Agenda and minutes

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.

(Director of Governance) To declare interests in any item on this agenda.

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

To confirm the minutes of the last meeting of the Committee held on 30 November 2015 (attached).

Resolved:

(1)        That the minutes of the meeting held on 30 November 2015 be taken as read and signed by the Chairman as a correct record.

(Director of Governance) To consider any matters arising from the previous meeting.

In respect of the Terms of Reference for the proposed Audit & Standards Committee, the Director of Governance reported that the Standards Committee was not in favour of the potential merger, at its meeting held on 25 January 2016. A report would now be submitted to the Council on 17 February 2016 to resolve the matter.

The Chairman stated that this issue should not be viewed as a disagreement between the two bodies as this Committee, whilst in favour of a merger, did not have particularly strong views on the matter either way.

(Director of Governance) To consider the attached Work Programme for 2015/16.

The Committee noted its Work Programme for 2015/16, which had included some minor updates since the previous meeting.

In response to a question from the Chairman, the Director of Governance reminded the Committee that it did have the authority to call Officers before it. However, it was important that there was a purpose behind calling an Officer before the Committee, and the Audit Recommendation Tracker could be used as a mechanism with the Committee focusing on those audit recommendations that it felt were not being progressed in a timely manner. But the Committee would have to be careful that it was not impinging upon the roles of other Committees, particularly the Select Committees who routinely monitored performance in their particular areas.

The Chairman welcomed the Director’s response, and commented that the Committee should consider calling Officers when it felt that responses to audit reports and recommendations were not being provided.

(Director of Resources) To consider the attached report (AGC-015-2015/16).

The Principal Accountant presented a wide-ranging report in respect of the Council’s Treasury Management Strategy Statement and Investment Strategy for the period 2016/17 to 2018/19, which was a requirement of the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management and covered the authority’s treasury activity for the period concerned. The Strategy Statement set out the risks associated with the Council’s treasury activity and how these were managed.

The Principal Accountant reported that the Council undertook capital expenditure on long-term assets, funded by capital receipts, grants or borrowing. The Committee noted that the Council planned to borrow to carry out its capital investment, and that the Capital Programme envisaged a balance of £5.207million in capital receipts and £0 in the Major Repairs Reserve on 31 March 2019, from which it was concluded that adequate resources still existed to fund the Capital Programme in the medium-term. The Council’s underlying need to borrow was referred to as the Capital Finance Requirement (CFR). As a consequence of the Housing Revenue Account Subsidy reform, and some large projects within the Capital Programme, an authorised limit of £230million had been set for borrowing, rising to £250million by the end of 2018/19.

The Committee was reminded that the Council’s current investments were subject to regular advice from it’s treasury management advisors, Arlingclose, regarding the use of counterparties. Members noted that the Council currently had an investment portfolio of £54.6million, of which all were invested in the United Kingdom (UK). The Committee noted that the maturity profile of the investments ranged from £13.6million available for instant access, to £10million with a maturity date between nine months and a year; it was important that the cash flow of the Council was carefully monitored and controlled to ensure that sufficient funds were available each day to cover its outgoings. Members were advised that this would become more difficult as the Council used up capital receipts and investment balances reduced.

The Principal Accountant advised members of the key risks associated with the Council’s treasury management activity, and how these had been managed throughout the year via the use of prudential indicators:

            (i)         The Credit and Counterparty risk was the possibility of a counterparty        going into liquidation and failing to meet its obligations to the Council. The       Council’s counterparty list was both prudent and regularly updated by its treasury advisors, and the authority kept its investments fairly liquid within a           restricted counterparty list.

            (ii)        The Liquidity risk was the possibility that sufficient cash would not be          available to the Council when required. In mitigation of this risk, a number of            Money Market Funds were maintained and the Director of Resources held       monthly meetings with treasury staff to review cash flow requirements.

            (iii)       The Interest Rate risk was concerned with potential fluctuations in interest rates. It was proposed to maintain no more than 75% of the Council’s investments in variable rate financial instruments, with the remainder of the       investments made in fixed rate deposits. This  ...  view the full minutes text for item 41.

(Chief Internal Auditor) To consider the attached report (AGC-016-2015/16).

The Chief Internal Auditor presented the Internal Audit Monitoring Report for the period December 2015 and January 2016, which provided a summary of the work undertaken by the Internal Audit Service during this time.

The Chief Internal Auditor advised the Committee that four reports had been issued since the previous meeting, of which 3 had been given Substantial Assurance – Community Partnerships, Council Housebuilding Programme and Licensing – and one had been given Limited Assurance. The Limited Assurance audit had been issued for Planning Fees; the recommendations made in the 2014/15 report had yet to be implemented and the main concern was the ability to ensure that all of the income due was collected and accounted for. The ICT team had been unable to effect regular reconciliations between the Northgate M3 system and the General Ledger, making reconciliations a largely manual process. This issue had been raised with Northgate.

The Chief Internal Auditor reported that the Recommendation Tracker contained three recommendations which had passed their due date, one of which replaced a previous Priority 1 recommendation for the reconciliation of Planning Fees (as outlined above). A Priority 3 recommendation had also been issued for the Planning Fees audit, for invalid applications to be returned to applicants within three months of submission, as per the Council’s policy. The final overdue recommendation concerned the management of sickness absence and a pilot exercise was being carried out within the Communities Directorate.

The Chief Internal Auditor highlighted that the Corporate Fraud Team was continuing to focus on the large number of Right-to-Buy applications being received by the Council, which had resulted in five applications being found as ‘suspicious’. A three-bedroom semi-detached property in Ongar had been recovered following a long investigation and one individual had been successfully prosecuted in relation to Local Council Tax fraud. A housing fraud case was due to commence in February 2016.

The Chief Internal Auditor stated that work had continued on the Audit Plan for 2015/16, but the Committee was requested to approve the deferral of the following audits:

            (i)         Gifts & Hospitality – to allow for the introduction of a new electronic system;

            (ii)        Grants to Voluntary Organisations – a bereavement within the section;

            (iii)       Facilities Management Contracts – to be included in next year’s e-   invoicing audit as the new system was being piloted in Facilities Management;

            (iv)       Equality & Diversity – staffing vacancies, and not deemed a high risk           area; and

            (v)        ICT Asset Management – to be removed as a stock check was being          undertaken following an internal theft.

Despite the need to defer/remove the small number of audits outlined above, the Chief Internal Auditor expected that sufficient audit work would be undertaken to give the annual audit opinion for 2015/16.

The Committee was surprised that Equalities & Diversity appeared to be never audited, as it had been deferred in 2014/15 as well; were there other means of assurance available for such areas? The Chief Internal Auditor reassured the Committee that her opinion would be based  ...  view the full minutes text for item 42.

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

The Committee noted that there was no business which necessitated the exclusion of the public and press from the meeting.