Agenda and minutes

Audit Committee - Thursday, 4 December 2014 7.00 p.m.

Venue: Georgian Room, Kendal Town Hall

Contact: Inge Booth 

Items
No. Item

AUD/30

MINUTES pdf icon PDF 173 KB

To authorise the Chairman to sign, as a correct record, the minutes of the meeting of the Committee held on 25 September 2014 (copy attached).

Minutes:

RESOLVED – That the Chairman be authorised to sign, as a correct record, the minutes of the meeting of the Committee held on 25 September 2014.

AUD/31

DECLARATIONS OF INTEREST

To receive declarations by Members of interests in respect of items on this Agenda.

 

Members are reminded that, in accordance with the revised Code of Conduct, they are required to declare any disclosable pecuniary interests or other registrable interests which have not already been declared in the Council’s Register of Interests.  (It is a criminal offence not to declare a disclosable pecuniary interest either in the Register or at the meeting.)

 

Members may, however, also decide, in the interests of clarity and transparency, to declare at this point in the meeting, any such disclosable pecuniary interests which they have already declared in the Register, as well as any other registrable or other interests.

 

If a Member requires advice on any item involving a possible declaration of interest which could affect his/her ability to speak and/or vote, he/she is advised to contact the Monitoring Officer at least 24 hours in advance of the meeting.

Minutes:

RESOLVED – That it be noted that no declarations of interest were made.

AUD/32

LOCAL GOVERNMENT ACT 1972 - EXCLUDED ITEMS

To consider whether the items, if any, in Part II of the Agenda should be considered in the presence of the press and public.

Minutes:

RESOLVED – That it be noted that there were no items in Part II of the Agenda.

AUD/33

WORK PROGRAMME 2014/15 pdf icon PDF 102 KB

To review the Committee’s Work Programme for 2014/15.

Minutes:

The Committee reviewed its Work Programme for 2014/15. The only change had been the update requested by Members on implementation of Internal Audit recommendations concerning Asset Management.

 

RESOLVED – That the Work Programme for 2014/15 be noted.

AUD/34

ASSET MANAGEMENT: UPDATE ON IMPLEMENTATION OF RECOMMENDATIONS pdf icon PDF 233 KB

To note progress made, with the reconciliation of asset rentals and the identification of any irrecoverable income, as requested by the Committee (Minute AUD/22.1 (2014/15)).

Additional documents:

Minutes:

At the previous meeting (Minute AUD/22.1 (2014/15)), the Committee had requested an update on progress made with the reconciliation of asset rentals and the identification of any irrecoverable income.

 

The Financial Services Manager explained that the Council’s property management contractor, NPS, had listed 446 lease agreements with annual rental income of £585.7k. Finance had checked these against their billing records and there was only one difference in the overall numbers of leases but 11 leases where there was a difference in the value billed which amounted to £30.8k. A breakdown of this difference was given. Invoices had been sent out and only £1.5k remained outstanding.

 

In reference to a query on the legitimacy of back-dated billing, it was understood that relevant notices had been served on time so there should not be any issues.

 

In terms of transparency, it was suggested that instead of reduced rents for charities, they should be charged full rents and secure grant funding from the Council. It was explained that the current approach was being phased out as leases expired and the suggested approach was being pursued.

 

Members thanked officers for providing clarity.

 

RESOLVED – That

 

(1)  the progress made to reconcile asset rentals be noted; and

 

(2)  the outstanding backdated rent due to missed notification as

detailed within the report be noted.

 

AUD/35

INTERNAL AUDIT REPORT RECOMMENDATIONS AND ANNUAL GOVERNANCE STATEMENT ACTION PLAN - PROGRESS MONITORING REPORT pdf icon PDF 142 KB

To note progress made against Internal Audit Report Recommendations and the Annual Governance Statement Action Plan for 2014/15.

 

Additional documents:

Minutes:

The Assistant Director Resources (Section 151 Officer) presented a progress report on implementation of Internal Audit recommendations and the Annual Governance Statement Action Plan. The Audit recommendations had all been fully implemented and the Action Plan work was well on track.

 

It was queried why clarification of the procedure for writing off sundry debts had been changed to end March 2015. It was explained that this more accurately reflecting when the Constitution was next being updated.

 

RESOLVED – That the progress made with implementing Internal Audit recommendations and progress made against the Annual Governance Statement Action Plan be noted.

 

AUD/36

INTERNAL AUDIT REPORTS 2014/15

To consider recently completed Internal Audit reports.

Minutes:

The Head of Internal Audit presented various reports for audits undertaken in 2013/14 as part of the agreed Audit Plan for that year. The scope of each audit was listed in the reports.

 

AUD/36a

DEVELOPMENT MANAGEMENT pdf icon PDF 492 KB

Minutes:

This audit of Development Management had reviewed the efficiency of the planning applications process and resource planning. A reasonable assurance had been given with some advisory recommendations and one medium priority recommendation. This recommended having a comprehensive procedure manual for processing applications. Service performance was good and the recommendation did concern technical procedures. This was about administrative procedures and ensuring consistency and more controlled processes.

 

The Development Management Group Manager explained that the planning regime was complex and constantly changing. Government often introduced legislation at short notice with little guidance. Ad-hoc appeal decisions also needed to be recognised. Whenever a new process was undertaken, the relevant officer would write up a procedure and circulate this to colleagues. Service performance was high.

 

Members took on board the explanation and regime demands but felt that there still needed to be a manageable comprehensive manual. There needed to be robust contingency for absent staff and to support new staff. It was suggested that updating of electronic manuals might be more practical. The management target of 18 months for implementation was queried.

 

It was explained that a council-wide digital innovation programme was being undertaken hence the 18 months target. Corporate support would be provided especially to specialist areas such as planning and a streamlined online manual would be available to all planning officers.

 

Members felt the planned approach was appropriate and complimented service performance. It was also suggested that, as no national subscription update service appeared to exist, the Council could explore this as a potential income generation opportunity or a national scheme through the Local Government Association.

 

RESOLVED – That the Internal Audit report be noted and progress reports on implementation of recommendations be provided at future meetings as appropriate.

 

AUD/36b

GROUNDS MAINTENANCE - CONTRACT MANAGEMENT pdf icon PDF 593 KB

Minutes:

This audit of the Grounds Maintenance contract had reviewed the effectiveness of monitoring to ensure delivery of the contract specification, flexibility for ad-hoc work and partnership working with the contractor.

 

A partial assurance had been given with seven medium priority recommendations and two high priority recommendations. One high priority recommendation was for a grounds maintenance service plan with clear objectives and targets. The other was for robust procedures and documentation to provide for contract flexibility (contract variations and ad-hoc works).

 

Internal Audit felt that the proposed Action Plan was good and would review progress in six months before reporting back to Members.

 

The Community and Leisure Manager explained that a new team had assumed responsibility for contract management in April 2013, midway through the seven year contract (2010-17) which was due to be reviewed before 2017. They were also responsible for the Council’s leisure partnership contract.

 

The grounds maintenance contract needed to deliver service savings of £50k in 2 years and £200k over the full 7 years. So it had been important to build a good working relationship based on trust with the contract partner which could now be formalised in time for the new financial year.

 

A high-level strategic service plan for Parks and Open Spaces was being developed which would incorporate grounds maintenance aspirations. One objective would be partnership working with local communities. A growth funding bid had been submitted for two new staff to undertake a two year project from April 2015.

 

Members referred to views that grounds maintenance was not very flexible and the quality of work had gone down. There were also perceptions that the contractors might have lower skills bases which needed to be developed in priority areas. It was recognised that the contractor had put in a competitive price but needed to deliver good performance. Ultimately local communities were affected by the performance so it would be good to inform them about service provision and involve them in work. It was explained that two-way dialogue took place with the contractor being encouraged to suggest ideas and work flexibly with the contract specification varied to allow flexibility. 

 

The Internal Audit report provided a helpful insight for reviewing the contract before 2017. The current contract was jointly procured with Barrow, who had a simpler and smaller terrain. South Lakeland needed to consider the range of options and partners such as County Highways (verges) and the County Area Committee. There had been some notable community successes involving the contractor and partnerships needed to be pursued with these community groups.

 

 

RESOLVED – That the Internal Audit report be noted and progress reports on implementation of recommendations be provided at future meetings as appropriate.

 

 

AUD/36c

LAKE WINDERMERE SERVICES pdf icon PDF 566 KB

Minutes:

This audit of Lake Windermere Services had reviewed the moorings income management, Ferry Nab management, partnership opportunities, and training value for money (Royal Yachting Association). Close working with the Lake District National Park Authority was important. 

 

A reasonable assurance had been given with 8 medium priority recommendations and two advisory recommendations. The strengths of the service were also recognised.

 

RESOLVED – That the Internal Audit report be noted and progress reports on implementation of recommendations be provided at future meetings as appropriate.

 

AUD/37

INTERNAL AUDIT - PROGRESS REPORT 2014/15 (No.3) pdf icon PDF 366 KB

To note work carried out by Internal Audit and progress made on delivering the Audit Plan 2014/15.

Minutes:

The Head of Internal Audit Manager presented the third progress report for 2014/15 which summarised Internal Audit activity to date (14 November 2014). She explained that feedback from the previous meeting concerning the report formats had been incorporated as appropriate. Reporting dates for Committee meetings had been added to aid planning. Internal Audit performance was on target with no issues.

 

RESOLVED – That the progress made against the agreed 2014-15 Audit Plan be noted.

 

 

AUD/38

EXTERNAL AUDIT - ANNUAL AUDIT LETTER 2013/14 pdf icon PDF 132 KB

To note the Annual Audit Letter for 2013/14.

Minutes:

The External Auditor presented the statutory Annual Audit Letter which summarised work undertaken over the last year. There were no surprises and an unqualified opinion had been made.

 

There was one update to the report, namely that the grant certification of housing benefit claims had now been completed and on time. A qualified opinion had been made with two minor issues.

 

The efforts of staff were acknowledged and it was noted that both the External and Internal Auditors had good working relationships with the Council.

 

RESOLVED – That the Annual Audit Letter for 2013/14 be noted.

AUD/39

EXTERNAL AUDIT - PROGRESS REPORT pdf icon PDF 135 KB

To provide a verbal update on the progress made on the external audit and on current issues for local government.

Minutes:

The External Auditor presented the regular progress report of work undertaken although it was still early in the external audit year. The scope of work remained unchanged including value for money assessments. The report also summarised key national issues of interest that were emerging and suggested approaches the Council might want to take in advancing solutions. The report included a link to a national paper ‘2020 Vision’ which looked at developing new options for long-term sustainability.

 

RESOLVED – That the progress report and summary of emerging national issues be noted.

AUD/40

REVIEW OF THE LOCAL CODE OF GOVERNANCE pdf icon PDF 156 KB

To consider the results of the review of the Code of Local Governance.

Additional documents:

Minutes:

The Financial Services Manager explained that the current Local Code of Governance had been reviewed in 2013. It had been reviewed again in line with best practice and was ‘fit for purpose’.

 

RESOLVED – That the review of the Local Code of Governance be noted.

AUD/41

REVIEW OF THE ANTI-FRAUD AND CORRUPTION POLICY AND ACTIVITY pdf icon PDF 166 KB

To consider the results of the Anti-Fraud and Corruption Policy and to provide statistical data on cases where sources of information indicated that fraudulent activity might be occurring.

Additional documents:

Minutes:

 

The Financial Services Manager explained that the current Anti-Fraud and Corruption Policy had been reviewed. Minor updates had been made including the internal audit provider details, introduction of Public Sector Internal Audit Standards, a new fraud/whistleblowing hotline number and replacement of references to Council tax benefit with Council tax discounts.   The Audit Commission had produced fraud guidance ‘Protecting the Public Purse’ which had been incorporated. Alongside the review were statistical indicators of potential fraudulent activity.

 

Members referred to previous suggestions that ‘mystery shopping’ style tests could be undertaken to ensure that staff were following anti-fraud procedures.

 

It was queried why a bid had not been put in for Government anti-fraud funding. It was explained that innovative bids were required.

 

It was suggested that there should be publicity highlighting the robust approach to tackling fraud. There was a risk that this could be undermined if fraud then took place. It was felt that measured publicity could be produced and Members updated on what was proposed.

 

RESOLVED – That

 

(1)       the amendments to the Anti-Fraud and Corruption Policy, as shown in Appendix 1 to the report, be approved; and

 

(2)       the anti-fraud activity be noted.

 

 

 

 

AUD/42

REVIEW OF THE WHISTLEBLOWING POLICY pdf icon PDF 155 KB

To consider the results of the review of the Whistleblowing Policy.

Additional documents:

Minutes:

The Financial Services Manager explained that, following the latest periodic review, the Whistleblowing Policy had been approved by the Human Resources Committee. The Policy linked closely to the Anti-Fraud and Corruption Policy so was of relevance to the work of the Audit Committee as well as the Standards Committee.

 

The Whistleblowing Policy was judged to be in line with guidance and best practice so no changes had been proposed. It was explained that the national ‘Public Concern at Work’ body provided advice and guidance rather than endorsement of individual policies. There had been no incidents reported under the Policy since its last review in 2013.

 

It was pointed out that the reference to reporting to the District Auditor under section 10 (External Contacts) of the Policy should be more appropriately changed to External Auditor.

 

RESOLVED – That

 

(1)       the review of the Whistleblowing Policy, as shown in Appendix 1 to the report, be noted; and

 

(2)       the reference to the District Auditor in the Policy be changed to External Auditor. .

 

AUD/43

REVIEW OF THE EFFECTIVENESS OF THE AUDIT COMMITTEE pdf icon PDF 90 KB

To consider the results of the annual review of the Audit Committee’s effectiveness.

Additional documents:

Minutes:

The Financial Services Manager explained that the Chartered Institute of Public Finance and Accountancy (CIPFA) had produced best practice Practical Guidance for testing the effectiveness of Audit Committees. This comprised of a detailed evaluation checklist and model terms of reference for Audit Committees.

 

The checklist included elements of judgemental assessment and ‘not applicable’ had been used where there was no positive/negative assessment. The overall conclusion was that the Audit Committee was effective.

 

It was explained that a model Knowledge and Skills Framework had also been produced by CIPFA for ensuring Audit Committee Members had the right tools This should also form part of Members’ Personal Development Plans.

 

Members referred to the specific ‘effectiveness’ section on the checklist. They felt that feedback was provided on their performance by the auditors and senior officers; and they did add value through ensuring that auditor recommendations were implemented. In reference to an improvement action plan, it was felt that this should perhaps be not applicable. Members also noted that there were no significant problems in completing the external audit (number 32 on the revised checklist) so this should be ‘no’ and felt that the Committee did address value for money (number 8 on the list) which should be ‘yes’.

 

It was explained that the proposed revised Terms of Reference for the Audit Committee, if approved by Council, would effectively incorporate further elements of best practice in relation to the assessment checklist. The checklist would be revised accordingly.     

 

RESOLVED – That

 

(1)       the review and its conclusion that the Committee is operating effectively in all material respects be approved, subject to proposed changes to the assessment checklist with a revised version to be presented to the next meeting;

 

(2)       the proposed amendments to the Audit Committee Terms of Reference, in Appendix 4 to the report, be recommended to Full Council; and

 

(3)       the Skills Framework for Members of the Audit Committee, in Appendix 5 to the report, be approved.

 

AUD/44

AUDIT COMMITTEE RISK REGISTER pdf icon PDF 84 KB

To review the Audit Committee Risk Register.

Additional documents:

Minutes:

The Financial Services Manager explained that the Audit Committee reviewed its Risk Register annually, which related to its own work and effectiveness. The Committee had looked at the Register at its July meeting and had asked for it to be reviewed again alongside the review of the effectiveness of the Committee.

 

All risks had been archived as no longer being a threat except one, namely that ‘significant issues addressed by Internal Audit were not addressed’. However, over the last 18 months this had not been an issue so there was low likelihood of occurring. Members were invited to review archived, existing and potential risks.

 

It was suggested that the External Auditor’s ‘2020 Vision’ report of future challenges for local government provided a good basis for identifying future risks that the Committee could recommend for going on the Register. It was also noted that new Members were a risk in terms of effectiveness until properly trained and experienced.

 

RESOLVED – That:

 

(1)       RISK AC 009, ‘significant issues identified by Internal Audit are not addressed’, be archived;

 

(2)       a new risk be added relating to future challenges faced by local government; and

 

(3)       a revised Risk Register be reported back to the next meeting of the Audit Committee.

 

 

AUD/45

REVIEW OF THE CONSTITUTION pdf icon PDF 141 KB

To show the results of the Audit Committee’s annual review of the Council’s Constitution.

Minutes:

The Financial Services Manager explained that two minor changes were proposed to the Constitution, relating to non-domestic rate base determinations and discretionary council tax reductions, for delegating to the S151 Officer. It was explained that should Members, in the future, wish to reverse these delegations, a request to review the relevant sections of the Constitution was required.

 

RESOLVED – That

 

(1)       the proposed amendments to the Constitution, as referred to in paragraph 3.2.1 of the report, be recommended to Council for approval; and

 

(2)       the proposed amendments to the Constitution, as referred to in paragraph 3.2.2 of the report, be recommended to Cabinet for approval.

 

 

AUD/46

OTHER SIGNIFICANT FINANCIAL ISSUES

To receive a verbal update from the Assistant Director (Resources) and Section 151 Officer.

Minutes:

The Assistant Director Resources and Section 151 Officer presented a brief topical update on significant financial issues. She explained that long-term strategic ‘horizon scanning’ took place.

 

She referred to the Chancellor’s Autumn Statement which maintained the downward trend in public sector funding. Although the Revenue Support Grant was reducing, the Council was less reliant on this source of funding but there would be pressure on the localised pool of business rates. The Council’s Medium Term Financial Plan had spelt out a balanced budget assuming savings were made. This would be presented to Cabinet in December before public consultation and approval by Council in February 2015.

 

RESOLVED – That the verbal report be noted.