Chairman: Councillor Glover
Venue: Civic Centre, Scunthorpe (Function Room 1)
Time: 10 am
E-Mail Address: matthew.nundy@northlincs.gov.uk
AGENDA
1. Substitutions (if any).
2. Declarations of Disclosable Pecuniary Interests and Personal or Personal and Prejudicial Interests (if any).
3. To take the minutes of the meeting held on 5 July 2017 as a correct record and authorise the chairman to sign.
4. Audit of Accounts 2016/17 – Matters Arising from the Audit.
5. Annual Governance Statement 2016-17
6. Treasury Management and Investment Strategy - Quarter 2 report 2017-18
7. Internal Audit Progress Report
8. Counter Fraud Progress Report
9. Risk Management Progress Report
10. Any other items which the chairman decides are urgent by reasons of special circumstances which must be specified.
Note: Reports are by the Director: Governance and Partnerships unless otherwise stated.
MINUTES
PRESENT: – Councillor Glover in the chair
Councillors T Foster (Vice-Chair), Clark, Gosling, Kirk, Mumby-Croft and Perry.
Also in attendance were two representatives of KPMG (the council’s external auditors).
The committeemet at the Civic Centre, Scunthorpe.
482 DECLARATIONS OF DISCLOSABLE PECUNIARY, PERSONAL OR PERSONAL AND PREJUDICIAL INTERESTS – There were no declarations of interests made at the meeting.
483 MINUTES – Resolved – That the minutes of the proceedings of the meeting held on 5 July 2017, having been printed and circulated amongst the members be taken as read and correctly recorded and be signed by the chairman.
484 (9) AUDIT OF ACCOUNT 2016-17 - MATTERS ARISING FROM THE AUDIT - The Director: Governance and Partnerships submitted a report informing the committee that the Accounts and Audit Regulations required the council to publish a statement of accounts each financial year. These accounts were the formal statement of the council’s financial performance for the year and its financial position at the end of that period. A financial year ran from April to March.
These accounts had to be considered and approved by the council's Chief Financial Officer by 30 June. They must then be audited and published within six months of the financial year-end. These deadlines were statutory requirements. The accounts were approved on the 22 June, before the statutory deadline.
The International Standard on Auditing 260 - 'The Auditor’s Communication with Those Charged with Governance (ISA 260)' required auditors to report certain matters arising from the audit of the council's financial statements before giving an opinion on them.
The report from the council's Auditors (KPMG) was attached to the report. It set out the matters arising from the audit of the council's 2016/2017 accounts. A representative of KPMG was in attendance at the meeting and presented their report and thanked the Director and her team for their cooperation during the audit.
A copy of the amended accounts were included with the report.
The main findings of the report were:
- An unqualified opinion on the council's accounts and arrangements for Value for Money were expected.
- That the closedown process had met the necessary statutory deadlines.
- Some adjustments to the accounts were required.
- A system weakness relating to super user accounts within Northgate was identified. This issue would be addressed with the system supplier during 2017/2018. No inappropriate use or changes to the system were identified during the audit.
- The valuations of Property, Plant and Equipment was identified as an area for process improvement.
International Standard on Auditing 580 'Management Representations' required auditors to obtain written confirmations of appropriate representations from management before the audit report is issued. A proposed letter of representation was attached, which the Committee was asked to approve and authorise the Chairman of the Audit Committee and the Director: Governance and Partnerships to sign.
Additionally IAS 570 required a specific statement on the applicability of the 'Going Concern' concept to the council. The accounts had been prepared on a going concern basis. A review of the applicability of the concept to the council was included at Appendix 1.
Members commented on particular aspects of the council's Statement of Accounts 2016/2017 and ISA 260 Report to which the Director: Governance and Partnerships and representatives of KPMG responded to.
Resolved - (a) That the Statement of Accounts for 2016/2017, prepared on a going-concern basis and as amended in line with the Auditor's findings be received and approved, (b) that the contents of the ISA260 Report be noted, and (c) that the signing of the Letter of Representation by the Chairman of the Audit Committee and the Director: Governance and Partnerships be endorsed.
485 (10) ANNUAL GOVERNANACE STATEMENT 2016-17 - The Director: Governance and Partnerships submitted a report on the Annual Governance Statement (AGS) for 2016-17.
The AGS set out the council's governance framework and the results of the annual review of the effectiveness of the council's arrangements. The AGS showed that the council had established governance arrangements that were monitored and reviewed on a regular basis. Changes and enhancements described in the AGS demonstrated the council's commitment to continual improvement.
The Audit Committee approved the AGS for 2016/17 on 5 July 2017. Under the changes to the Accounts and Audit (England) Regulations 2015 the AGS must accompany the final accounts and be considered in its own right.
This could take place in September. However, the Committee decided to consider the AGS in June as well as in September to allow early action to be taken on any issues identified by the AGS.
The AGShad now been updated – in section 4 'Third line of Defence (Independent Oversight)- to reflect the outcome of the recent OFSTED inspection of Children's Services, external audit's audit of the annual statements of accounts, and a review of Ombudsman adjudications up to the date of signature.
The amended AGS was attached as an appendix.
Resolved - That the final version of the Annual Governance Statement for 2016/17, which took into account events between its approval of the draft Statement on 5 July and the completion of the audit of the annual statement of accounts be noted.
486 (11) TREASURY MANAGEMENT AND INVESTMENT STRATEGY - QUARTER 2 REPORT 2017-18 - The Director: Governance and Partnerships submitted a report on the council's treasury management performance for 2017-18 quarter 2. The benchmark for measuring performance was the treasury strategy which the council set at its meeting on 25 February 2017.
The annual treasury management and investment strategy was prepared in line with -
- The CIPFA (Chartered Institute of Public Finance and Accountancy) – Code of Practice in the Public Service Fully Revised 2011;
- CIPFA The Prudential Code Fully Revised Second Edition 2011
- Department for Communities and Local Governance Guidance
- Local Government Act 2003
The code of practice required that council receive a report on treasury management strategy at the start of the financial year, at mid-year and at year end. In addition the Audit Committee received reports quarterly to provide it with assurance on the effectiveness of treasury management arrangements.
The High Level objectives of the council's treasury management activities were set out in the Treasury Management Policy Statement.
The Code also required the council to maintain suitable Treasury Management Practices (TMPs), setting out the manner in which the organisation would seek to achieve its Treasury Management policies and objectives, and prescribing how it would manage and control those activities. The Treasury Management Practices adopted by the Council were reviewed on a regular basis.
The Director in her report outlined the annual strategy under headings which covered legal and regulatory framework, the Strategy for 2017-18, the Investment Strategy; the Borrowing Strategy and how the Council Performed, including key investment and borrowing statistics.
The Director responded to members' questions on aspects of her report.
Resolved - (a) That following consideration of the report and appendix and discussion of its content, the committee agreed that the Treasury Management and Investment Strategy quarter 2 report provided sufficient assurance on the effectiveness of arrangements for treasury management, and (b) that the Treasury Management performance for the 20176-18 financial year to date be noted.
487 (12) INTERNAL AUDIT PROGRESS REPORT - The Director: Governance and Partnerships submitted a report that updated the committee on key issues arising from work undertaken by Internal Audit in the 2017/18 audit plan year.
Members were informed that an effective Internal Audit service contributed to the achievement of strategic objectives by assessing, providing comment and where relevant recommending improvement to the council's assurance and control frameworks. The Internal Audit Plan 2017/18 was approved by the Audit Committee in outline on 11 April 2017 and in detail on 5 July 2017; completion of the Plan was monitored and reported regularly to the Committee.
It was reported that as at 31 August 2017, 186 days had been charged against the approved Audit Plan of 1250 days (15%), which included a contingency of 100 days. Some audits had been carried forward from last year and new audits had been identified, which had reduced the contingency. To ensure that deadlines were met, a recruitment process was undertaken to appoint new staff, as well as working with a partner for the completion of ICT audits.
In addition as part of an ongoing review of the plan, internal audit would meet senior managers in September to review the plan, which may lead to the re-prioritisation of work where appropriate. It was anticipated that sufficient work would be carried out to form an opinion on the adequacy of the control environment in June 2018 as required.
In addition, the following audits originally were included in the 2016/17 plan but subsequently deferred for inclusion in the 2017/18 plan and funded out of the contingency:
- Grant Claims
- Assessment, Support Planning and Review
- Special schools funding
- Fixed assets
- Inventory (Hardware & Software)
- Security of mobile devices
- Compliance with corporate contracts
- Compliance with CPRs – use of extensions and exceptions
- Preventing procurement fraud
To date, no audits had been taken out of the Plan.
The Director, in her report, provided an update on any significant audit findings, any advisory and support work and the progress on the quality standards and external inspection.
The Director responded to questions asked by members.
Resolved – That following consideration of the above report and discussion of its content, the committee agreed that the progress report contributed to a sufficient level of assurance on the adequacy of internal control arrangements.
488 (13) COUNTER FRAUD PROGRESS REPORT – The Director: Governance and Partnerships submitted a report informing the committee of key issues arising from counter fraud work. Regular reporting on counter fraud issues was an important source of assurance for the committee to fulfil its role and provided supporting evidence for the annual approval of the Governance Statement.
The Director in her report addressed and commented upon counter fraud work which was summarised under the following headings -
- Acknowledging and understanding fraud risks
- Preventing and Detecting Fraud, and
- Pursuing fraud and recovering losses.
The Director responded to questions asked by members.
Resolved - (a) That following consideration of the above report and discussion of its content the committee agreed that the progress report contributed to assurance on the adequacy of counter fraud arrangements, and (b) that the counter fraud work programme delivered a sufficient level of assurance on the adequacy of counter fraud arrangements.
489 (14) RISK MANAGEMENT PROGRESS REPORT – The Director: Governance and Partnerships submitted a report updating the committee of key issues arising from risk management work. Regular reporting on risk management issues was an important source of assurance for the committee to fulfil its role, and provided supporting evidence for the annual approval of the council’s Governance Statement.
The Director in her report addressed and commented upon progress made including -
- the development of a revised risk strategy which set out the council's approach to risk management, risk appetite and roles and responsibilities;
- the development of shared risk management software across North and North East Lincolnshire Councils;
- the production of a risk management toolkit to support the implementation of the new risk register and the updated risk policy;
- a review of the council's strategic risks.
- a review of the e-learning packages related to risk management; and
- the introduction of Risk Super Users who would be responsible for disseminating training, sharing information about risk management and ensuring risk registers are kept up to date across services.
The Director informed members that as part of the 2016/17 internal audit programme Lincolnshire County Council was requested to conduct an independent review of the council's risk management arrangements. The final report was issued in June 2017 and provided satisfactory assurance on the adequacy of the arrangement.
An important aspect of the risk management action plan was to continue to raise awareness across the council. This was achieved through training programmes and communication networks. In addition to information available on the web page and Intralinc the latest edition of the Risk Roundup newsletter had also been published. The newsletter, which was attached to the report, included important articles on significant risk topics such as health and safety, information governance and fraud.
Resolved – That following consideration of the above report and discussion of its content, the committee agrees that the Risk Management Progress Report contributed to assurance on the adequacy of risk management arrangements.