Meeting documents

RESOLVED –

That Councillor Newcombe be elected Chairman of the Committee for the ensuing year.

RESOLVED –

That Councillor Waite be appointed Vice Chairman of the Committee for the ensuing year.

To approve as a correct record the Minutes of the meeting held on 25 March, 2019, copy attached as an appendix.

RESOLVED –

That the minutes of the meeting held on 25 March, 2019, be approved as a correct record.

To receive a verbal update from the external auditors.

Contact Officer:  Nuala Donnelly (01296) 585164

The Committee was advised that the draft accounts for 2018/19 had been completed by the finance team by the deadline of 31 May,2019.  They had been published on the Council’s website and were available therefore for public inspection.  The target date for publishing the final accounts was 31 July, 2019.  However, the Council would be unable to meet this deadline because the external auditors (Ernst and Young) had advised that they could not support an audit to meet this timetable.  The audit had been postponed until September.

At a meeting with a representative of the external auditors and the Chief Executive of the PSAA, attended by the Chairman of this Committee, it had been stated that the external auditors did not have enough qualified staff and that the quality of the audit rather than the need to meet the deadline was more important.  Other local authority Audit Committee Chairmen and finance officers had been present at this meeting.  The Council was one of 19 local authorities (including those in Buckinghamshire) affected by the delay.  The external auditors had indicated that 31 job offers had been made, but Members appreciated that this was no guarantee that all would be taken up.

The Chairman of this Committee had expressed disappointment with this situation which was felt to be unacceptable, given that the external auditors had had enough time to assess their capacity when tendering their services to all the local authorities to which they had been appointed external auditors.  The external auditors had been asked to provide a form of wording that could accompany the final (unaudited) accounts when published in July.  It was indicated that the audit had now been arranged to take place from 2 to 28 September, 2019.  This had meant that there was now a need to rearrange the previously diarised meetings of this Committee, and Members expressed their thanks to the finance team for organising their annual leave arrangements in a flexible manner in order to accommodate the new timetable.

The Chairman (supported by Members of the Committee) expressed his disappointment at the lack of customer engagement and insight shown by the external auditors and the PSAA in relation to the operational/reputational impact of the delay on the affected local authorities.  It had become clear at the meeting referred to above that no consideration had been given to local factors such as the transition to a single authority for Buckinghamshire.  The meeting had also expressed disappointment at the fact that the local authorities affected had not been given an opportunity to comment on the delay and the fact that they had not been offered any flexibility. The issue of financial compensation had been raised but the only response from the PSAA had been that the affected local authorities could challenge the fees.  It was reported that subsequently, the Secretary of State for Housing, Communities and Local Government had announced that he would be instigating a review of local authority audit arrangements.

Members had no option but to  ...  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 strategic risk assessment and plans for internal audit work for 2019/20.  Information on the annual plan and indicative timeline of proposed reviews was detailed at Section 4 of the plan.

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 placed upon them.  Corporate level objectives and risks had been considered when preparing the plan.  Members were informed that in developing the plan for the final year of AVDC, particular consideration had been given to the Unitary context and the changing priorities and risk of AVDC as a transitioning authority rather than as a continuing organisation.

In putting together the plan, consideration had been given to the impact that an internal audit review might have on the capacity of teams involved to deliver their core activities, particularly as teams were already stretched to deliver those services; additional work associated with a review and, in many cases, transitionary work in preparation for the unitary authority.  More assurance from "first and second level" sources, such as the risk management process and work being undertaken as part of the transition programme would be needed.

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 2019/20 and were informed:-

(i)            It was confirmed that particular attention had been given to audits that provided added value to the Council as a transitioning authority.  Because of this, the plan was "lighter touch" than would normally be the case.  However, flexibility had been built into the plan to enable specific reviews to take place if considered to necessary.

(ii)           Referred to in response to a number of the reports included on the Committee agenda, it had been recognised that the risk of losing key staff during the transitioning process was relatively high and was likely to increase as vesting day approached. The Committee was assured that Cabinet was reviewing the position regularly and was prioritising work  ...  view the full minutes text for item 5.

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 2018-19.  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 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 2018-19 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:-

·             The majority of weaknesses in control design and operating effectiveness identified had been mediumorlowrisk.

·             Two high risk findings had been identified in the areas of Commercial Waste and General Ledger Reconciliations.

·             Good progress had been made during the year on implementing actions identified during internal audit reviews to strengthen the overall control environment.

A total of 8 assurance reviews had been completed in 2018/19 of which 1 had been classified as "high" risk, 5 as "medium" risk and 2 as "low" risk.  This had resulted in the identification of 2 high, 12 medium and 25 low risk findings relating to weaknesses in the design and operating effectiveness of controls.  This compared to 9 assurance reviews (6 high, 16 medium and 20 low risk recommendations) in 2017/18, although a direct comparison could not be made.

A summary of the reviews undertaken and the opinion given was detailed at Section 3 of the Corporate Governance Manager’s report.

A number of weaknesses had been identified that needed to be reported in the Annual Governance Statement, and which related to the "high risk" findings identified in the reviews of the General Ledger and Commercial Waste.  A summary of these high risks was also detailed in Section 3 of the Corporate Governance Manager’s report.

Other internal audit work undertaken during the year had included:-

·                    reviewing the Council’s governance arrangements over its investment in  ...  view the full minutes text for item 6.

To consider the attached report.

Contact Officer:  Kate Mulhearn (01296) 585724

Members received a progress report on activity undertaken against the 2018/19 Assurance Plan that had been approved by the Committee in June 2018.  The following matters were highlighted:-

Final Reports issued since the previous Committee Meeting

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

·                    Connected Knowledge – Benefits Realisation (Risk Rating: n/a) – the review had used a sample of 3 completed Connected Knowledge projects to assess the approach the Council was taking to identify, measure and report on the benefits and lessons learnt.  The report highlighted a number of areas of good practice and, for the projects sampled, the majority of service users had stated that the projects had delivered improvements on the previous arrangements.  However, the review had concluded that, at this stage of the programme, it was hard to form a definitive view on the benefits realised to date, with further improvements needed on the clarity with which anticipated benefits were stated and subsequently reported.

The review had also found that arrangements to close down projects needed to be further formalised, using a two stage approach.  Members commented on the need in particular to be mindful of the decision of Council to ensure a proper assessment of the benefits of projects against the aspirations of the new unitary authority.

·        General Ledger Reconciliations and Management Information (Medium Risk) – the review had identified one high risk, one medium risk and 2 low risk findings.  The purpose of the review had been to assess the control design and operating effectiveness with regard to AVDC’s management of its general ledger, particularly in terms of how it interfaced with other systems and the processes for reconciliation.  The findings had been summarised as follows:-

·                     there had been a lack of automated integration between some Council systems and the general ledger and some key reconciliations (including Licensing, Environmental Health (RegServe) and Commercial Property) had not taken place to confirm the accuracy and completeness of data held.  This lack of integration had created inefficiencies in some of the Council’s billing processes. (High)

·                     reconciliations in the Waste service, including Garden Waste and Trade Waste had not been undertaken. (Medium)

·                     other areas for improvement in reconciliation processes had been identified including Bulky Waste, Domestic Waste, Land Charges, Planning and Markets. (Low)

·                     procedures relating to the completion of reconciliations between AVDC’s various financial systems had not been sufficiently detailed.  This included not having a documented reconciliation approval form to record all reconciliations that had not taken place. (Low)

·                     the Quarterly Finance Digest had not always been reported for formal scrutiny on a timely basis. (Advisory).  It was commented that the Financial Digest should be circulated as soon as it had been finalised with a request for Members to raise any issues directly with officers for subsequent report to this Committee if necessary.

A number of areas of good practice had been noted during the review and these had been reflected in the overall "Medium" risk classification for the report.

·                    Debt Management (Low  ...  view the full minutes text for item 7.

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 2018/19.

The Council was required to make available for audit its draft Annual Accounts by 31 May 2019, with a view to producing the final (audited) Annual Accounts for approval by 31 July 2019.  The Accounts and Audit Regulations required the accounts to be formally signed off by the Chairman of the Audit Committee and the Director responsible for Finance.

Whilst there was no requirement to do so, the guidance to the Accounts and Audit Regulations suggested that 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 timetable for the preparation of the accounts had been completed to a draft accounts deadline of 31 May 2019.  From 1 June 2019 to 15 July 2019, members of the public and local government electors would be able to inspect the accounts of the Council for the year ended 31 March 2019 and certain related documents.  A copy of the Council unaudited statement of accounts was also currently available on the Councils website.

The Committee was informed that the Council’s accounts were subject to external audit by Ernst and Young (EY) LLP.  In May 2019, the external audit team had informed the Council that they would be unable to carry out the audit to meet the 31 July 2019 target date.  The deadline represented a target date for the publication of the accounts and was not a statutory deadline.

As referred to earlier during the meeting, Ernst and Young had cited exceptional levels of staff vacancies leading to staff shortages as the primary reason for the delay, with AVDC being 1 of 19 authorities affected by it.  The Public Sector Audit Appointments (PSAA) who contracted with EY had supported the decision to delay, on the understanding that the delay would ensure the required high quality of audit, and outweighed any considerations over timeliness.  The NAO, MHCLG and the LGA had also been informed of the decision.  AVDC had not been consulted on the delay and had been presented with a "fait accompli".

The formal audit was now scheduled to commence on 2 September 2019 and continue for 4 weeks.  The final accounts would then be presented to the Audit Committee on 25 November 2019 where Members would be asked to consider the approve the statement of accounts.  The Audit Committee would also be asked 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  ...  view the full minutes text for item 8.

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 Strategic Board.  Some of the risks were not dissimilar to those faced across other local authorities. 

The CRR had been fully updated in January 2019 to reflect the impact of the Secretary of State’s decision to implement a single unitary authority for Buckinghamshire.  The CRR had last been reviewed by the Audit Committee on 25 March 2019 and by Cabinet on 16 June. The following table showing the changing risk profile over time was submitted:-

The background and comments against each risk was included in the report, as well as a summary in relation to residual risk ratings.  Members were informed on the following:-

Staff capacity

That the highest risk currently facing AVDC was the lack of staff capacity to maintain services and deliver priority projects (CRR Risks 2, 3 and 4).  There was increasingly a recognition that there was no longer "business as usual" but that the Council needed to operate under a new model as it transitioned away from AVDC and towards the new Buckinghamshire Council.  This risk was now the subject of regular reports to Cabinet.

Support to Unitary Implementation

Information was provided that a number of AVDC staff members were already working full time for the Unitary Implementation team, that others were being considered for transfer or were considering moving, whilst the Council was also experiencing significant demands on "experts" to resource unitary work streams.  In some cases, AVDC senior managers were providing 50% or more of their time to support unitary work.  This was from across all areas of the Council.  The scope and scale of resource involvement was likely to increase over time

Staff retention and recruitment

A number of key staff had left AVDC to join outside organisations, as well as there being a number of recent management resignations.  There were already a number of hard to fill posts and this, coupled with the instability associated with the unitary transition was likely to make recruitment increasingly challenging.

Following the confirmed plans of the Chief Executive and a Director to leave AVDC shortly, there was an increasing risk that the existing leadership structures would no longer be sufficient to operate as they had previously done.

Managing the Risks

The Committee report provided details of the work that was  ...  view the full minutes text for item 9.

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.

Members also considered the Actions Tracker and it was agreed that the outstanding actions and implementation of the findings of the Safeguarding 2016/17 Review (AT 2/19) should be marked as complete.

RESOLVED –

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