Meeting documents

To approve as a correct record the minutes of the meeting held on 12 June, 2018, copy attached as an appendix.

With regards to the letter of the former Managing Director of AVB that had been circulated at the 12 June meeting, the Committee was informed that Members had been advised at the meeting that it was reasonable and lawful for them to consider the letter as part of their deliberations on the AVB review report.

RESOLVED –

That, subject to the above clarification, the minutes of the meeting held on 12 June, 2018, be approved as a correct record.

To receive a verbal update from the external auditors on the progress of work undertaken against the current year’s plan.

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 2017/18 Statement of Accounts was progressing satisfactorily.  The external auditors were currently working onsite at the Council offices undertaking the audit of the accounts and would report their findings and other conclusions to the Audit Committee on 23 July 2018.  There were no significant issues to report to Members.

Members requested further information and were informed:-

(i)            that the auditors were aware of the recommendations of the review of AVB, that would help to inform their future audit work.

(ii)           that the Audit Committee had played an active role over the last 2 years in challenging the governance arrangements of AVB.

RESOLVED –

That the external auditors 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 2017/18 Assurance Plan.  Last year’s work had now concluded and the Assurance Plan for next year’s work (2018/19) would be considered by Members as a separate agenda item at the meeting.  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 (Medium risk) – the review had identified one high, one medium and one low risk finding.  Overall, there had been a decline in performance compared to the previous year, primarily as a result of organisational changes, new staff and capacity issues.

o        High – the timeliness of Purchase Order (PO) approval and payments made to suppliers within 30 days performance had deteriorated compared to the prior year.  100% of purchase transactions made from April 2017 to January 2018 had been analysed.  From the 5,652 invoices received by the Council during this period, 40% had POs raised either on the same day or later than the invoice date.  21% of invoices had been processed for payment over 30 days later than the invoice dates.

o        Medium – key performance indicators had not been reported and monitored.

o        Low – Historic duplicate and incomplete supplier information in TechOne needed to be reviewed and cleared.

·                    Payroll (Low risk) – the report had identified two medium risk findings.  Overall, payments by payroll had been made in line with Council establishment lists and were accurate/complete through to payslips.  No issues had been identified.  The 2 medium findings were:-

o        Travel and subsistence – there was no up-to-date policy for staff and Managers to follow when submitting claims.  The narrative held in expense claims was also insufficient.

o        Starters, Leavers and Variations – these were not always processed in line with the Council’s requirement and forms were completed post and prior to the start and leaving dates respectively.

The full review reports were attached as Appendix 3 to the Committee report.

2017/18 Internal Audit Plan Work in Progress

With the exception of a small piece of work to obtain an independent review of the Annual Governance Statement, the Internal Audit Plan for 2017/18 had been completed.

Summary of changes to the 2017/18 Internal Audit Plan

To remain relevant, the annual internal audit plan needed to be flexible to respond to emerging or changing risks.  With budget constraints, there was also a need to ensure prioritisation was given to work that would achieve the greatest value to the organisation. The following changes had been made to the 2017/18 plan since it was approved in July 2017:

·                    Accounts Receivable – work was continuing to progress on implementing actions identified in prior year internal audit reports. Progress was being monitored through the audit action follow up process.  A review would be performed in 2018/19 when the new processes were in place.

·                    Tech 1 – an action plan was in place to update the Tech1 system  ...  view the full minutes text for item 3.

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 2018/19.

A summary of the approach undertaken for the risk assessment and preparing the internal audit plan was provided.  The plan was driven by the Council’s organisational objectives and priorities, and the risks that might prevent the Council from meeting those objectives.

The development of the internal audit risk assessment and plan had taken into account the requirement to produce an annual internal audit opinion by determining the level of internal audit coverage over the "audit universe" and key risks.  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.

In developing the internal audit risk assessment assurance had come from numerous sources within the Council as well as taking into account other sources where reliance could be place upon them.  Corporate level objectives and risks had been considered when preparing the plan.  Input had been obtained from Directors, Assistant Directors and Senior Managers to identify any specific areas that might require reviewing.

Members were informed that 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 and would be reported to the Audit Committee as part of the progress report.

Members sought further information on the Plan for 2018/19 and were informed:-

(i)            that Aylesbury Vale Estates (AVE) had been regularly scrutinised by the Economy and Business Development Scrutiny Committee and Cabinet since formation in 2009.  AVE representatives had attended the Audit Committee in March 2013 as there had been an issue at that time with the timely provision of financial information by AVE to AVDC to assist in the preparation of the end of year financial statements and group financial statements.  However, this situation had improved and AVE was now providing information in good time.

(ii)           Commercial Property – that work during 2017/18 had looked at service charges within the Estates and Asset Management area.  The actions identified during that review had now been actioned.  It was not planned to do internal audit work in this area during 2018/19.  However, if issues arose in-year then the Audit Committee would be consulted and audit resources could be re-directed.

(iii)          Section 106 – Members asked that the scope for this review include looking at how developer contributions were determined and whether developers were, or were not, complying with and delivering on their commitments.

RESOLVED –

That the Internal Audit Strategy and Plan for 2018-19 be approved.

To consider the attached report.

Contact Officer:  Kate Mulhearn (01296) 585724

The Committee received a preliminary draft of the Annual Governance Statement (AGS) for 2017-18 and were asked to identify any issues for further consideration or amendment.  The "review of effectiveness"  (pages 19-20) had not yet been included. The finalised AGS would be reported to the Audit Committee in July 2018, along with the Annual Internal Audit Opinion, prior to the AGS being included in the Statement of Accounts.  All other sections were complete.

Members were informed that the Annual Governance Statement had to be 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 preparation and publication of the Annual Governance Statement was a statutory requirement of the Accounts and Audit Regulations 2011. The Council was required 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".

Local authorities were required to prepare an annual governance statement in order to report publicly on the extent to which they complied with the good governance principles in the Framework. This included how they monitored and evaluated the effectiveness of their governance arrangements in the year, and on any planned changes in the coming period.

The annual governance statement was a valuable means of communication.  It enables an authority to explain to the community, service users, tax payers and other stakeholders its governance arrangements and how the controls it had in place managed risks of failure in delivering its outcomes. It needed to reflect an individual authority’s particular features and challenges.

The annual governance statement also provided a meaningful but brief communication regarding the review of governance that had taken place, including the role of the governance structures involved (such as the authority, the audit and other committees).  It focused on outcomes and value for money and related to the authority’s vision for the area. It should provide an assessment of the effectiveness of the authority’s governance arrangements in supporting the planned outcomes – not simply a description of them.

The annual governance statement would be reported to the Audit Committee in July 2018 along with the statement of accounts.  Once approved, it would be signed by the Leader of the Council and the Chief Executive at the same time as they signed the Annual Statement of Accounts.

RESOLVED –

That the content of the draft Annual Governance Statement 2017-18, be noted.

To consider the attached report.

Contact Officer:  Nuala Donnelly (01296) 585164

The Committee received a report on the current position in terms of the Statement of Accounts preparation, which set out the provisional financial outturn for 2017/18.

The dates for the accounts approval process had changed in recent years, but now required the Council to make available for audit its draft Annual Accounts by 31 May 2018, with a view to producing the final (audited) Annual Accounts for approval by 31 July 2018.  The Accounts and Audit Recommendations required the accounts to be formally signed off by the Chairman of the Audit Committee and the Director responsible for Finance., which would be done at the Audit Committee on 23 July.

Whilst there was no requirement to do so, the guidance to the Accounts and Audit Regulations suggests it was good practice to give members an early notification of the financial outcome of the previous year and to this end, the draft Statement of Accounts had been submitted to this meeting.  The timetable for the preparation of the draft accounts (31 May deadline) and final approval (31 July) was earlier than previous years and had presented challenges for both the preparers and the auditors of the financial statements.

The Council had liaised closely with external auditors and planned a shorter period for the production and audit of the Councils Annual Accounts.  From 1 June 2018 to 12 July 2018, members of the public and local government electors would be able to inspect the accounts of the Council for the year ended 31 March 2018 and certain related documents.  A copy of the Council unaudited statement of accounts was also currently available on the Councils website.

Members were informed that the formal audit of the accounts by the external auditors (Ernst and Young LLP) had commenced on 18 June for a 3 week period.  Following the audit, the accounts would be submitted to the Audit Committee on 23 July to consider and approve them.  The Committee would also be requested to consider the findings of the annual review of the effectiveness of the system of internal control, approve the Annual Governance Statement and consider the Annual Audit letter.

The Accounts presented detailed the Accounts for the Authority but also extended to the group financial statements where the Council had material interests in subsidiaries and joint ventures.  The accounts include results for Aylesbury Vale Broadband, Vale Commerce and reflected the material interest in Aylesbury Vale Estates.

The Accounts

Local authority financial statements had to comply with CIPFA’s Local Authority Code of Practice, which is based on International Financial Reporting Standards (IFRS), and also the requirements of accounting and financing regulations of central government.  The year end position within the Statutory Accounts contains transactions that were required by the Accounting Regulations.  These transactions were intended to provide a complete picture of the Councils financial affairs during the course of the year.

The report explained the key features of the primary statements and notes that made up the set of financial statements.  These included:

Narrative Report/Explanatory  ...  view the full minutes text for item 6.

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 last time the had considered the CRR in March 2018, there had been a number of changes to risks as follows:-

·                    5 New Risks had been added:

o        Failure to provide Universal Credit applicants with the support needed to successfully claim; could result in increased rent arrears locally and subsequent pressure on homelessness services (Moderate).

o        Fail to work with stakeholders to ensure safety of residential buildings following Grenfell. Lessons learned from Grenfell are not implemented (Moderate).

o        Fail to manage and deliver major capital projects on budget and to time -Pembroke Road redevelopment (High).

o        Fail to manage and deliver major capital projects on budget and to time - The Exchange (High).

o        Implementation of new HR & Payroll system may not go live with 100% accuracy (High).

·                    One risk had increased from Moderate to High:

o        Failure to adequately plan for next round of growth following adoption of VALP; including consideration of CaMKOx Corridor and need to meet updated OAN housing targets.

·                    2 Risks had reduced from High to Moderate:

o        Fail to recruit Technical Professional Specialists (Planning, IT, Property). Reliance on use of consultants / agency and not effectively managed.

o        Information Governance - A significant data breach, Inappropriate access, corruption or loss of data

·                    3 Risks had been removed / replaced:

o        Failure to manage and deliver the requirements of the SLA for HS2.

o        Failure to respond to new legislation on  Homelessness Duty, enforceable from 1 April 2018. Inability to recruit and train staff in complex new legislation.

o        Fail to manage and deliver major capital projects - Waterside North, Pembroke Road.

The background and comments against each risk was included in the report, as well as a summary in relation to residual risk ratings.  There were now 25 risks on the Corporate Risk Register.

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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.

Members would be asked to consider at the next meeting topics / issues that they would like included in the training and briefing sessions.

RESOLVED –

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