed that audit work on the draft 2016/17 Statement of Accounts was progressing satisfactorily.  There were no significant issues to report to Members.

The external auditors had asked the Council’s Officers to provide some additional information regarding valuations.  It was anticipated that the audit work on the accounts would be concluded in the next few weeks, subject to any issues that might arise in that time.

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 Accounts Receivable review had been completed and been classified as high risk.  The full report was attached as Appendix 4 to the agenda and had found that there was a lack of corporate and local oversight of the debt held in each service area and irregular monitoring of the age profile of debt.  There were no corporate performance indicators to identify areas which were performing less well in their debt management to allow more effective corrective action to be taken.  There was also a lack of clarity over the roles and responsibilities of the central Income Team and service areas regarding which team is responsible for debt management. The Council recognised these challenges and in November 2016 had set up a Corporate Debt Project to address the issues and improve debt management processes.

Through the work of the Debt Project, issues have been identified between the system interfaces and manual processes that ensured information on housing benefit overpayment debt was consistent and reconciled between the finance system (Tech One) and the Benefits system (Northgate).  During June-July 2017 the project team had been working to reconcile the two systems and clear any discrepancies.  At the time of concluding the report all electronic matching and sorting had been completed on the data from both systems.  The task in process was to work through manually each unmatched item and investigate both systems to correct the difference.  At this stage it was not believed that this would result in a material adjustment to the reported debt figures.

Work was also progressing with the software providers to address the underlying issue around the interface between Tech One and Northgate.  In the mean time, dedicated resource had been identified to ensure manual processes operated effectively to maintain ongoing updates and accuracy.

Further findings had also been made regarding:

•              Invoices for trade waste collection had not been issued promptly.

•              Invoices not being subject to the correct approval in line with delegated limits when re-directed from the original approver.

•              Back up documentation to evidence credit notes was not held on Tech One.

The following work was being progressed:-

·                    Debt Recovery – the Corporate Debt project work was ongoing, with the progress being monitored by internal audit.

·                    Service Charges – management approval was being awaited on the draft report.

Overdue Recommendations and Follow Up Work

The Committee was informed that the implementation of actions and recommendations raised by internal audit reviews were monitored to ensure that the control weaknesses identified had been satisfactorily addressed.

The overall progress and detail of those actions/recommendations that were considered overdue was set out in Appendix 3.  To the end of June 2017, there were 14 "high" and "medium" agreed audit actions due of which 7 were still outstanding and  ...  view the full minutes text for item 3.

To consider the attached report.

Contact Officer:  Kate Mulhearn (01296) 585724

The Head of Internal Audit (Corporate Governance Manager) was required to provide a written annual report to those charged with governance timed to support the Annual Governance Statement (AGS), and which should be presented to Members and considered separately from the AGS and the formal accounts.

The Committee received a report detailing the Corporate Governance Manager’s opinion on risk management, control and governance and their effectiveness in achieving the Council’s agreed objectives for 2016-17.  The report also incorporated a summary of the work undertaken to support the opinion and a statement on conformance with the Public Sector Internal Audit Standards.  Based on this work, the Corporate Governance Manager had provided the following opinion:-

"Generally satisfactory with some improvements required to specific systems and processes.

Governance, risk management and control in relation to business critical areas was generally satisfactory.  However, there were some weaknesses in the framework of governance, risk management and control which potentially put the achievement of the Council’s objectives at risk.

Improvements were required in those areas to enhance the adequacy and effectiveness of governance, risk management and control."

In forming this opinion the Corporate Governance Manager had confirmed that internal audit activity throughout 2016-17 had been independent from the rest of the organisation and had not been subject to interference in the level or scope of the audit work completed.

Thekeyfactorsthat contributedto the opinion weresummarisedas follows:-

·             Overall the weaknessesincontrol designand operatingeffectivenessidentifiedwere mediumorlowrisk.  Improvementshad beenmadeduring theyear in somekey financial systems(AccountsPayable, General Ledger, Budget Management) to strengthentheoverall control environment.

·             Improvements werestill requiredina numberofareas.  Highrisk report  ...  view the full minutes text for item 4.

To consider the attached report.

Contact Officer: Kate Mulhearn (01296) 585724

The Committee received a report which detailed a risk assessment of Internal Audit and plans for audit work for 2017/18.  Following the Commercial AVDC re-structure a full assessment had been undertaken of the "Audit Universe" which was the identifiable auditable units within the Council and included consideration of processes that ran across a number of different areas of the Council.  Each auditable unit had been risk assessed at a high level to determine the priority for internal audit, represented by the frequency of audit review.

Corporate level objectives and risks had been considered when preparing the internal audit plan, and input had also been obtained from Directors, Assistant Directors and Senior Managers to take into account any areas they specifically identified for review.

The core financial systems, housing benefits and collection fund remained on the list each year but the scope of the reviews would be tailored to look at different areas of risk each year as well as the key controls.  Additional areas of focus for 2017-18 were the key services delivered by Customer Fulfilment.  This will provide assurance over the end-to-end processes following team restructures and system changes.

The Internal Audit Plan would be reviewed on a quarterly basis to allow for flexibility to pick up new areas of risk or organisational change.  It would be reported to the Audit Committee as part of the progress reports.

Members sought further information on the Plan for 2017/18 and were informed:-

(i)            on the Corporate level objectives and risks that had been considered when preparing the internal audit plan.

(ii)           on the methodology that had been used for assessing auditable units for inherent risk and the strength of their control environment (The methodology was detailed in more depth at Appendices 1 and 2 to the Committee report).

(iii)          that a standard set of terms of reference had been developed and was used as the starting point for each piece of audit work.  Auditors then worked with management to identify specific issues to include in the review.  This could also include talking with Members and allowing them to feed into the scope.  All of this was to ensure that there was a robust audit process.

Members expressed some concerns about the Planning and Planning Enforcement audit (planned for quarter one, 2017/18) and that it should include looking at staffing (high turnover, high number of vacancies) and the planning complaints recording process.  Members who had particular concerns were asked to provide this information to the Corporate Governance Manager.

RESOLVED –

That the Internal Audit Strategy and Plan for 2017-18 be approved.

To consider the attached report.

Contact Officer: Kate Mulhearn (01296) 585724

The Annual Governance Statement (AGS) for Aylesbury Vale District Council, that would be signed by the Leader of the Council and the Chief Executive when approved by the Audit Committee, formed part of the Council’s formal accounts for the financial year 2016-17.

The AGS had been prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting 2015/16 following the principles set out in the CIPFA Delivering Good Governance in Local Government Framework (2016).

The statement explained how AVDC had complied with the principles of corporate governance and also met the requirements of regulations 4(2) and 4(3) of the Accounts and Audit Regulations 2011, which required all relevant bodies to "conduct a review at least once in a year of the effectiveness of its system of internal control" and to prepare a statement on internal control "in accordance with proper practices".

Members were advised that the assurance gathering process for preparing the Statement was based on the management and internal control framework of the Council and, in particular, on the independent report of the Council’s Corporate Governance Manager presented to this meeting.  The assurance framework included reference to the sources of assurance obtained from management.  This included the new service risk assurance process which had been reported in more detail to the Committee.

Internal audit work in 2016/17 had highlighted a number of weaknesses relating to the design of financial controls and processes and the way they were operating within the new financial system.  Improvements had been made during the year in some key financial systems (Accounts Payable, General Ledger and Budget Management) to strengthen the overall control environment.  Improvements were still required in a number of areas, most notably Accounts Receivable and Housing Benefits.

Members were informed that a number of internal audit reports had highlighted the inadequacies in the level of management information, both at a corporate and service level to enable effective monitoring and oversight of both financial and non-financial performance, and to inform decision.  This has also been highlighted in the Corporate Risk Register.  The re-structure had created two new posts to support enhancing business intelligence across the Council and investment had been made in software to enable data extraction and reporting across all the systems.  This would be an area of focus during 2017/18.

Having critically reviewed the Annual Governance Statement 2016-17 and the robustness of the Council’s governance arrangements, it was

RESOLVED –

(1)          That the content of the Annual Governance Statement 2016-17, be noted.

(2)          That the Annual Governance Statement 2016-17 be approved for inclusion in the Council’s Statement of Accounts for 2016-17.

To consider the attached report.

Contact Officer:  Simon Wasteney (01296) 585164

The Committee received a report on the current position in terms of accounts preparation, and which also identified significant changes to accounting policies applied in the preparation of the accounts.  The budget outturn position was also reported in a management style for the information of Members.

Members were informed that whilst the Quarterly Finance Digest (QFD) did not form part of the statutory accounts, it did provide a more understandable guide to the financial events that had taken place in the last year by comparing them with the expected or budgeted equivalent figures.

The Statutory Accounts presented actual expenditure and income, without reference to budgeted levels. Therefore, whilst the accounts presented the definitive position on the Authority by way of its financial resources, they did not inform the reader as to whether this was the planned or expected position.

The main financial events of 2016/17 were explained in the Digest but the key issues were:

The outturn position for the year shown in the Digest was a reduction in balances of £0.726m.  This was mainly attributable to the use of balances approved by the Council for the AVDC Commercial Programme (£0.145 million) and the Web and E-Commerce projects (£0.424 million).

The December 2016 Quarterly Digest forecast an underspend at the end of 2016/17 of £0.596 million, compared to the final outturn position being a slight overspend of £21,857, representing a variance between the two reports of £0.618 million.  This variation was made up of a number of ups and downs against individual services, some of which were reported in earlier issues of the Quarterly Digest and some of which relate to year end adjustments.  The main variance between the December 2016 Quarterly Digest and The March 2017 document related to £0.618 million of redundancy and pension strain costs which were charged to service budgets in 2016/17 resulting from the on-going organisation restructuring.

Budget variances reported throughout the year contributing to the final outturn position had been savings/extra income from Increased Planning Fee income, Refuse and Recycling reduced vehicle fuel and maintenance costs, renegotiated contract with Waterside Theatre and Car Parking service charge income, reductions in utility & running expense costs. Factors that had gone the other way included consultancy / agency / redundancy costs associated with Information Technology & Facilities Management, reduced rental income from UCAV & lower service charges from Waterside properties.

The table below detailed the balances position at the year end after taking into account the outturn position. The balance position was higher than the agreed prudent level that should be held, therefore, a report on its use would be submitted to Finance and Services Scrutiny Committee.

To consider the attached work programme.

Contact Officer: Kate Mulhearn (01296) 585724

The Committee considered the Work Programme for 2017-18 which took account of comments and requests made at previous Committee meetings, particular views expressed at the meeting, and the Annual Internal Audit Strategy and Plan 2017-18 that had been considered at the meeting.

RESOLVED –

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