Agenda and minutes

Audit Committee - Thursday, 19 April 2018 6.30 p.m.

Venue: Georgian Room, Kendal Town Hall. View directions

Contact: Inge Booth 

Items
No. Item

AUD/48

Minutes pdf icon PDF 80 KB

To authorise the Chairman to sign, as a correct record, the minutes of the meeting of the Committee held on 6 December 2017 (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 6 December 2017.

AUD/49

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 raised under this item.

AUD/50

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 are no excluded items on the Agenda.

AUD/51

Annual Reporting of Operational Risks to Audit Committee pdf icon PDF 170 KB

To consider the operational risks which are positioned above the line of tolerance and the mitigations to manage them.

Minutes:

The Performance and Risk Officer reminded the Committee that Internal Audit had recommended that the operational risks which were above the tolerance level should be reported to the Audit Committee, on an annual basis as a minimum, to ensure that Members were aware of the operational risks which had been identified and that they were being managed.  The ten operational risks that were above tolerance, together with details on the mitigations to manage them, were shown at Appendix 1 to the report.  Members’ attention was drawn to an additional risk around recycling income which had recently been escalated from operational level for inclusion on the Strategic Risk Register.

 

Further to AUD/38 (2017/18), the report included an explanation with regard to the low likelihood of a cyber security incident, together with information on the protective controls in place to prevent cyber attacks and on the processes for escalation and alerting other authorities and agencies.

 

In addition, the Performance and Risk Officer pointed out that the Strategic Risk Register was also reported to Audit Committee every six months.

 

During discussion, Members questioned how impact was being interpreted and raised the need for clarity, as well as for regularisation in the format of the risks contained within the Register.  They were also keen for the inclusion of a key explaining the significance of the risk position matrices at the start of the document, not only for the benefit of Members of the Audit Committee, but for other Members and for the public.  In response to a query raised with regard to the increase in the position above the line of tolerance to reflect the lack of capacity within Partnerships and Organisational Development, the Performance and Risk Officer advised that resources were being brought in to help lessen the effect.

 

RESOLVED – That the operational risks which are positioned above the line of tolerance and the mitigations to manage them, as listed in Appendix 1 to the report, be noted.

AUD/52

Internal Audit Progress Report 2017/18 pdf icon PDF 71 KB

To consider a summary of progress against the Internal Audit Annual Plan to date in 2017/18.

Additional documents:

Minutes:

The Internal Audit Manager introduced the Internal Audit Progress Report 2017/18. The report provided a summary of the progress against the Internal Audit Annual Plan to date.

 

The report detailed that, following the Internal Audit Plan’s approval by the Committee in April 2017, nine reviews had been finalised.  A draft report had been issued with regard to Lake Services (Moorings and Encroachments) and the site work with regard to Awarding of Grants completed.  The reviews for both Council Tax and Asset Management were due to commence in April 2018.  At the meeting, the Internal Audit Manager provided an update, informing Members that fieldwork had now been completed on the Council Tax audit.  He also reported that although the Asset Management Review had been due to commence in April 2018, this would not now commence until the new Council Year pending completion of the Asset Management Strategy.

 

The report also contained the executive summaries of the two audit reports completed in the period: Performance Monitoring and Compliance with the Local Code of Corporate Governance, both of which had been awarded Reasonable Assurance. These reports were also presented by the Internal Audit Manager.

 

One important action point had been identified with regard to the Review of Performance Monitoring.  The recommendation had received a positive management response.

 

Four important action points had been identified with regard to the Review of Compliance with the Local Code of Corporate Governance, each having received a positive management response.  The Internal Audit Manager explained that the four recommendations were essentially around streamlining and enhancing processes.  Attention was drawn to a typographical error in Recommendation 2 which appeared within the document as being Priority 3 instead of 2.  In response to queries as to why the Review had achieved Reasonable Assurance, having received four Priority 2 action points, the Internal Audit Manager explained that Internal Audit felt comfortable with this judgement.  He also agreed with a comment regarding the need for the colour coding of the document to be examined.

 

Internal Audit had also assessed the extent to which previous internal audit recommendations had been implemented. The report showed that four recommendations were yet to be implemented but were on target.  Implementation was in progress for ten recommendations where the original target date had not been met. 50 of the recommendations had been implemented and were now considered closed.  The Internal Audit Manager took on board comments raised with regard to paragraph 2 of the Follow Up Review (Appendix 3 to the report) and the need for additional headings and to re-order the status colours.

 

Concerns were raised with regard to the time being taken to address recommendations 1 and 2 relating to Bereavement Services and the time being taken to advertise for a consultant.  The Internal Audit Manager suggested that the delay was due to the drafting of the Parks and Open Spaces Strategy which underpinned the service.  The Director of Policy and Resources (Monitoring Officer) undertook to make enquiries from the Assistant Director Neighbourhood Services and  ...  view the full minutes text for item AUD/52

AUD/53

Audit Committee 2017/18 Work Programme pdf icon PDF 58 KB

To consider progress against the Committee’s 2017/18 Work Programme.

Minutes:

The Financial Services Manager presented a report on progress against the Committee’s 2017/18 Work Programme.

 

RESOLVED – That progress against the 2017/18 Work Programme be noted.

AUD/54

Audit Committee 2018/19 Work Programme pdf icon PDF 57 KB

To consider a draft Work Programme for 2018/19.  (The Programme can be adapted as necessary during the year.  Provisional dates are shown, dependent on confirmation of the Council’s Calendar of Meetings on 22 May 2018.)

Minutes:

The Financial Services Manager presented a draft Work Programme for the Audit Committee for 2018/19.  The provisional meeting dates shown were dependent on approval by Council of its Calendar of Meetings for 2018/19.

 

The Financial Services Manager drew Members’ attention to an additional item on the forthcoming year’s Programme.  Following the report to Audit Committee at its last meeting on preparing for the introduction of the General Data Protection Regulation (GDPR) and the Data Protection Bill (AUD/037 (2017/18) refers), there was to be an annual report on the subject presented to the Committee at its December meeting.  Members were keen for assurance to be provided in July on the Council having met the requirements of the Regulation.  It was also felt that a further report should be brought to the December meeting to provide an update on how the Council was performing in this area, together with details on the likely impact of potential errors.

 

RESOLVED – That the draft Work Programme for 2018/19 be agreed, subject to confirmation of the Council’s Calendar of Meetings.

AUD/55

Chair of the Audit Committee's Annual Report 2017/18 pdf icon PDF 57 KB

To consider the Chair of the Audit Committee’s draft Annual Report which summarises the activities of the Committee during 2017/18.

Additional documents:

Minutes:

The Committee considered the Chair’s Audit Committee Annual Report 2017/18.  The report summarised the activities of the Committee during the current Council Year and, subject to approval, would be submitted to Council in May 2018.  The report demonstrated that the Committee was working effectively and providing independent assessment of the Council’s governance arrangements.

 

RESOLVED – That the Chair of the Audit Committee’s Annual Report 2017/18 be approved for submission to Council on 22 May 2018.

AUD/56

Certification Work for South Lakeland District Council for Year Ended 31 March 2017 pdf icon PDF 119 KB

To consider a letter from External Audit on certification work for South Lakeland District Council for year ended 31 March 2017.

Minutes:

The External Audit Manager presented a letter from Grant Thornton on certification work carried out for South Lakeland District Council for year ended 31 March 2017.  External Audit had certified the Council’s Housing Benefit subsidy claim for the financial year 2016/17 relating to subsidy claimed of £17.7m, details of which were set out in Appendix A to the letter.

 

As a result of the findings of their work on the 2015/16 Housing benefit subsidy claim, Grant Thornton had asked Council staff to complete additional testing on non-Housing Revenue Account rent rebates cases and had re-performed a sample of their work.  The 2016/17 testing had also identified an error in relation to backdated claims, and Council staff had completed further work on these cases.  As a result of the errors identified, the claim had been amended, and Grant Thornton had issued an unqualified certificate to the Department for Work and Pensions.

 

The Chairman of the Committee expressed gratitude to officers for this achievement.

 

The indicative fee for the certification of the Council’s 2016/17 Housing Benefit claim had been based on the final 2014/15 certification fee, reflecting the amount of work required by the auditor to certify the subsidy claim that year.  The indicative fee set by Public Sector Audit Appointments had been £7,545 and Grant Thornton were now able to confirm this as the final fee, details of which were set out at Appendix B to the letter.

 

RESOLVED – That the letter from External Audit on certification work carried out for South Lakeland District Council for year ended 31 March 2017 be received.

AUD/57

The External Audit Plan for South Lakeland District Council Year Ended 31 March 2018 pdf icon PDF 428 KB

To consider the Audit Plan for South Lakeland District Council year ended 31 March 2018 and to receive a verbal update.

Minutes:

Note – During consideration of this item of business and in relation to reference made to the Cumbria Pensions Fund, Councillor Stan Collins declared a non-pecuniary interest by virtue of the fact that he was a member of both the Cumbria Pensions Committee and the Cumbria Pensions Forum.  He remained in the meeting during the discussion and voting on the item.

 

The External Audit Manager presented the External Audit Plan for the Council for the year ended 31 March 2018.  The Plan set out an overview of the planned scope and timing of the statutory audit of the Council for those charged with governance.

 

The document aimed to assist the Committee in understanding the consequences of External Audit’s work, discuss issues of risk and the concept of materiality and identify those areas of work External Audit will undertake during the year.

 

In addition, the External Audit Manager reported verbally on progress made by Grant Thornton in delivering their responsibilities as External Auditors during year ended 31 March 2018.

 

Discussion took place with regard to significant risks identified and the valuation of pension fund net liability.  Both the External Audit Manager and the Financial Services Manager were able to provide assurance that the gap between pension assets and pension liabilities was very much on the radar.

 

RESOLVED – That the following be noted:-

 

(1)        the Audit Plan for South Lakeland District Council year ended 31 March 2018; and

 

(2)        the update on progress made by Grant Thornton in delivering their responsibilities as External Auditors during year ended 31 March 2018.

AUD/58

Interim Internal Audit Annual Report 2017/18 pdf icon PDF 82 KB

To consider a summary of the outcomes of the work of the internal audit for South Lakeland District Council for 2017/18.

Additional documents:

Minutes:

An Interim Audit Annual Report 2017/18 was presented by Peter Harrison of TIAA Limited.

 

The Report provided a summary of the outcomes of the Internal Audit work and included the Head of Internal Audit’s interim opinion of reasonable assurance on the effectiveness of the Council’s arrangements for risk management, governance and internal control in accordance with the requirements of the Public Sector Internal Audit Standards.

 

The Committee was informed that, for 2017/18, the Accounts and Audit Regulations 2015 required the timetable for the preparation and approval of accounts to be brought forward to a draft accounts deadline of 31 May 2018 and an audit deadline of 31 July 2018.  The interim opinion was being provided to inform the Annual Governance Statement as part of the accelerated process.

 

RESOLVED – That the following be noted:-

 

(1)        the Head of Internal Audit’s interim opinion of reasonable assurance on the Council’s overall systems of governance, risk management and internal control for the year ended 31 March 2018, as set out at Appendix 1 to the report;

 

(2)        the progress achieved so far in 2017/18 in delivering the Audit Plan and the outcomes of completed reviews, as set out at Appendix 1 to the report;

 

(3)        the Head of Internal Audit’s declaration of Internal Audit independence as required by the mandatory Public Sector Internal Audit Standards; and

 

(4)        the Head of Internal Audit’s declaration of conformance with the mandatory Public Sector Internal Audit Standards.

AUD/59

Internal Audit Annual Plan 2018-19 pdf icon PDF 81 KB

To consider the Internal Audit Annual Plan 2018-19.

Additional documents:

Minutes:

Members gave consideration to a proposed Internal Audit Annual Plan for 2018/19, presented by the Internal Audit Manager.

 

The Accounts and Audit Regulations required the Council to undertake an adequate and effective internal audit of its accounting records and of its system of internal control in accordance with proper practices in relation to internal control. Proper Practices were now defined within the Public Sector Internal Audit Standards (PSIAS) which had become mandatory for all UK public sector internal auditors from 1 April 2013.  The PSIAS affirmed the need for annual risk based audit plans to be developed in order that the Head of Internal Audit could form an annual opinion on the Council’s systems of risk management, governance and internal control.

 

The draft Internal Audit Annual Plan attached at Appendix 1 to the report had been prepared following review of corporate documents including the Council’s Corporate Risk Register, corporate plans and recent internal audit coverage.

 

The Plan would be subject to regular review to ensure that it remained appropriate and any revision required would be considered and agreed by the Assistant Director Resources (Section 151 Officer) and reported to the Audit Committee.  Any request for significant consulting activity by Internal Audit would be considered for approval by the Audit Committee, in line with the requirements of the PSIAS.

 

Particular attention was drawn to the key areas which required internal audit coverage during the year:-

 

·         Enactment of General Data Protection Regulations;

·         Cybercrime;

·         Homelessness legislation; and

·         Customer Connect.

 

Discussion took place around the importance of officers having a thorough understanding in the use of statistics and it was suggested that this should be raised with management with a view to a report being presented to the Committee.  It was also suggested that it might be of benefit to the Council for the review of National Non-Domestic Rates to be brought forward to 2018/19 in the light of the Government’s proposals concerning localisation of business rates.  In addition, the potential for learning lessons through benchmarking reviews carried out within other organisations was raised.

 

RESOLVED – That the Internal Audit Annual Plan 2017/18, as attached at Appendix 1 to the report, be approved.

AUD/60

Other Significant Financial Issues

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

Minutes:

The Financial Services Manager provided a verbal update on processes being carried out by officers in relation to the year end.  Work was currently a week to ten days ahead of this time last year.

 

It was raised that this would be the last meeting of the Audit Committee attended by Councillor Stan Collins who would not be standing in the District Council Elections in May 2018.  Councillor Collins had been a Member of the Committee for many years, and Members took the opportunity to thank him for his contribution.

 

RESOLVED – That the verbal update be noted.