Meeting documents

Venue: Mezzanine Room 1, County Hall, Aylesbury. View directions

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Items
Note No. Item

09:00

1.

Election of Chairman

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Minutes:

Mr D Watson welcomed the attendees to the meeting and introduced the first item of the agenda; Election of Chairman. Mr Watson proposed Mr D Martin as Chairman. Mr P Martin seconded this proposal. There were no other candidates.

 

It was resolved that Mr D Martin would be Chairman for the ensuing year.

 

Mr D Martin took the Chair and thanked the Committee Members.

 

2.

Appointment of Vice Chairman

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Minutes:

The Chairman appointed Mr T Butcher to continue in his role as Vice-Chairman for the ensuing year

 

3.

Apologies for Absence / Changes in Membership

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Minutes:

Apologies had been received from:

·         Mr R Bagge

·         Mrs Patricia Birchley

·         Mr R Schmidt

·         Mr T Butcher

·         Mr D Dhillon

·         Ms M Gibb

 

The Chairman welcomed new Member Ms P Birchley.

 

Members noted that Ms N Glover had stepped down from the Committee.

4.

Declarations of Interest

To disclose any Personal or Disclosable Pecuniary Interests

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Minutes:

There were none.

5.

Minutes pdf icon PDF 172 KB

Minutes of the meeting held on 31 January 2018 to be confirmed as a correct record

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Minutes:

The minutes of the meeting held on 31 January 2018 were agreed as an accurate record and signed by the Chairman.

09:05

6.

Draft Statement of Accounts pdf icon PDF 2 MB

Draft Statement of Accounts for Buckinghamshire County Council and Pension Fund for the year ended 31 March 2018.

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Minutes:

The Chairman welcomed Mr R Ambrose, Director of Finance and Procurement.

 

Mr Ambrose introduced the Draft Statement of accounts during which the following key points were highlighted:

  • The Council was ahead of the deadline for providing the Draft Statement of Accounts.
  • Once the accounts had been audited, the Statement of Accounts would be provided to the Committee on 25 July 2018 alongside the Annual Governance Statement.
  • 2017-2018 was the final year that the Council would be in receipt of the Revenue Support Grant. Going forward the Council would receive negative funding, commencing at £10.5m 2018-2019, reducing thereafter.
  • There was a £2.9M underspend against budget forecast, last year despite pressures, in particular from Adults and Children’s Social Care. This underspend aided the increase of general fund reserves which currently stood at £27.4M.
  • The slippage in the capital fund would be reviewed with the aim of reducing this in the future.
  • Mr Ambrose thanked Ms R Martinig, Mr L Whitehead, Ms Julie Edwards, Mr P McGovern and all the finance team/ budget managers for their hard work.

 

The Chairman thanked Mr Ambrose for his presentation.

 

Mr L Whitehead presented the main accounts and highlighted the following points:

  • There would be two major changes to accounting standards for 2018-2019 but neither would have an impact on the statement of accounts.
  • The accounts for 2017-2018 were prepared in accordance with the statutory framework.
  • Investments in property were diversified with £34.75M invested in commercial properties including Clarion House in Maidenhead and the retail park in High Wycombe.
  • The fair value of the investment portfolio had increased by £9M.
  • Pension liability had seen a slight decrease from £753.9M to £743.4M.
  • The pension fund had an increased net growth of in excess of £24.1M
  • A review of the employer contributions took place in 2016-2017 and the employer contribution increased to 26.4% from 22.8%. This would be part of a plan to reduce the underlying deficit over a 15 year period; hence the reduction in liability in the current year
  • The Revenue Support Grant (RSG) was at £8M and this year there would be no RSG.

 

The Chairman thanked Mr Whitehead for his presentation and invited questions from Members.

 

The Committee raised and discussed the following points:

  • A Member asked how the Council would calculate the income that would be set aside for when properties were vacant. Members were advised that 5% of income was set aside and earmarked for such costs including landlord’s fees.
  • A Member highlighted that the Capital Budget had missed every target and raised concerns relating to the commercial property investments given current market conditions. Members were informed that due diligence would be carried out on all potential investments including the financial standing of tenants, diversifying investments along with involvement from Carter Jonas and the Cabinet Member. The properties had provided a yield of roughly 6.5% which had exceed the anticipated yield of 6%. Further discussion took place relating to Members concerns about the investment in commercial property. Mr Ambrose agreed to provide Members  ...  view the full minutes text for item 6.

09:35

7.

Treasury Management Annual Report 2017/18 pdf icon PDF 337 KB

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Minutes:

The Chairman thanked Mr G Williams for his past work and welcomed Mr A Hussain as Deputy Cabinet Member for Resources.

 

Mr Hussain presented the Treasury Management Annual Report during which the following points were noted:

  • Following the payment for the Energy from Waste plan the Council changed from a net positive cash position to a net borrower.
  • The net borrowing position was £213M at year’s end.
  • Projected net savings over 25 years of around £10M will be achieved through the prepayment of £48M Lenders Option Borrowers Option (LOBO) loans and replacing the borrowing with Public Works Loan Board (PWLB) loans.

 

The Chairman thanked Mr Hussein for his summary and invited questions from Members.

 

The Committee raised and discussed the following points:

 

  • Members were keen to know more about the Council’s borrowing for the Energy from Waste Plant. The asset was deemed to have a life of 35 years.
  • An in depth discussion took place regarding the structuring and repayment of the loans taken out for the Energy from Waste Plant.
  • Members were keen to know more about the strategy between the Public Works Loan Board (PWLB) and lender's option borrower's option (LOBO). The Council would be replacing LOBOs with PWLB loans where savings could be achieved.
  • The Chairman highlighted the difference in Capital Expenditure on page 107. £82.68M had been approved at Full Council in February 2017 and the increase was due to commercial acquisitions and carry-forwards from 2016-17. It was noted that there had been an under-spend overall.

 

The Chairman thanked the officers and Mr Hussain for their report.

 

RESOLVED

The Committee RECOMMENDED the Treasury Management Annual Report and the Annual Prudential Indicators for 2017-18 to Council.

 

10:05

8.

Grant Thornton Audit Plan pdf icon PDF 529 KB

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Minutes:

The Chairman welcomed representatives from Grant Thornton.

 

Mr Paul Grady explained the Audit Plan which set out the general value for money work, key areas of risk and the work proposed in response to risk.

 

Page 118 - 112 summarised key challenges for the Council which included Adult Social Care Transformation Plans and the response to the Ofsted rating of Children’s Social Care. 

 

Mr Grady reported that page 123 contained a typographical error: the chart should read £16.5M as opposed to £16.5.

 

 

Page 124 was an examination of the Council’s value for money arrangements, ensuring that these would be fit for purpose. This included a review of the Council’s medium to long term ambitions and the assumptions in place to satisfy financial viability, including those built on strategic work.

 

The Chairman thanked Mr Grady for this overview and invited questions from Members.

 

  • A Member raised a query regarding audit quality and asked whether there would be any changes in the approach to accounting practices in relation to the move to a more commercialised style environment. It was confirmed that this change would be taken into account but that the audit would be in line with international financial reporting standards which would be the same as any large commercial entity.
  • In relation to the accruals provisions that the Council had been making regarding Bucks Care, Members asked whether there would be any residual challenges in 2018-19. Members were told that, while there would still be some considerations in this respect from the auditors perspective and there were still balances on the Council’s books, there would be no further transactions and as such there should be no residual challenges in 2018-19.
  • An in depth discussion took place in relation to the risks associated with possible conflicts of interest for Members on external bodies. While this had not been flagged up as one of the four main risks, this was taken into account as part of the governance issues that the Council would need to monitor. The audit would look at the provisions the Council had in place to mitigate this risk.
  • Ms Forsyth highlighted that any conflict should be reported to the Monitoring Officer and in turn this would be reported to internal audit. Ms Harlock went into further detail to explain this process to Members.
  • Members were concerned about IT security and whether extra scrutiny would be in place to mitigate any risks. Ms Harlock explained that the Council had software access rights in place. However, there would still be some residual risks around poor use. Mr Grady added that there would be other controls in place to minimise the impact should an incident arise.
  • A Member raised a quality issue in relation to the aforementioned typographical error on page 123. Mr Grady explained that any errors would be recorded and monitored to see if there was a cumulative impact and subsequently would look at whether any errors were intentional or accidental.

 

The Chairman thanked the representatives from Grant Thornton for  ...  view the full minutes text for item 8.

10.20

9.

Grant Thornton Pension Fund Audit Plan pdf icon PDF 352 KB

Additional documents:

Minutes:

The Chairman welcomed Thomas Slaughter, Grant Thornton who presented the Pension Fund Audit Plan.

 

The following points were highlighted:

  • The audit plan for the Pension Fund would be similar to that for the Council’s Statement of Accounts and would show the key headlines and focus on the risk areas for audit.
  • There would be a risk in the Council’s valuation of Level 3 investments which would be a standard for all pension funds.
  • There would also be a risk in the change of custodian and work would be completed on the transfer of data.
  • Planning materiality had been calculated at £27M which equated to 1% of the net asset of the fund.
  • Grant Thornton would report back to the Committee in July.
  • An in depth discussion took place regarding the autonomy of fund managers to terminate their relationship with the fund. This would be for the Pension Fund Committee to monitor.
  • The Chairman raised a query asking if there had been a change in the audit approach to the Level 3 investments. Mr Slaughter confirmed that there would be no significant change in their approach to audit but would review any changes compared to previous years.
  • The pooling arrangement would not make a huge difference to underlying work but would lead to changes in how the investments would be managed.

 

The Chairman sought feedback from Mr Grady on how the Committee could continue to work effectively and collaboratively with Grant Thornton and encourage the active promotion of the values of the audit process. Mr Grady reported that the Committee does achieve this. The Committee had demonstrated a high level of interest in comparison with other Local Authorities and commended Members for their perseverance. Mr Grady believed that the questions asked were relevant and that Members treated the matters raised with the appropriate seriousness.

 

·         In response to a question from the chairman, despite the reduction in fees, the level of service provided will continue. That being said, authorities that performed well would incur lower fees than those who required more concentrated auditing.

 

The Chairman thanked Grant Thornton on behalf of the Committee and on behalf of the County Council.

 

 

 

10:35

10.

Forward Plan pdf icon PDF 270 KB

Additional documents:

Minutes:

There was nothing to add.

10:40

11.

Exclusion of the Press and Public

To resolve to exclude the press and public as the following item is exempt by virtue of Paragraph 3 of Part 1 of Schedule 12a of the Local Government Act 1972 because it contains information relating to the financial or business affairs of any particular person (including the authority holding that information)

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Minutes:

RESOLVED

 

That the press and public be excluded for the following item which is exempt by virtue of Paragraph 3 of Part 1 of Schedule 12a of the Local Government Act 1972 because it contains information relating to the financial or business affairs of any particular person (including the authority holding that information)

 

12.

Confidential Minutes

Confidential minutes of the meeting held on 31 January 2018 to be confirmed as a correct record

 

Minutes:

The minutes of the meeting held on 31 January 2018 were agreed as an accurate record and signed by the Chairman.

10:45

13.

Date and Time of Next Meeting

25 July 2018, Mezz 1

Additional documents:

Minutes:

25 July 2018, 09:00, Mezzanine Room 1, County Hall, Aylesbury