Agenda and minutes

The Chairman will read the following announcement:

“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 made a short address to remind everyone present that the meeting would be broadcast live to the internet, and would be capable of repeated viewing, which could infringe their human and data protection rights.

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

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

(Director of Governance) To confirm the minutes of the last meeting of the Committee held on 27 November 2017 (previously circulated).

Click here for Audit & Governance Minutes 27 November 2017.

Resolved:

(1)        That the minutes of the meeting held on 27 November 2017 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.

There were no matters arising from the previous meeting for further discussion.

(Director of Governance) To consider the attached Work Programme for 2017/18.

The Chief Internal Auditor reported that the report on the Review of the Audit & Governance Committee Effectiveness was still outstanding as the publication of the guidance from the Chartered Institute of Public Finance & Accountancy had been delayed yet again.

(Director of Neighbourhoods) To consider the attached report (AGC-014-2017/18).

The Assistant Director of Neighbourhoods (Technical Services) presented a progress report on Health & Safety issues at Town Mead Depot in Waltham Abbey.

The Assistant Director acknowledged that, at the last meeting of the Committee, Members had expressed concern at the lack of progress in the implementation of recommendations from an external Fire Risk Assessment at the Town Mead Depot in Waltham Abbey and had asked for an update by a Senior Officer of the Council.

The Assistant Director informed the Committee that Town Mead Depot in Waltham Abbey was a small operational depot which had been in the ownership of the Council since 1974, and was jointly occupied with Waltham Abbey Town Council. Approximately 60% of the Depot was occupied by the Town Council. For a number of years, the site had been earmarked for redevelopment as affordable housing, but it was located in a flood plain and this was not possible. However, one consequence of this was that only essential maintenance had been carried out at the site in recent years. The Internal Audit Team had carried out an audit in September 2016 and identified a number of weaknesses at the site. The Audit Report had made two recommendations to: enter into a formal agreement with the Town Council; and draw up an Action Plan to address the health & safety issues identified.

The Assistant Director stated that, following the Audit, an Officer Working Group was formed to address the issues identified. Meetings were held with the Town Council, who extended their full support and co-operation, whilst the Council had made additional budget available to facilitate essential health and safety works. The Council did not have a dedicated Depot Manager so the Fleet Operations Manager had been helping to address the safety issues, and a number of actions had been carried out since early 2016.

The Assistant Director reported that a Fire Risk Assessment was carried out and recommendations were made in March 2017. The initial delay in implementing the recommendations had arisen from the Council not having a dedicated Manager for its depots, but significant work had now been carried out. Warning Signs had either been installed or were in the process of being done, a Fire Log Book and associated information was being collated, and key personnel were being identified to take the lead in implementing the Fire Evacuation Procedures at the Depot.

The Committee was keen to identify learning points for the future and, when questioned by the Committee, the Assistant Director reiterated that a new Health & Safety Manager with experience of Fire Risk Assessments had been appointed, and Action Plans were being drawn up with reviews after every three months to prevent actions being overlooked in the future. The last inspection of the Depot was on 30 January 2018, and the next inspection was scheduled for the following month. There was liaison with the Clerk at Waltham Abbey Town Council to ensure their staff knew to go to the front of the site when the fire  ...  view the full minutes text for item 41.

(External Auditor) To consider the attached report (AGC-015-2017/18).

The External Auditor presented two reports to the Committee, who was reminded that it had, within its Terms of Reference, the consideration of reports made by the External Auditor.

Audit Plan 2017/18

The External Auditor presented the first report, the Audit Plan for 2017/18, which summarised the significant risks that could impact on the audit and the key outputs from the audit. There were detailed sections setting out the scope of the audit, a risk assessment and the audit timetable.

The External Auditor reported that the Audit Plan summarised the proposed work to be undertaken for the audit of the 2017/18 financial year. It would be designed to respond to significant risks and indicated where the focus of resources would be in providing an opinion on the financial statements and value for money conclusion. There were five significant risks which could impact upon the Audit, these being: Management Override; Revenue Recognition; Property, Plant and Equipment evaluations; Pension Liability assumptions; and Financial Sustainability. The trivial threshold had been set at £40,000 for the audit and there were no planned changes to the Audit Fees for the year. It was highlighted that there was an accelerated timeline for this year’s audit.

In response to questions from the Committee, the External Auditor stated that the level of reserves to be maintained by the Council was an issue for the Council to determine as part of its Medium Term Financial Strategy. Due to the accelerated timetable for the closure of the Accounts and completion of the Audit, the External Auditor had brought forward some of its work from the Summer to now, and discussions were ongoing with the Accountancy Team at the Council regarding the measures required to meet the new deadlines. There were no planned changes to the non-audit activities for this year at the current time.

With respect to the trivial threshold that had been set for the Audit, any discrepancies that were less than £40,000 would be recorded but would not get reported to the Committee. The Director of Resources added that any errors found during the Audit would be discussed with the Director and Assistant Director of Resources, and if it was agreed that the figures were wrong then they would be corrected if possible.

Grant Claims & Returns Certification 2016/17

The second report presented by the External Auditor was the Grant Claims and Returns Certification Report, which set out the key findings from the External Auditor’s certification work.

The External Auditor highlighted that the total value of the Claim for 2016/17 had been £35.3million. There were no large errors in relation to the Claim, but three small errors had been found, none of which had exceeded £100 or required amendment. The Claim was certified before the Government deadline of 30 November, with the matters identified reported by letter to the Department of Work & Pensions.

The Director of Resources highlighted that the Council’s Claim had not required amendment this year, and this illustrated the value of the Council’s Benefit Assessors  ...  view the full minutes text for item 42.

(Chief Internal Auditor) To consider the attached report (AGC-016-2017/18).

The Chief Internal Auditor presented a report on the revised Internal Audit Charter.

The Chief Internal Auditor reminded the Committee that the Chartered Institute of Public Finance and Accountancy (CIPFA) Audit Committee’s Practical Guidance for Local Authorities and Police 2013 edition stated that the Audit and Governance Committee (the Committee) should have a role in reviewing and approving the Internal Audit Charter, which set out the purpose, authority and responsibility of the Internal Audit function. In addition, the Committee had a role in overseeing the independence, objectivity, performance and professionalism of the Internal Audit service.

The Chief Internal Auditor reported that during the review, the most significant changes to the Charter were that it was now more explicit on the mission and principles of the Internal Audit function, and ensured the role of Internal Audit included risk management and governance, as well as internal controls. The safeguards required in order to maintain impartiality and independence, should the Chief Internal Auditor take on additional responsibilities, were also outlined. The Internal Audit Charter had been revised with these minor amendments to ensure it remained current, fit for purpose and aligned to the Public Sector Internal Audit Standards.

The Committee welcomed the revised Internal Audit Charter, but felt that the performance indicators should have been listed in Section 13 of the Charter – Periodic Assessment. The Chief Internal Auditor apologised for not having included them in the Charter, but they had been listed in the Internal Audit Strategy approved by the Committee in 2017. They would be included in the Internal Audit Monitoring Report for the next meeting of the Committee.

Resolved:

(1)        That the revised Internal Audit Charter be approved.

(Chief Internal Auditor) To consider the attached report (AGC-0176-2017/18).

The Senior Internal Auditor presented the Internal Audit Monitoring report for the period November 2017 to February 2018.

The Senior Internal Auditor emphasised that good progress was being made against the Audit Plan for 2017/18, but it was requested for two scheduled audits to be deferred to 2018/19. Firstly, Complaints, as the current system for managing Complaints was being reviewed during 2018/19, and secondly, Equality Impact Assessments, to allow time for recent revisions to be fully implemented. The Committee was requested to approve the deferral of these two Audits from 2017/18 to 2018/19.

The Senior Internal Auditor advised the Committee that two reports had been issued since the previous meeting, both of which had been given substantial assurance: Fleet Operations Income; and Community Safety – Joint Working. The Audit Recommendation Tracker currently contained 4 recommendations which had passed their due date; one high priority and one medium priority recommendation regarding Health & Safety – Townmead Depot, and two low priority recommendations concerning External Data Transfers.

The Senior Internal Auditor reported that, since November 2017, the Corporate Fraud Team had continued their proactive approach in tackling Right-To-Buy fraud, worked closely with the Communities Directorate to prevent Tenancy fraud, as well as undertaking a number of internal investigations. The Team had been preparing for a Crown Court trial which involved a number of charges relating to social housing fraud, including the suspected fraudulent obtaining of a Home Ownership Grant. However, the defendant had pleaded guilty so there was no longer a need for a full trial.

The Senior Internal Auditor stated that, as part of the National Fraud Initiative, the annual Council Tax/Electoral Register data matching exercise was completed in December 2017 and a review of data matches by the Council Tax section was in progress, with Internal Audit providing training and guidance to Officers as necessary. Previous exercises have found many matches are not fraudulent and there was usually a simple explanation for matches; no significant frauds had been identified to date.

The Senior Internal Auditor reminded the Committee that staff within the Shared Service were represented on a number of business groups and project teams in addition to less formal meetings, to provide advice and guidance, including:

·        the General Data Protection Regulation Working Party;

·        Programme & Project Management / Corporate & Business Planning;

·        Personal Data (Payroll/HR);

·        the Corporate Debt Working Party; and

·        the Risk Management Group.

Finally, the Senior Internal Auditor informed the Committee that the Council’s Code of Corporate Governance had undergone its annual review, and it was considered that no changes was required to the Code as it still reflected current practice. Consequently, the Committee was requested to approve the reviewed Code.

The Director of Resources explained that a new corporate debt management system was being implemented, whereby a central debt collection unit would use the information from all of the Council’s sundry debt systems. The Debtor would only be contacted by one person and only one solution for all of their debts to the Council would be agreed.  ...  view the full minutes text for item 44.

(Director of Resources) To consider the attached report (AGC -018-2017/18).

The Director of Resources presented a report on the Treasury Management Strategy Statement for 2018/19.

The Director reminded the Committee that the annual Treasury Management Strategy Statement report was a requirement of the CIPFA Code of Practice on Treasury Management, and covered the treasury activity for the financial year 2018/19. The risks associated with Treasury Management were highlighted within the report along with how these risks were being managed. The most significant change from the previous Strategy was an increase in the minimum credit rating for counterparties from BBB+ to A-.

In response to queries from the Committee, the Director of Resources stated that the Capital Programme reflected the items that the Council was currently progressing and the figures were expected to improve during the next year as a number of schemes came forward. The operational limit of £250million for the Council’s borrowings had been set by the Council itself; this could be amended to £500million or to a level that was a lot less than the current limit. However, the Council generally looked at the planned expenditure, the borrowing required for this expenditure and then added some contingency to permit the Council to take advantage of any unforeseen opportunities that might arise. The aim was always for the Council to remain prudent.

The Director of Resources acknowledged that the proposed change in ratings for approved counter-parties would remove some banks from the list of financial institutions that the Council could invest with; however, with a balance in the reserves of £30million, this was not expected to cause the Council any real difficulty.

Resolved:

(1)        That the Treasury Management Strategy Statement for 2018/19 represented a continuation of the prudent approach, which had been a consistent theme of the Council’s Treasury Management function for a number of years, be noted;

(2)        That the arrangements for dealing with the risks associated with its Treasury Management activity, as outlined in the Council’s proposed Treasury Management Strategy Statement for 2018/19, be considered adequate; and

Recommended:

(3)        That the proposed Treasury Management Strategy Statement for 2018/19 be recommended to the Council for approval and adoption.

Section 100B(4)(b) of the Local Government Act 1972 requires 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.

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

Exclusion:

To consider whether, under Section 100(A)(4) of the Local Government Act 1972, the public and press should be excluded from the meeting for the items of business set out below on grounds that they will involve the likely disclosure of exempt information as defined in the following paragraph(s) of Part 1 of Schedule 12A of the Act (as amended) or are confidential under Section 100(A)(2):

The Local Government (Access to Information) (Variation) Order 2006, which came into effect on 1 March 2006, requires the Council to consider whether maintaining the exemption listed above outweighs the potential public interest in disclosing the information. Any member who considers that this test should be applied to any currently exempted matter on this agenda should contact the proper officer at least 24 hours prior to the meeting.

Background Papers: 

Article 17 of the Constitution (Access to Information) define background papers as being documents relating to the subject matter of the report which in the Proper Officer's opinion:

(a)        disclose any facts or matters on which the report or an important part of the report is based;  and

(b)        have been relied on to a material extent in preparing the report and does not include published works or those which disclose exempt or confidential information and in respect of executive reports, the advice of any political advisor.

The Council will make available for public inspection one copy of each of the documents on the list of background papers for four years after the date of the meeting. Inspection of background papers can be arranged by contacting either the Responsible Officer or the Democratic Services Officer for the particular item.

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