Agenda and minutes

I would like to remind everyone present that this meeting will be recorded for subsequent repeated viewing on the Internet and copies of the recording could be made available for those that request it.

By being present at this meeting it is likely that the recording cameras will capture your image and this will result in your image becoming part of the broadcast.

You should be aware that this might infringe your human and data protection rights. If you have any concerns please speak to the webcasting officer.

Please could I also remind members to put on their microphones before speaking by pressing the button on the microphone unit.

The Chairman reminded everyone present that the meeting would be broadcast live to the Internet, and that the Council had adopted a protocol for the webcasting of its meetings.

(Assistant to the Chief Executive) To declare interests in any item on this agenda.

There were no declarations of interest pursuant to the Council’s Code of Member Conduct.

To confirm the minutes of the last meeting of the Committee held on 24 September 2012 (previously circulated).

Resolved:

(1)        That the minutes of the meeting held on 24 September 2012 be taken as read and signed by the Chairman as a correct record.

To consider any matters arising from the previous meeting.

The Assistant Director of Finance & ICT (Benefits) provided a progress report on the implementation of the recommendations made in the Housing & Council Tax Benefits audit report, considered at the Committee’s last meeting.

The Assistant Director reported that the section had not been performing sufficient checking of new claims as claim payments were being prioritised over claim checking. The section was currently complying with the requirement to check 5% of all claims received for accuracy, and the situation was being actively monitored by managers to ensure that all checking was completed. All of the outstanding priority 1 actions from the audit report were now complete.

The Director of Planning & Economic Development provided a progress report on the implementation of the recommendations made in the Planning Fees audit report, considered at the Committee’s last meeting.

The Director reported that the reconciliation of Planning Fees income between the Planning System and the General Ledger was reliant upon three different systems. Cheques were now individually itemised on the General Ledger, which made it easier to reconcile these items. However, the Directorate had insufficient resources to manually reconcile the fees received, and work to interface the systems more efficiently relied upon resources from ICT. It was proposed to submit a report to the Planning Services Scrutiny Panel to review the number of payment options available for residents to pay their Planning Fees.

The Chairman commented that this problem was part of a wider issue; the Council did not have a Corporate Management Information Systems Plan, hence the proliferation of systems across different departments. The Committee needed to have confidence that all Planning Fees had been received and accounted for correctly, but this was currently not possible due to the proliferation of different systems. It was queried whether a thematic review of the Council’s ICT systems could be undertaken by Internal Audit. The Chief Internal Auditor responded that resources would be needed to perform this review and double-check all reconciliations, but that it would be added to the Audit Plan. The Leader of the Council reassured the Committee that the Cabinet would examine the issue and the possible implementation of a Corporate Management Information Systems plan.

The Director added that the income from Planning Fees was in excess of £1million per annum, and the receipt of each fee needed to be confirmed before work commenced on determining the application. The Directorate had been labouring to reconcile all income received against individual applications, due to the complexity of the systems involved in the process. The Directorate would also need further procedures in place to process Community Infrastructure Levy payments when the Local Plan was implemented. Internal Audit was requested to investigate the Council’s readiness for processing these payments.

Resolved:

(1)        That the update reports received by the Committee be noted;

(2)        That the Cabinet be requested to investigate the possibility of implementing a Corporate Management Information Systems for the Council; and

(3)        That the Chief Internal Auditor be requested to investigate the Council’s readiness for processing Community  ...  view the full minutes text for item 26.

(Director of Housing) To receive a presentation on the progress made by the Repairs Management Contract, originally given to the Housing Scrutiny Panel on 7 August 2012.

The Assistant Director of Housing Services (Property) presented an update report on the Housing Repairs Management Contract, following a number of limited assurance audit reports regarding the stock-taking at the Depot.

The Assistant Director outlined the procedures previously in place before Mears won the Housing Repairs Management contract. Operatives received all work instructions on a paper based format and chose the order in which they were completed. Many tenants were out when the operative visited as not all operatives had council-supplied mobile phones and were not required to phone ahead to see if the tenants were in or it was convenient to turn up. The work tickets did not require the operatives to record the time of the completion, but office based staff had to update the Council’s Housing Management system with the time of completion - which they would not know. Tenants were not required to sign off work tickets to confirm the works orders had been completed and operatives completed a weekly time sheet listing which jobs had been completed on which days. Manual processes were in operation for ordering stores, although operatives were permitted to place direct orders with local suppliers up to a maximum value of £50.

The Assistant Director stated that an analysis was undertaken, in conjunction with Internal Audit, to identify the key controls to focus on in the new system when Mears was appointed as the Council’s Housing Repairs Management contractor. All operatives were issued with mobile phones and hand-held devices, which now enabled much more data to be captured as the devices would time and date stamp every action, and all the unit’s vans had been fitted with tracker devices. A Work Planner post had also been created to control the work allocated to the operatives; this was considered essential to improve productivity. Appointments were now made with tenants in advance to perform works, and text messages were sent to tenants to remind them of their appointments, that the operative was now on route to their property and “You were not in” if the tenant did not answer the door. In addition, the Mears Contract Monitoring software was implemented.

The Assistant Director reported that these measures had led to an increase in productivity, with operatives now completing between four and five jobs a day as opposed to the previous daily average of 1.36. The number of appointments had increased from 2,889 in 2010/11 to an estimated 11,000 for 2012/13. Now, only 1 in 14 appointments were being missed, which compared favourably with the national average of 1 in 12 missed appointments. Real time information was being captured about each job for the use of the office based staff, including tenant satisfaction data, and the operatives were able to produce photographic evidence of their attendance on site as well as the completion of the job.

The Assistant Director informed the Committee that the new measures had led to the Council making considerable savings through reduced staffing and increased productivity. The unit was now  ...  view the full minutes text for item 27.

(Chief Internal Auditor) To consider the attached report (AGC-010-2012/13).

The Chief Internal Auditor presented the Internal Audit Monitoring Report for the second quarter of 2012/13, which provided a summary of the work undertaken by the Internal Audit Unit between July and September 2012. The report detailed the overall performance to date against the Audit Plan for 2012/13 and also allowed the Committee to monitor the progress of Priority 1 recommendations issued in previous audit reports.

The Chief Internal Auditor advised the Committee of the audit reports that had been issued during the period:

(a)        Substantial Assurance:

·                     Environmental Controls & Backup Procedures;

·                     Fleet Operations Income; and

·                     Business Plans.

(b)        Limited Assurance:

·                     Legal Services Debt Recovery.

(c)        At draft report stage:

·                     Recruitment & Selection;

·                     Gifts & Hospitality (Members & Officers);

·                     Corporate Procurement; and

·                     Car Mileage.

The Chief Internal Auditor informed the Committee of the circumstances surrounding the Limited Assurance audit report issued for Legal Services Debt Recovery during the quarter. Two Litigation Officers were responsible for managing approximately 380 debts. However, it was not possible at the current time to quantify the exact value of outstanding debts referred to Legal Services and the value of the debts recovered as there was not a reporting facility in place. The audit had recommended that invoices should be raised on the Council’s debtors system (AIMS) to ensure that court costs were identified and charged to the debtor.

The Committee’s attention was drawn to the Outstanding Priority 1 Actions Status report, all of which would be reviewed in follow-up audits, and the Limited Assurance Audit Follow Up Status report. It was also noted that the Audit Plan for 2012/13 had been appended to allow the Committee to monitor progress against the Plan.

The Chief Internal Auditor reported upon the current status of the Internal Audit Unit’s Local Performance Indicators for 2012/13:

·                     % Planned Audits Completed             Target 90%     Actual 37%;

·                     % Chargeable Staff Time                   Target 72%     Actual 76%;

·                     Average Cost per Audit Day               Target £245     Actual £223; and

·                     % User Satisfaction                            Target 85%     Actual 85%.

The Committee noted that the vacancy within the Internal Audit Unit had now been filled, and that the new member of staff had started on 1 October 2012.

The Assistant Director of Corporate Support Services (Legal Services) reported on the outstanding priority 1 action for Licensing Administration. The problem with reconciliations for Licensing were similar to that being experienced by Development Control reported earlier in the meeting. The reconciliation between the M3 system and the Cash Receipting System was not up to date as the two systems were not compatible and could not be interfaced. It was difficult to check if a payment had been miscoded and the reconciliation was not being carried out due to insufficient resources within the Department. An apprentice had been employed by the section to carry out the reconciliations last year, but they had now left the Council. The Assistant Director stated that the Licensing Section was aware of whether they had received all outstanding monies due, but that it required an additional employee for approximately two days a month  ...  view the full minutes text for item 28.

(External Auditor) To consider the following attached reports from the External Auditor (AGC-011-2012/13):

(i)         Annual Audit Letter 2011/12; and

(ii)        Audit Fee Outturn Summary 2011/12.

The External Auditor presented two reports to the Committee, the first being the Annual Audit Letter for 2011/12, which summarised the key issues arising from the audit work during the year, and the second was the Fee Outturn Summary for 2011/12, which set out the final costs of the audit.

In respect of the Annual Audit Letter for 2011/12, the External Auditor reported that:

·                     The financial statements had given a true and accurate view of the Council’s financial affairs, and were properly prepared in accordance with the 2011 Code of Practice on Local Authority Accounting.

·                     The Annual Governance Statement was not misleading or inconsistent with other information available.

·                     The significant financial systems were generally adequate for preparing the financial statements.

·                     One internal control deficiency within the Housing and Council Tax Benefit system had been identified and reported.

·                     The work of Internal Audit could be relied upon.

·                     There were a number of notable differences between the Whole of Government Accounts and the audited Financial Statements, which were corrected in the final consolidated pack.

·                     The Council had put into place proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

·                     An unqualified Value for Money conclusion was issued.

In respect of the Fee Outturn Summary, the External Auditor reported that the final outturn fee - £157,215 - was £15,000 in excess of the planned fee. The additional fees were incurred due to:

·                     Time spent by senior staff on the options for self-financing of the Housing Revenue Account (HRA).

·                     Work performed to address issues arising from the Collection Fund, changes in the useful economic lives of HRA properties, and accounting for income and expenditure in the correct periods.

·                     Time spent on the Whole of Government Accounts due to the number of changes required, as outlined above.

The External Auditor expected that the fee for certification of claims for the year ended 31 March 2012 would be £58,000 as planned. The Committee was informed that it was possible to have a rebate of audit fees if the work was performed quicker than expected.

Resolved:

(1)        That the Annual Audit Letter and Fee Outturn Summary for 2011/12 issued by the External Auditor be noted.

(Director of Finance & ICT) To consider the attached report (AGC-012-2012/13).

The Director of Finance & ICT presented the mid-year progress report on Treasury Management and Prudential Indicators, which covered the treasury activity for the first half of 2012/13, and was a requirement of the Chartered Institute of Public Finance & Accountancy (CIPFA) Code of Practice on Treasury Management.

The Director reported that the current probable outturn for 2012/13 showed a drop in capital expenditure of £3.4million, which had been re-phased into future years of the Capital Programme. This would lead to a reduction in the use of capital receipts in the current financial year of £1.01million and a higher than anticipated level of reserves, but subsequent increases in future years. There was a risk involved in reducing the balance of usable capital receipts over the next five years and this had been included in the Council’s Corporate Risk Register. Current predictions indicated there would still be £8.1million of usable capital receipts available and £3.2million in the Major Repairs Reserve at the end of 2016/17. Therefore, it had been concluded that there were adequate reserves available for the Capital Programme in the medium term.

The Director confirmed that, in respect of the Council’s indebtedness for capital purposes, there had been no breaches of the Authorised Limit (£200million), the Operational Boundary (£186million) and the Maturity Structure of Fixed Rate Borrowing during the first six months of the year. The Council’s largest loan had been that of £185.456million taken out for the refinancing of the Housing Revenue Account. The risks for the Council were associated with affordability, interest rates and refinancing. The affordability risk was whether the Council could afford to service its loans; this had been evidenced by the Council producing a viable thirty-year for the Housing Revenue Account. Only 17% of the amount borrowed was at a variable rate with the remainder of the loans at fixed rates. Any upward movement in interest rates would be ‘hedged’ by a corresponding increase in the interest earned on the Council’s investments. It was anticipated that all borrowing would be repaid upon maturity and all future capital expenditure would be financed from within internal resources, therefore there was currently no refinancing risk.

The Director informed the Committee that during the first half of the year, the Council’s average investment position had been approximately £53.6million, and that there had been no breaches of any of the prudential indicators. Finally, in respect of the Heritable Bank, the administrators had indicated that a further dividend would be paid in January 2013, and ultimately it was still expected that the Council would receive 90% of its total investment.

In response to queries from the Committee, the Director stated that the interest incurred by the Council on its variable rate loans should not exceed the interest earned on the Council’s investments. The thirty-year financial plan for the Housing Revenue Account was reviewed every six months by the Housing Scrutiny Panel, and further reports would be submitted to the Scrutiny Panel if the Plan no longer seemed viable. However, the Council had  ...  view the full minutes text for item 30.

Recommendation:

(1)        To consider the method to be adopted so as to ensure that overlapping 3 year terms of office are achieved for the two co-optees following recent changes to the Committee’s Constitution.

1.         (Assistant to the Chief Executive) At the Council meeting on 27 September 2012, Article 11 of the Constitution was amended following review. These amendments included changes to the terms of office of the co-opted members including:

            (a)        introduction of 3 year terms of office;

            (b)        a limit of two terms of office as of right;

            (c)        an opportunity for two further 3 year terms but only after competitive           advertisement;

            (d)        a requirement that re-appointment is conditional on satisfactory attendance; and

            (e)        creation of overlapping 3 year terms for succession planning purposes.

2.         With the introduction of fixed three year terms of office, there is a need to introduce overlapping terms of office. The report made to the Council was as follows:

“15. There are two co-opted members at present and if our recommendation is accepted, the Panel recommend that their terms of office should be made to overlap to ensure that if one of them was to leave, continuity would be achieved through the other co-opted member. The Panel are proposing that the Audit and Governance Committee itself should consider how the terms of office of the two existing members can be made to overlap in future years.”

3.         It is understood that the two co-opted members will discuss this issue and that a proposal will be made at the meeting.

The Democratic Services Officer reminded the Committee that Article 11 of the Constitution, Audit & Governance Committee, had been amended at the Council meeting held on 27 September 2012 in respect of the Co-Opted members as follows:

(a)        introduction of three-year terms of office;

(b)        a limit of two terms of office as right;

(c)        an opportunity for two further terms of office, but only after a competitive selection process;

(d)        a requirement that re-appointment be conditional upon satisfactory attendance; and

(e)        the creation of overlapping terms of office so that the terms for both Co-Opted members did not expire at the same time.

The Democratic Services Officer reported that the two Co-Opted members had discussed this issue prior to the meeting, and had suggested that their terms of office should begin from their dates of appointment, this being September 2007 and February 2009 respectively. This would mean that both Co-Opted members had already been reappointed for a second term, and would be subject to a competitive selection process if they wished to seek a third term in September 2013 and February 2015 accordingly. The Committee was requested to ratify the proposal from the two Co-Opted members.

Resolved:

(1)        That the overlapping three-year terms of office for the two Co-Opted members be commenced from their dates of appointment, this being September 2007 and February 2009 respectively.

Section 100B(4)(b) of the Local Government Act 1972, together with paragraphs (6) and (24) of the Council Procedure Rules contained in the Constitution require that the permission of the Chairman be obtained, after prior notice to the Chief Executive, before urgent business not specified in the agenda (including a supplementary agenda of which the statutory period of notice has been given) may be transacted.

In accordance with Operational Standing Order 6 (Non-Executive Bodies), any item raised by a non-member shall require the support of a member of the Committee concerned and the Chairman of that Committee. Two weeks notice of non-urgent items is required.

The Committee noted that there was no other urgent business for consideration at the meeting.