Meeting documents

Audit Committee
Wednesday 23rd January 2019

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 27 June and 27 July 2018 as a correct record and authorise the chairman to sign.

4. DCS Assurance - Ofsted Annual Conversation - To receive a presentation from the Director: Children and Community Resilience.

5. External Audit Progress Report - To receive a report from the council's external auditors Mazars

6. Accounting Policies 2018-19

7. Treasury Management and Investment Strategy Mid-Year Report 2018-19

8. Internal Audit Update (including the updated Audit Charter)

9. Attendance Management Progress Report - Report by the Director: Business Development

10. Anti-Bribery Policy

11. Anti-Money Laundering Policy

12. Local Code of Corporate Governance

13. Risk Management Progress Report

14. 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 Clark, Godfrey, Kirk, Mumby-Croft, Perry and K Vickers.

The committee met at the Civic Centre, Scunthorpe.

521 DECLARATIONS OF DISCLOSABLE PECUNIARY, PERSONAL OR PERSONAL AND PREJUDICIAL INTERESTS - There were no declarations of disclosable pecuniary, personal or personal and prejudicial interests.

522 MAZARS - EXTERNAL AUDITORS - The Chairman welcomed representatives of the council's new external auditors Mazars to their first Audit Committee meeting in North Lincolnshire.

523 MINUTES - Resolved - That the minutes of the proceedings of this committee held on 27 June 2018 and the special meeting 27 July 2018, having been printed and circulated amongst the members, be taken as read and correctly recorded and signed by the Chairman.

524 (9) DIRECTOR CHILDREN SERVICES ASSURANCE - OFSTED ANNUAL CONVERSATION – The Chairman welcomed Mick Gibbs to the meeting, the council's Director: Children and Community Resilience. Mr Gibbs had been invited to the meeting to guide members through the governance framework that was in place in respect of all financial, assurance and operational matters within the portfolio of the Director: Children and Community Resilience.

Following the verbal presentation, the Chairman facilitated a discussion between the Director and committee members.

Resolved - (a) That the presentation be noted, and (b) that the Director: Children and Community Resilience be thanked for his attendance, presentation and for answering members questions.

525 (10) EXTERNAL AUDIT PROGRESS REPORT – Representatives of Mazars, the council's external auditor, submitted its external audit progress report for January 2019.

The update provided members with a high level overview on progress in delivering Mazars responsibilities as the council's external auditors.

Members commented on particular aspects of the report to which the representatives of Mazars and the Director: Governance and Partnerships responded to.

Resolved - That following consideration of the reports and discussion of their content, the committee agreed that the progress report be received and noted.

526 (11) ACCOUNTING POLICIES 2018-19 – The Director: Governance and Partnerships submitted a report that informed the committee that the Code of Practice on Local Authority Accounting in the United Kingdom 2018/19 (The Code) required each local authority to adopt accounting policies that set principles for recording financial transactions within the Council's accounts.

The report explained that The Code was, in effect, a legal requirement as it was recognised in Government legislation as 'Proper accounting practice'. The Code required that policies were set to comply with UK accounting standards which incorporate International Financial Reporting Standards (IFRS) but otherwise they may reflect matters appropriate to an authority's circumstances.

The policies proposed for North Lincolnshire were based upon guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and took account of local circumstances.

The report requested that members satisfy themselves that the Accounting Policies at Appendix 1 were appropriate.

The Director responded to members' questions on aspects of her report.

Resolved - (a) That following consideration of the report and appendix, and discussion of their content, the accounting policies set out at Appendix 1 of the Directors report be approved, and (b) that the Director: Governance and Partnerships be authorised to make new accounting policies and amend existing policies as may become necessary in the production of the accounts, with any such changes being reported to the next meeting of this committee.

527 (12) TREASURY MANAGEMENT AND INVESTMENT STRATEGY - MID-YEAR REPORT 2018-19 – The Director: Governance and Partnerships submitted a report on the council's Treasury Management and Investment Strategy quarter 3 for 2018/19. The benchmark for measuring performance was the treasury strategy which the council set at its meeting on 1 March 2018.

The annual treasury management and investment strategy was prepared in line with -

  • The CIPFA Code of Practice in the Public Service Fully Revised 2011
  • The CIPFA The Prudential Code Fully Revised Second Edition 2011
  • DCLG 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.

The report provided an update on the investment strategy, the borrowing strategy and the prudential indicators for external debt and treasury management.

A list of approved counterparties, key investment and borrowing statistics, and prudential guideline indicators were included with the report.

The Director responded to members' questions on aspects of her report.

Resolved - (a) That following consideration of the report and appendices and discussion of their content, the committee agreed that the mid-year Treasury Management report provided sufficient assurance on the effectiveness of arrangements for treasury management, and (b) that the mid-year Treasury Management performance for the 2018-19 financial year to date be noted.

528 (13) INTERNAL AUDIT UPDATE (INCLUDING THE UPDATED AUDIT CHARTER – The Director: Governance and Partnerships submitted a report that updated the committee on Internal Audit activity up to 30 November 2018 and an updated Audit Charter to take account of changes to the Public Sector Internal Auditing Standards (PSIAS).

Members were informed that it was a requirement of the PSIAS for the committee to receive regular updates on the activities of Internal Audit, in particular:

  • providing assurance that sufficient work would be carried to provide a reliable risk based annual opinion on the effectiveness of the control environment and any amendments to the audit plan;
  • bringing to the committee's attention any issues identified during the course of the 2017/18 audit which could impact on the annual opinion; and
  • providing assurance of Internal Audit's compliance with Public Sector Internal Audit Standards (PSIAS).Appendix 1 of the report prepared by the Head of Audit and Assurance provided an update on the delivery of the audit plan up to 30 November 2018. Sufficient work should be carried out by May 2019 to provide a reliable opinion on the Council's control environment.

    The report also showed that there had been a reduction in the overall size of the audit plan from 1180 days to 1110. This was due to some planned audits no longer being required or their scope reduced due to changes in circumstances. The report also referred to Audit's Quality and Assurance processes. It provided assurances on the Audit teams compliance with PSIAS and in particular how it was progressing against actions identified in the external quality inspection carried out in March 2018.

    In addition it was a requirement for the Audit Charter (which set out the purpose, authority and responsibility of Internal Audit) to be annually reviewed.

    Although there had been no changes to the PSIAS, the updated charter attached at Appendix 2 of the report, had been amended to further clarify the role of audit in relation to fraud and advisory work.

    The Director responded to members' questions on aspects of her report.

Resolved - (a) That following consideration of the report and appendices, and discussion of their content, the Internal Audit progress report at Appendix 1 be noted, and (b) that the updated Audit Charter at Appendix 2 be approved.

529 (14) ATTENDANCE MANAGEMENT PROGRESS REPORT - Further to Minute 515, the Director: Business Development submitted a progress report on sickness absence levels during 2018-19 and the findings of the task and finish group on stress, depression and mental health.

The report provided an overview of the council's 2018-19 sickness absence levels, with particular emphasis on the average number of working days lost per full time equivalent; the number of full time equivalent days lost due to sickness absence; the periods of sickness absence and the reasons for sickness absence. The report also included the findings from the Stress, Depression and Mental Health task and finish group.

The Director responded to members' questions on aspects of her report.

Resolved - That following consideration of the report and discussion of its content, the committee agreed that there was continuing assurance that the risk to capacity from sickness absence was being managed through adequate controls.

530 (15) ANTI-BRIBERY POLICY - The Director: Governance and Partnerships submitted a report that reviewed the council's Anti-Bribery Policy. The Policy had been reviewed as part of a periodical review of policies that related to fraud and corruption to ensure it was fit for purpose.

The Anti-Bribery Policy had been developed as a result of the Bribery Act 2010 that introduced specific offences in relation to bribery.

Members heard that both the Council and its employees may commit offences under the Act and therefore, the policy applied to all of the Council's activities and employees. It made clear that the Council would not offer bribes or any other improper inducements to anyone for any purpose, nor would they accept bribes or improper inducements.

Although there had been no changes in the legislation in relation to Bribery, the Council's policy had been reviewed to ensure that the Council's approach to Bribery remained an appropriate one.

The Anti-Bribery Policy was attached at Appendix A.

The Director responded to members' questions on aspects of her report.

Resolved - That the Anti-Bribery Policy be approved.

531 (16) ANTI-MONEY LAUNDERING POLICY - The Director: Governance and Partnerships submitted the revised Anti-Money Laundering Policy and supporting operational guidance for approval.

The revised Anti-Money Laundering policy took into account new legislation contained in The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and related to the requirement to undertake due diligence in certain prescribed circumstances.

The 2017 regulations were not aimed at Local Authority activities, but certain activities may fall within the Act's definition of 'regulated' activity. Guidance from finance and legal professions, including the Chartered Institute of Public Finance and Accounting (CIPFA), indicated that public service organisations should comply with the underlying spirit of the legislation and regulations and put in place appropriate and proportionate anti-money laundering safeguards and reporting arrangements.

Both the Council and its employees as individuals may commit offences under the various Money Laundering regulations in force. This policy and its accompanying operational guidance had been drafted to provide clear guidance on the what, how, when and where to report suspicious financial activity to protect both the Council and its employees.

The revised Anti-Money Laundering Policy was included as an appendix to the report.

The Director responded to members' questions on aspects of her report.

Resolved - That the Anti-Money Laundering Policy be approved.

532 (17) LOCAL CODE OF CORPORATE GOVERNANCE - The Director: Governance and Partnerships submitted a report on the updated Code of Corporate Governance.

In April 2016 the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Government Chief Executives (SOLACE) issued their document 'Delivering Good Governance in Local Government: a Framework'. It was based on seven principles underpinning the framework.

  • Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law.
  • Ensuring openness and comprehensive stakeholder engagement.
  • Defining outcomes in terms of sustainable economic, social and environmental benefits.
  • Determining the interventions necessary to optimize the achievement of intended outcomes.
  • Developing the entity's capacity, including the capacity of its leadership and the individuals within it.
  • Managing risks and performance through robust internal control and strong financial management.
  • Implementing good practices in transparency, reporting and audit to deliver effective accountability.

In 2016/17 the council updated its Local Code using the principles in the framework, which was approved by the Audit Committee on 27 September 2016. The Code was subject to annual review and the revised version was shown on Appendix 1.

To reflect the changes of the council's operating model there had been amendments to sections D and E. In addition there had been minor amendments to other areas of the Code.

The updated Code showed that overall the council continued to comply with the principles outlined in the CIPFA/SOLACE Framework. The effectiveness of these arrangements would be reported in the Annual Governance Statement.

The Director responded to members' questions on aspects of her report.

Resolved - That the updated Code of Corporate Governance be approved.

533 (18) RISK MANAGEMENT PROGRESS REPORT - The Director: Governance and Partnerships submitted a report that informed members of the key issues arising from risk management work.

The committee heard that regular reporting on risk management issues was an important source of assurance for members to enable them to fulfil their role and to provide supporting evidence for the annual approval of the Governance Statement.

The report provided a comprehensive update of the initiatives and developments that were in place to manage risk. The council's Risk Roundup magazine was attached to the report as an appendix.

The Director and council officers responded to members' questions on aspects of the report.

Resolved - That following consideration of the report and appendix, and discussion of their content, the Risk Management Progress Report provided adequate assurance in respect of the council's risk management arrangements.

Reports