Agenda and minutes

Audit Committee - Wednesday, 23 September 2015 6.30 p.m.

Venue: Georgian Room, Kendal Town Hall

Contact: Sandip Mahajan 

Items
No. Item

AUD/17

ELECTION OF CHAIRMAN

Minutes:

RESOLVED – That, in the absence of the Chairman and Vice-Chairman, Councillor Stan Collins be elected Chairman for the meeting.

AUD/18

MINUTES pdf icon PDF 163 KB

To authorise the Chairman to sign, as a correct record, the minutes of the meeting of the Committee held on 23 July 2015 (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 23 July 2015.

AUD/19

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/20

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/21

WORK PROGRAMME 2015/16 pdf icon PDF 102 KB

To review the Audit Committee’s Work Programme for 2015/16.

Minutes:

The Committee reviewed their Work Programme for 2015/16.

 

RESOLVED – That the Work Programme for 2015/16 be noted.

AUD/22

INTERNAL AUDIT RECOMMENDATIONS AND ANNUAL GOVERNANCE STATEMENT ACTION PLAN - PROGRESS REPORT pdf icon PDF 138 KB

To note progress made with Internal Audit Recommendations, the Annual Governance Statement Action Plan 2015/16 and Anti-Fraud and Corruption.

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 (AGS) Action Plan.

 

There were 21 Internal Audit recommendations of which nine had future completion dates; of the 12 recommendations due, six had been completed and six partially completed.

 

The AGS Action Plan contained three longer-term actions and progress would be reported back to the Audit Committee.

 

The report also covered managing the risk of fraud and corruption in line with the CIPFA Code of Practice and local codes. Six areas had been identified which required some improvement of which two had been actioned and previously reported (Minute AUD/65 (2014/15) refers).

 

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

AUD/23

INTERNAL AUDIT PROGRESS REPORT 2015/16 (No. 2) pdf icon PDF 726 KB

To note a summary of the work carried out by Internal Audit and details of the progress made on the delivery of the approved Audit Plan for the second period of 2015/16 including Internal Audit reports.

Minutes:

The Internal Audit Manager presented this report which summarised the work carried out by Internal Audit and progress made on the delivery of the approved Audit Plan in period two of 2015/16. Audit staff had been allocated for all the planned audits. Five audits were in progress and three audits had been completed of which two were ‘follow-up’ progress reports.

 

The Internal Audit Manager outlined the findings and recommendations of the three completed audits. The scope of each audit was listed in the reports.

 

Asset Management

 

The original audit of the Asset Management Service had resulted in a partial assurance with four recommendations (one high priority and three medium priority) requiring follow-up work. One recommendation had been completed, two were being progressed and one was not due yet.

 

The follow-up audit had resulted in an improved assurance level of ‘reasonable’ with four medium priority recommendations. The medium priority recommendations concerned the need for a comprehensive asset management strategy and ensuring that rent reviews and lease renewals were completed to avoid any continued loss of rent.

 

Members had some concerns about loss of rent some of which had been occurring for the last 18 months. Officers explained that some improvements had been made such as Financial and Legal Services working more closely together and also holding regular progress meetings with the Council’s property manager, NPS. Other improvements included more robust use of emails that could be more easily tracked rather than paper memos. Each case could involve different issues such as complex legal elements that could involve lengthy processes to be followed. There was also currently a legal officer vacancy to be filled. A progress update could be provided at the next Audit Committee in December.

 

Grounds Maintenance

 

The original audit of the Grounds Maintenance Service had resulted in a partial assurance with nine recommendations requiring follow-up work. Of the original nine recommendations, two had been completed, five were being progressed and two needed actioning.

 

The follow-up audit had resulted in an improved assurance level of ‘reasonable’ with five medium priority recommendations and two advisory recommendations. The medium priority recommendations concerned completion of a service strategy, finalising performance management arrangements including using a service level agreement with the contract provider, robust procedures for contract changes and extra works.

 

Members had some concerns about ensuring that there were robust procedures for contract changes, in particular extra works. They felt that there needed to be effective control and planning to ensure that extra works were fully justified and exceptional. Officers explained that regular meetings were held with the contractor allowing potential extra works to be identified and considered as to whether these came within the contract scope, in particular whether there was any additional cost. Extra works were not required often and there was some budget provision for these. Consideration was given to whether any particular extra works might occur again and appropriate forward planning applied. Further written details would be provided.

 

Insurance

 

The audit of the Insurance Service had resulted in  ...  view the full minutes text for item AUD/23

AUD/24

EXTERNAL AUDITOR'S OPINION - STATEMENT OF ACCOUNTS 2014/15 (AUDIT FINDINGS) pdf icon PDF 300 KB

To receive the External Auditor’s opinion on the 2014/15 Accounts.

Minutes:

The External Auditor staff presented this report which formed the External Auditor’s Opinion on the 2014/15 Statement of Accounts. This included the ‘Audit Findings’ concerning the accounts and a ‘Value for Money’ assessment concerning good use of resources. The Audit Committee was obliged to consider the Opinion.

 

This was an unqualified set of accounts and good value for money conclusion. They had looked at management estimates, assumptions and judgements made and accounting risks. There had been no outstanding issues.

 

One post-balance sheet adjustment had been required. This concerned a car park income sharing agreement whereby the Council had recently been made aware of a discrepancy which meant that the other party needed to be refunded £219,000. This meant income for 2014/15 reduced by £219,000 and needed to be reflected as such, this sum represented six years of surplus income share equating to £37,000 per year.

 

One significant issue had been the need for management to adjust the valuation of the Council’s leisure centre properties based on an external valuator’s advice. The External Auditors concluded that the right approach had been followed and the valuation was in line with best practice.

 

There was some advice on making slight improvements to procedures for cross-referencing third party transaction disclosures.

 

The External Auditor outlined that Value for Money related to having financial resilience, with an effective Medium Term Financial Plan and good use of resources (economic, efficient and effective). The Council had robust arrangements for securing value for money, had a good record of making strategic savings and had strong reserves.  The External Auditor added that there had been some slight slippage in the capital programme. This was not uncommon but needed monitoring including the revenue costs of the capital programme.

 

A small amount of work remained concerning housing benefits so the external audit would be completed shortly.

 

Members acknowledged the efforts of the External Auditor and Finance staff.

 

RESOLVED – That the External Auditor’s Opinion on the 2014/15 Statement of Accounts be noted.

AUD/25

STATEMENT OF ACCOUNTS 2014/15 pdf icon PDF 144 KB

To approve the Statement of Accounts 2014/15 and Letter of Representation and authorise the Chairman to sign the Letter on behalf of the Audit Committee.

Additional documents:

Minutes:

The Chief Accountant presented this report which followed on from the External Auditor’s Opinion on the 2014/15 Statement of Accounts. Members had reviewed the unaudited Accounts at their July meeting. He explained that there had been one post-balance sheet change concerning a car park refund through a shared income agreement.

 

In the absence of the Audit Committee Chairman and the Chief Executive, delegated authority was sought for the acting Chairman for this meeting, Councillor Stan Collins, to sign the Letter of Representation and Statement of Accounts as approved, and the Director of Policy and Resources (Monitoring Officer) to sign the Annual Governance Statement as approved.

 

RESOLVED – That

 

(1)          the revised Statement of Accounts, including the Annual Governance

Statement, be approved;

 

(2)          the letter of representation as at Appendix 2 to the report be approved;

 

(3)          the acting Chairman of the Audit Committee for this meeting, be

authorised to sign the Letter of Representation and the Statement of Accounts on behalf of the Committee; and

 

(4)          the Director of Policy and Resources (Monitoring Officer) be authorised

to sign the Annual Governance Statement on behalf of the Chief Executive.

AUD/26

OTHER SIGNIFICANT FINANCIAL ISSUES

To receive a verbal update from the Assistant Director (Resources) and Section 151 Officer on any other significant financial issues.

Minutes:

The Assistant Director Resources (Section 151 Officer) reported that the Medium Term Financial Plan, which was due to be approved by Council, set out broadly balanced budgets for the next three years involving a range of savings and income opportunities. The fourth year, 2019/20, required additional savings of over £600,000. The Government’s Spending Review would give more information on government funding over the next three years or so. The precise Local Government Financial Settlement was expected in December.

 

Members noted the volatility and unpredictability of government funding, in particular the long-term future of New Homes Bonus which formed an increasingly important element of the Council’s finances.

 

RESOLVED – That the verbal report be noted.