Meeting documents

Prior to the commencement of the formal business of the meeting all those present stood in silent tribute to Councillor Kevin Hewson, Chairman of the Audit Committee, who had sadly passed away suddenly on 22 February 2018.

RESOLVED –

That Councillor Irwin be elected Chairman of the Audit Committee for the remainder of the municipal year.

To approve as correct records the Minutes of the meeting held on 22 January, 2018, attached as an appendix.

RESOLVED –

That the minutes of the meeting held on 22 January, 2018, be approved as a correct record.

To consider the future work programme.

Contact Officer:  Kate Mulhearn (01296) 585724

The Committee considered the future Work Programme (Appendix 1) 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.

The Audit Committee Tracker (Appendix 2) was also attached to the Committee report which highlighted ongoing and completed actions identified by Members at previous meetings.

The following matters were discussed:-

(i)            Review of Aylesbury Vale Broadband (AVB) – Members were informed that BDO was still finalising the review and the draft report would hopefully be received by the Council in the next few weeks.  As agreed at the Audit Committee meeting on 22 January 2018, Group Leaders would receive a draft of the report (for information only) prior to its submission to the Audit Committee.  The special meeting to consider the report would be convened as soon as possible.

The Chairman suggested that it might be helpful for a short Press Release, on behalf of the Audit Committee, to be issued when the agenda for the special Audit Committee meeting was published, inviting the public and all Members to attend the meeting.

(ii)           Action Tracker AT2/17 (Commercial Property Service Charges Review) – information on this action had been provided to Members on 22 March.  The overall impact on AVDC had been a potential cost recovery of £200,000 per annum.  There had been no tenants lost.  Service charge budgets were being sent out for next year and reconciliations were being started for next year.

(iii)          Action Tracker AT1/18 (Council Tax and Business Rates) – it was agreed that this action would be re-opened.  Further information in relation to how the Council reclaimed monies owed would be provided.

(iv)         Action Tracker AT2/18 – (Delegation of financial approval authority) – a briefing note on the delegation of financial approval authority had been provided to Members in January 2018 and re-circulated on 22 March.  It was agreed that identified control weaknesses / low risk actions needed to be monitored to ensure they were appropriately actioned.

The Director with responsibility for finance gave an undertaking to meet with one Member who had particular concerns about this process.  An update would then be provided to a future meeting.

(v)          Action Tracker AT 3/18 (Corporate Risk Register) – it was confirmed that all of the Risk Register information would be included in the open part of the agenda, wherever this was possible.

RESOLVED –

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

To consider the attached report.

Contact Officer:  Nuala Donnelly (01296) 585164

The Committee received a report and External Audit Plan which summarised the proposed approach and scope of work to be undertaken by the external auditors for the 2017/18 audit in accordance with statutory requirements and to ensure it was aligned with the Committee’s service expectations.

The Audit Plan had been prepared having regard to several key inputs including:-

·                    Strategic, operational and financial risks relevant to the financial statements.

·                    Developments in financial reporting and auditing standards.

·                    The quality of systems and processes.

·                    Changes in the business and regulatory environment.

·                    Management’s views on all the above mentioned issues.

As well as the financial statement risks and value for money risks, the auditors had to perform other procedures as required by auditing, ethical and independence standards, the Code and other regulations.

The auditors had assessed the key risks which would drive the development of an effective audit and the planned audit strategy in response to those risks and had identified four significant risks to the opinion of the financial statements. These were the risk of fraud in revenue and expenditure recognition, misstatements due to fraud or error – management override and property, plant and equipment – administration and valuation.

The external auditors had also identified Pension Liability Valuation as an important issue when considering the risk of material misstatements to the financial statements and disclosures, although it had not been classified as a significant risk.

The Audit Plan restated, as in previous years, that management had the primary responsibility to prevent and detect fraud.  The Plan detailed how the auditors planned to obtain reasonable assurance about whether the financial statements as a whole were free of material misstatements whether caused by error or fraud.  Work would also be undertaken to consider whether the Council had in place ‘proper arrangements’ for securing financial resilience at the Council, and to secure economy, efficiency and effectiveness on its use of resources, which would include an assessment against the requirements of the CIPFA/SOLACE framework for local government.  In due course this would be reported to the Committee through documents such as the Annual Governance Statement.

An update on the results of the audit work in these areas would be reported back to the Committee in September 2018.

As in previous years, the Internal Audit plans and resulting work would be reviewed.  The findings of audit reports, together with any other work completed in the year, would help to inform detailed external audit work, including on issues raised that had an impact on the year-end financial statements.

The indicative fee scale for the audit work was £56,785, although it was possible that this fee could increase in due course if additional testing or work was required in addition to that already identified within the Audit Plan.  The external auditors would be making use of third party specialists for work on the valuation of land and buildings and for Pensions disclosure and IAS 19 Liability work.

The fee for other non-audit services not covered by the audit work was  ...  view the full minutes text for item 4.

To consider the attached report, which includes the following completed internal audit reports:-

·                     General Ledger

·                     Housing Benefits

·                     Taxi Licensing

·                     Building Control "to follow"

Contact Officer: Kate Mulhearn (01296) 585724

The Committee received a progress report on assurance work activity undertaken against the 2017/18 Assurance Plan that had been approved by the Audit Committee in July 2017.

The following matters were highlighted:-

Four reports had been finalised since the previous Committee meeting:

General Ledger – a number of audit reports in recent years had highlighted issues with the Tech1 finance system including the initial implementation of the system, the design of processes and controls, and poor engagement and speed of response to requests for support.  System improvements had also been hindered by internal factors, primarily the level of work required following restructure to remodel the finance structures in line with organisational change and an under resourced team with appropriate expertise. The issues had not impacted on the integrity of the financial accounts, but had resulted in inefficiency, inconsistencies, manual work-arounds and a general lack of reporting to support good financial control.

The report provided a summary of the issues and actions being taken to address them and concluded that whilst progress was being made, a number of concerns remained, mainly around Tech1 consultant capacity and resource to meet the operational and development needs of AVDC.  Until significant progress had been made in addressing some long outstanding issues with existing processes and controls, there remained a high risk around the operational performance and functionality of the finance system.

Overall, the report had been classified as High Risk and had identified the following issues with recommended actions:-

·                    Balances within suspense accounts were not being cleared in a timely manner and there was a lack of clarity around responsibility and documented procedure for completing the process (Medium)

·                    Some interfaces were not reconciled to Tech1 including the Bartec system and some Uniform activity. Issues relating the Northgate/Tech1 interface had been reported in the Housing Benefits internal audit report.  A number of the system maps for the interfaces between the Tech1 system and the Council’s other sub-systems remain incomplete, with regular reconciliation not being consistently performed (Medium)

·                    There was insufficient monitoring over Tech1 user accounts and supplier access to the Tech1 system. Staff leaving the Council were not consistently having their user accounts deactivated in a timely manner (Medium)

·                    There was a lack of knowledge and restrictions on who was able to access and make amendments to the chart of accounts (Low)

·                    Insufficient journal narrative and back-up documentation was being recorded for journals on the Tech1 system and there were cases where the same member of staff was preparing and approving the journal for posting (Low)

·                    There was a lack of documented procedure for managing any updates or changes required for the Tech1 system (Low  ...  view the full minutes text for item 5.

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.

Since the previous Audit Committee meeting in January 2018 the following risks had changed:

The Council’s managementcontinuedtoconsidertherisksarising following theBrexitdecision.  Atthissta  ...  view the full minutes text for item 6.

To consider the attached report.

Contact Officer: Nuala Donnelly (01296) 585164

The Committee received a report on the risk assessment methodology applied in determining the minimum safe level of General Fund Working Balance used in budget planning.  Members were invited to consider this and comment upon the completeness and adequacy of the provision as it would be used in budget planning for 2019/20.

There was a statutory requirement on all Councils to set a balanced budget each year which could legitimately include the use of general uncommitted balances, where the Council agreed that it was appropriate to do so.  It was prudent practice for Councils to maintain a General Fund uncommitted working balance against unexpected cost pressures or loss of income in order to ensure that the Council’s finances remain balanced at all times.

The level of balance maintained by Aylesbury Vale District Council was reassessed annually and the minimum recommended safe level was then applied in budget setting and planning.  The report presented the risk assessment methodology and the risks identified in determining the minimum recommended safe level of £2.0 million used in budget planning for 2019/20.

Members of the Committee considered the methodology, the risks and the mitigations identified and their appropriateness in the context of the budgetary pressures facing the Council.  The potential risks arising following the Brexit and potential Unitary decision would continue to be assessed.  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 make any financial provision.  The assessment was attached as an appendix to the Committee report.

RESOLVED –

That the risk assessment methodology applied in determining the minimum safe level of General Fund Working Balance used in budget planning be noted.