Meeting documents
Finance, Audit and Risk Committee
Thursday, 13th June, 2013 7.30 pm
| Time: | 7.30pm | Place: | Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City |
| PRESENT: | Councillor M.E. Weeks (Chairman),Councillor John Booth, Councillor Bill Davidson, Councillor David Kearns and Councillor Ian Mantle. Note. Councillor Bill Davidson joined the meeting at 7.50 p.m. |
| IN ATTENDANCE: | Norma Atlay - Strategic Director of Finance, Policy and Governance Andy Cavanagh - Head of Finance, Performance and Asset Management Howard Crompton - Head of Revenues and Benefits Geraldine Goodwin - Revenues Manager Nigel Schofield - Committee and Member Services Officer Terry Barnett - SIAS Audit Manager Alan Coooper - SIAS Principal Auditor |
| ALSO PRESENT: |
| Item | Description/Resolution | Status | Action | |
| PART I | ||||
| 1 |
APOLOGIES FOR ABSENCE An apology for absence had been received from Councillors Julian Cunningham and Lawrence Oliver. An apology was received from Tim Neill the Accountancy Manager. |
Noted | ||
| 2 |
MINUTES Minutes RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 20 March 2013 be confirmed as a true record of the proceedings and be signed by the Chairman. |
Agreed | ||
| 3 |
NOTIFICATION OF OTHER BUSINESS There was no other item of business tabled. |
Noted | ||
| 4 |
CHAIRMAN'S ANNOUNCEMENTS The Chairman welcomed everyone to the first meeting of the Civic Year 2013-2014 and reminded Members that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question. |
Noted | ||
| 5 |
PUBLIC PARTICIPATION There was no public participation. |
Noted | ||
| 6 |
RISK MANAGEMENT UPDATE Report Appendix A Appendix B Appendix C The Performance and Risk Manager (RM) presented the report of the Head of Finance, Performance and Asset Management. The RM advised the Committee that this was an update on the management of Strategic and Corporate Risks owned by Senior Management Team (SMT) and Cabinet and to present to the Committee the Annual Report on Risk Management. The RM confirmed that Top Risks had been reviewed and changes noted by the SMT on 14 May 2013. There was with one change to the assessment of one of the Top Risks and the introduction of one new SMT Top Risk. The RM referred the Committee to Tables 1 and 2 which detailed all the Top Risks for Cabinet and SMT respectively. The RM proposed that there should be a reduction in the probability score for Hitchin Town Centre Development Cabinet Top Risk from a ‘3' to a ‘2' and that a full description of the risk was presented at Appendix A. The RM next proposed that the SMT sub risk of Organisational Workload of Community Right to Bid should have its probability assessment reduced from a ‘3' to a ‘2' and advised that this suggestion did not impact on the overall assessment of the full Organisational Workload Risk. The RM advised the Committee that following the presentation of a final report on Churchgate at the meeting of Council it was very likely that there would be a new risk for Hitchin Town Centre Development involving a new assessment of actions required and the Strategic Director for Finance, Policy and Governance (SD) confirmed that all of the previous actions and activities associated with the Churchgate Project would be removed from the risk description. With regard to SMT Top Risks the RM confirmed that there was a new SMT Top Risk that related to the replacement payroll system/payroll service which had to be implemented in a short timescale as Midland had given notice on the Trent system for 1 April 2014 and the risk description was presented at Appendix B. The RM concluded her presentation by referring the Committee to Appendix C which was the Annual Report that summarised the Risk Management Framework and changes made to the Top Risks in the Financial Year 2012 - 2013. The Committee noted that the NHDC Risk and Opportunity Strategy required that Cabinet and Council should agree and endorse this Annual Report. The Chairman thanked the Risk and Performance Manager for the update on changes to risks owned by the SMT and Cabinet and invited comments and or questions from the Committee. With regard to the cessation of the support for the current payroll system the SD confirmed that there were three options for consideration and the risk assessment would be amended subject to the continuation with the current supplier or a new provider. In response to a question on insurance risks and Municipal Mutual Insurance the RM advised that there was an ongoing liability for long term illness where the disease arose from an exposure that happened many years ago such as mesothelioma. RESOLVED: (1)That the proposal to reduce the probability element score of the risk assessment of Hitchin Town Centre Development be agreed; (2)That the proposal to include a new SMT Top Risk applicable to the replacement Payroll System/Payroll Service be agreed; (3)That the changed assessment of the SMT Organisational Workload sub risk of Community Right to bid be agreed; (4)That the Annual Risk Management Report as presented at Appendix C be agreed. RECOMMENDED TO CABINET: (1)That Cabinet be requested to accept the recommendation that the proposal to reduce the probability element score of the risk assessment of Hitchin Town Centre Development (Appendix A) be agreed; (2)That Cabinet be requested to accept the recommendation for the approval of the Annual Risk Management Report (Appendix C) and forward to Council for adoption. REASON FOR DECISION: (1)That Cabinet was responsible for ensuring the management of the risks of the Hitchin Town Centre Development; (2)That the Finance, Audit and Risk Committee was responsible for the monitoring of the Senior Management Team Top Risks; (3)That the Risk and Opportunities Management Strategy stipulated that an Annual Risk Management Report was presented to Council. |
Agreed | Performance and Risk Manager |
|
| 7 |
AUDIT CHARTER - PUBLIC SECTOR INTERNAL AUDIT STANDARDS Report The Audit Manager - SIAS (AM) advised the Committee that in 2011 the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Chartered Institute of Internal Auditors (CIIA) had agreed to collaborate to promote the internal audit profession in the public sector. The outcome of this collaboration was a national standard: The Public Sector Internal Audit Standards (PSIAS) (based on the CIIA's International Professional Performance Framework) which became effective on 1 April 2013. The AM confirmed that the PSIAS required a Local Authority to adopt an Audit Charter. The Audit Charter should set out the framework within which the internal audit service would discharge its responsibilities to those charged with governance at NHDC and detailed the permanent arrangements for the internal audit and key governance roles and responsibilities to ensure the effectiveness of internal audit provision. The AM informed the Committee that the Head of Assurance for the Shared Internal Audit Service had carried out an exercise to assess how SIAS complied fully with the PSIAS standards. There were no material issues and that the Audit Charter was presented at Appendix A to this report. The AM referred the Committee to the existing requirements within the Standards and the new requirements and described the differences in respect of: Internal Audit Charter; Quality Assurance, External Assessment; Resource limitations and Effective Communications. The Chairman thanked the Audit Manager for the introduction to the Audit Charter and invited comments and or questions from the Committee. A Member questioned whether there ever had been need for the Anti Fraud Service (Appendix A) and if there were sufficient resources. The Strategic Director for Finance, Policy and Governance (SD) in her role as Section 151 Officer confirmed that resources were available to support this process. The SD assured the Committee that should there ever be a shortage of resources to complete any of the internal audits this Committee would be advised well in advance of there being a problem. The SIAS Audit Manager (AM) stated that there would be continued use of an external partner (currently Price Waterhouse Coopers) for internal audit work. In response to a question the AM confirmed that there was in practice very little difference between the CIPFA auditing system and the new PSIAS auditing system which was effective from 1 April 2013 and which the 2013-2014 Internal Audit Programme would use. RESOLVED: (1)That the proposal to adopt the national Public Sector Internal Audit Standards effective at 1 April 2013 be agreed; (2)That the condition within the Public Sector Internal Audit Standards requiring the adoption of a Shared Internal Audit Service Audit Charter which would cover the authority and responsibility of the internal audit function be noted and agreed; (3)That the Internal Audit Charter at Appendix A to the report be agreed; (4)That confirmation from the Strategic Director of Finance, Policy and Governance that there had been no inappropriate scope or resource limitations on internal audit activity be welcomed and noted. REASON FOR DECISION: To note the new national Public Sector Internal Audit Standards and approve the adoption of a new Audit Charter. |
Agreed | ||
| 8 |
NORTH HERTFORDSHIRE DISTRICT COUNCIL 2012-2013 ANNUAL ASSURANCE STATEMENT AND INTERNAL AUDIT ANNUAL REPORT Introduction Report The SIAS Audit Manager (AM) advised the Committee that the purpose of the report was to provide an opinion on the adequacy and effectiveness of the Council's control environment, a summary of the audit work from which the opinion was derived and a summary of the performance of the internal audit service. The AM took the Committee through the salient points of the Annual Assurance Statement viz. Scope of Responsibility; Control Environment; Review of Effectiveness; Confirmation of Independence of Internal Audit and assurance on limitations and Basis of assurance opinion. The AM was pleased to confirm that SIAS were able to give substantial assurance on the adequacy and effectiveness of the Council's control environment which was split into financial and non financial systems. Also, that the corporate governance and risk management framework substantially complied with the best practice guidance as required by CIPFA/SOLACE with NHDC Officers confirming that there had been no fundamental changes to the council's risk management arrangements in 2012-2013. The AM referred the Committee to Appendix A which listed all the audit work completed in 2012-2013 including the assurance level, the number of recommendations made and the final position on the agreed audit plan. Twenty three reports were at substantial level of assurance and six at full level of assurance in 2012-2013. The Committee noted that there was one high recommendation at priority level with 40 at medium, 48 merited attention. The AM stated that the high priority recommendation was in the Debt Recovery Audit which related to the procedure for the recovery of over payment of housing benefit and that this problem had been subsequently addressed. The level of assurance given did not cover Corporate Governance, Fraud Baseline and VAT but work was ongoing on all three audits and the AM advised the Committee that these would be finalised shortly. The AM described next the performance in 2012-2-13 of SAIS at NHDC against targets agreed by the SIAS Board e.g. the actual audit days used were at 98 per cent against a target 95 per cent; there were 35 projects completed out of an agreed 37 projects but the target of 95 per cent was met; the External auditors satisfaction and the SIAS Annual Plan were achieved and there was 100 per cent client satisfaction; The Head of Assurances' Annual Report was delivered on time and 100 per cent of High Priority Recommendations had been agreed. The AM confirmed to the Committee that the management of the internal audit was progressing on a good direction of travel and that the lower number of audits completed in 2011-2012 as compared to 2012-2013 was due to the audit year for 2011-2012 not commencing until July 2011 when SIAS became operational. The AM concluded his presentation by advising the Committee of several operational developments introduced by SAIS during 2012-2013 which were designed to enhance the audit service as follows: A Control Risk Self Assessment Model; Benchmarking Reviews; IT, Procurement and Fraud Baseline Assessments; Chief Financial Officer's Emerging Risk Workshop and Risk Assessment Model. The Chairman thanked the SIAS Audit Manager for the update and report on the work of Shared Internal audit at NHDC in 2012-2013. A Member referred the Committee to previous meetings where the target of 95 per cent completion of internal audits and other tasks - such as client satisfaction - had been challenged as to why targets were not set at 100 per cent. The AM assured the Committee that in effect 100 per cent of the planned audits would be completed although several audits were in draft at 31 March 2013. The Strategic Director for Finance, Policy and Governance (SD) confirmed that as requested at the meeting held on 20 March 2013 (Minute 69 refers) the SIAS Board had a long debate on the target to be set but did not agree to amend the target to 100 per cent and the SD was also pleased to confirm that the internal audit plan was completed in the first few days of the 2013 - 2014 financial year. Following another question on Client Satisfaction the AM advised that this target of 100 per cent was achieved as the records showed that all the audit questionnaires returned to SIAS had confirmed 100 per cent satisfaction with the audit process and audit reporting. The SD advised that at meetings of the Senior Management Team all managers were reminded to complete the audit questionnaire and that SIAS were very keen to have a good feedback from those audited. RESOLVED: (1)That the Annual Assurance Statement and Internal Audit Annual Report be noted; (2)That the final position for the 2012 - 2013 Audit Plan as presented at Appendix A be noted; (3)That the Definitions of Assurance Levels Priority of Recommendations as presented at Appendix B be noted; (4)That the Areas of Non-Conformance with Public Sector Internal Audit Standards at May 2013 be noted; (5)That the confirmation from the Strategic Director of Finance, Policy and Governance that there were no inappropriate limitations on scope and resources for internal audit (as required by the new mandatory Public Sector Internal Audit Standards) be welcomed and noted. REASON FOR DECISION: To approve the Annual Assurance Statement and Internal Audit Annual Report. |
Noted | ||
| 9 |
NORTH HERTS DISTRICT COUNCIL - AUDIT COMMITTEE PROGRESS REPORT Introduction Report The Principal Auditor (PA) presented the report of the Head of Assurances - SIAS which sought the Committee's view on the Internal Audit Progress Report, approve the amendments to the Audit Plan as at 17 May 2013 and if appropriate agree the removal of the implemented high priority recommendations The PA advised the Committee that at 17 May 2013 9.5 per cent of the 2013 -2014 Audit Plan days had been delivered and presented at Appendix A was a status update on each project within the Audit Plan. The PA stated that 14 audits from 2012 - 2013 had been completed in the period since 1 March 2013 of which three had full assurance and 10 had substantial assurance with one benchmarking review of the IT Baseline Assessment which did not require a level of assurance. The Committee noted that no audit reports had been completed in the year 2013-2014 to date but audit status for the year to date was presented at Appendix A. The PA referred the Committee to Appendix B which presented the standard template schedule for listing the status of previously agreed high priority audit recommendations including those which were complete and one that was due for removal from the list. The PA concluded his presentation by stating that there were no changes to the 2013-2014 Audit Plan and that the actual performance for North Herts against the targets to be monitored at 17 May 2013 was 9.5 per cent against a target of 10 per cent. The Chairman thanked the Principal Auditor for the SIAS report and an immediate enquiry concerned the potential need for an internal audit of the efficiency of the new payroll system and the PA advised that no such audit was scheduled. The Strategic Director of Finance, Policy and Governance confirmed that an audit would take place in third or fourth quarter in 2013-2014 if the I - Trent upgrade went ahead. In response to a question concerning the late completion and removal of the High Priority Recommendation No. 3 - Copyright Act - Software Licensing the Head of Revenues and Benefits and IT advised that the delays were caused by the exhaustive work undertaken by officers during the preparation of the Shared Services Project and the large number of software purchases over many years from different suppliers. In response to a question on the collection of Fixed Penalty Notice Fines The Head of Finance, Policy and Governance advised that the collection of monies from such sundry debtors was not part of the overall audit plan and the Chairman considered that it might be appropriate to request an audit of such sundry debtors with recognition that such an audit would be on process and procedure of collection such fines and not the reason for the penalty notice. RESOLVED: (1)That the information presented in the Internal Audit Progress Report against the 2013-2014 Audit Plan as presented at Appendix A be noted; (2)That the implementation status of High Priority Recommendations as presented at Appendix B be noted; (3)That the proposal to remove the following High Priority Recommendation - 3. Copyright Act - Software Licensing (Appendix B refers) be agreed. REASON FOR DECISION: For the Committee to review the progress of the 2013 -2014 Audit Plan and confirm removal of High Level Recommendations on completion. |
Agreed | ||
| 10 |
THE EFFECTIVENESS OF THE FINANCE, AUDIT AND RISK COMMITTEE Report The Audit Manager (AM) presented the report of the Head of Assurances at SIAS and confirmed that SIAS had carried out this review at the request of the Head of Finance, Performance and Asset Management. The AM confirmed that the previous Chairman of this Committee had been consulted on the effectiveness of the Committee and Members of the Committee had been invited to complete a questionnaire (see Appendix B). The AM referred the Committee to Table 1 which listed the results of the review against the Terms of Reference and how the duties of the Committee were discharged. Resulting from this analysis the AM advised that the Action Plan presented at Appendix A only had one outstanding issue viz. The Whistleblowing Policy. The AM was pleased to confirm that in the opinion of SIAS this Committee fulfilled its function well as the NHDC Finance, Audit and Risk Committee. The Chairman thanked SIAS for this positive report and it was agreed that Committee Members should be requested to complete the SIAS questionnaire as presented at Appendix B. RESOLVED: (1)That the Committee were pleased to endorse the proposal that the Finance, Audit and Risk Committee was operating successfully; (2)That the Action Plan as presented at Appendix A be approved for implementation in the Civic Year 2013-2014; REASON FOR DECISION: To acknowledge and support the Senior Management Team's proposals for Risk Management. |
Agreed | ||
| 11 |
ANNUAL GOVERNANCE STATEMENT Report Appendix A Appendix B The Performance and Risk Manager (RM) presented the report of the Head of Finance, Performance and Asset Management the purpose of which was to seek the views of this Committee on the Annual Governance Statement (AGS) for 2012-2013. The RM reminded Members that each Head of Service and Corporate Manager had completed an assurance statement that included a review of their service risks and risk management practices. The subsequent Draft Annual Governance Statement had been compiled as a Corporate Document and reviewed and agreed by the Senior Management Team as presented at Appendix A. The RM confirmed that that the Draft AGS had been reviewed by the Council's external auditors (Grant Thornton) and would be reported to this Committee at the meeting scheduled for 19 September 2013 with an update on actions reported to the September and March meetings. The RM next referred the Committee to Table 1 which detailed the draft improvement plans that arose from the review and summarised in Sections 5.2 to 5.3 of the report notwithstanding that relevant officers had yet to agree the proposed recommendations. The RM confirmed that the final improvement plan would be presented with the final AGS at the meeting to be held on 19 September. The Chairman thanked the Performance and Risk Manager for the updating on the AGS and the details of the actions as listed at Table 1. A Member questioned the approach by the Authority on Fraud Awareness and whether there had been occasions of high or low level fraud. The Strategic Director of Finance, Policy and Governance stated that a high level of fraud could occur with benefit fraud but officers regularly checked claimants' records and applications. Following a short discussion it was agreed that it would be useful for all Members and relevant officers to be given the opportunity to participate in an e-learning module and include this as part of the AGS Action Plan. RESOLVED: (1)That the Draft Annual Governance Statement as presented at Appendix A and supporting documentation be approved; (2)That the proposal to report on the progress against the Action Plan in September 2013 and March 2014 be agreed; (3)That the Performance and Risk Manager be requested to make the necessary arrangements to provide an e learning module on Fraud Awareness for Members and Officers which would be added to the AGS Action Plan. REASON FOR DECISION: To allow the Committee assess and consider the Annual Governance Statement before approval and to confirm that the Council was improving its governance arrangements. |
Agreed | ||
| 12 |
REVENUE BUDGET OUTTURN 2012-2013 Report Appendix A Appendix B Appendix C The Head of Finance, Performance and Asset Management (HF) presented the report of the Strategic Director of Finance, Policy and Governance which at the time of publication was in draft format prior to presentation to Cabinet on 18 June. The HF advised that in 2012 - 2013 savings had been over achieved and that the budget was down by 3.2 per cent. The HF took the Committee through the changes to the General Fund at each Quarter in 2012-2013 and that the third Quarter showed an expenditure on the General Fund of £15.742M which was net decrease on the working budget of £284K. Of this decrease the HF advised that £211K was carried forward to 2013-2014 and that the net impact on the 2013-2014 base budget was an increase of £196K reported at the third Quarter. The HF referred the Committee to the Executive Summary which detailed significant aspects of the Revenue Budget Outturn for 2013-2014 and to Tables 1 to 10 which inter alia described: Significant Changes to the General Fund, Careline, Efficiency Proposals, Earmarked Reserves and Bad Debt Provisions. With regard to Vacancy Control the HF advised that Challenge Board requested that £100K of the under spend be carried forward to 2013-2014 as a Strategic Priorities Fund which could be used to invest to save or continuous improvement projects. Within this carry forward the HF accepted the proposal to include the need for Member approval on outstanding and new projects. A Member questioned the net loss for Careline when in recent years this operation had returned good profits to NHDC. The HF advised that several key clients had withdrawn e.g. Hertfordshire County Council, there had been a value for money study and a review of the Careline marketing strategy and that there would be concerted effort to attract new customers. A Member asked about the reason for the precise amount of £600K attributed to Leisure Services and the Strategic Director of Finance, Policy and Governance advised that a fixed sum had been reserved each year and that this would be a net item (see Minute 17 below). The Chairman thanked the Head of Finance, Performance and Asset Management for the updating and it was agreed that the report be noted. RESOLVED: That the information in the Draft Revenue Budget Outturn Report for 2012-2013 to Cabinet be noted. REASON FOR DECISION: To provide the Committee with the opportunity to comment on reports to Cabinet. |
Noted | ||
| 13 |
ANNUAL TREASURY MANAGEMENT REVIEW 2012 -2013 Report Appendix A Declaration of Interest: The Chairman Councillor Michael Weeks advised the Committee that he had a non - pecuniary interest as he was an employee of Lloyds TSB Bank - with whom the Council invested considerable funds - but in a capacity far removed from the Treasury activities mentioned in this report. It was noted that there was no conflict of interest and that Councillor Weeks should remain in the room for the duration of this item and vote if necessary. The Head of Finance, Performance and Asset Management (HF) presented the report of the Strategic Director of Finance, Policy and Governance which at the time of publication was in draft format prior to presentation to Cabinet on 18 June. The HF reminded Members that the income from investments was an important income stream for the General fund each year and that in 2012-2013 the Council generated interest of £1.18M at an average interest rate of 2.42 per cent on new deals and an interest rate of 2.3 per cent on all outstanding investments. Conversely the HF advised that NHDC had to borrow £2M on a twenty day rate to cover the shortfall in income from Council Tax due to the majority of Council Tax Payers only paying council tax for ten months of the year from April to December. Also, if the Council did not invest with Building Societies the income loss would amount to £150K. In response to a question as to why the Council did not lend to other local authorities when NHDC in fact borrowed from two other local authorities the HF advised that policy did allow lending to other authorities but the interest rate had to be sufficient to justify the loan and that cash borrowing was always on very short terms The Chairman thanked the Head of Finance, Performance and Asset Management for the updating on Treasury Management and the Committee agreed to note the report. RESOLVED: That the information in the Annual Treasury Management Review for 2012-2013 be noted. REASON FOR DECISION: To provide the Committee with the opportunity to comment on reports to Cabinet. |
Noted | ||
| 14 |
CAPITAL PROGRAMME OUTTURN 2012 -2013 Report Appendix A Appendix B Appendix C The Head of Finance, Performance and Asset Management (HF) presented the report of the Strategic Director of Finance, Policy and Governance which at the time of publication was in draft format prior to presentation to Cabinet on 18 June. The HF advised the Committee that at year end 2012-2013 there had been expenditure of £2.472M on the Capital programme which was a decrease of £2.115M since the last report at the end of the third quarter. The Committee noted that this decrease in spend was partly due to the revision of the timetable for the completion of schemes and that this lead to the re-profiling of schemes into future years of £1.022M and partly due to a net decrease in the expected spend on schemes of £1.073M. The HF listed the capital schemes completed in 2012-2013 e.g. Disabled Facility Grants of £790K, enhanced play areas, extension to Great Ashby Community Centre, New payment machines in NHDC Car parks and roof replacement at North Herts Leisure Centre (savings of £175K). In response to a question on the £1M allocation to the Local Authority Mortgage Scheme the HF advised that this advance would not be treated as expenditure as it represented financial assistance and consequently this would be stated as a long term debtor in the accounts and paid on termination of the scheme. The HF also confirmed that set aside payments could not be used as capital receipts but the sale of NHDC land assets could be used as capital receipts, and the Strategic Director of Finance. Policy and Governance explained that set aside payments were linked to the financial requirements of the authority and that set aside payments affected revenue budget. The Chairman thanked the Head of Finance, Performance and Asset Management for the updating on the Capital Programme Outturn Report for 2012-2013 and the Committee agreed to note the report. RESOLVED: That the information in the Capital Programme Outturn Report for 2012-2013 be noted. REASON FOR DECISION: To provide the Committee with the opportunity to comment on reports to Cabinet. |
Noted | ||
| 15 |
DEBT RECOVERY Report Appendix B The Head of Finance, Performance and Asset Management (HF)reminded the Committee that at the meeting held on 28 January 2013 (Minute 60 refers) it had been agreed that at a future meeting should receive a report on Debt Recovery Process and management of debtors. The HF explained that the debt recovery function was within the Revenue and Benefits Department and was responsible for the collection of unpaid debts relating to Council Tax, National Non Domestic Rates, Business Improvement Districts, Housing Benefits Overpayments, Car Parking Excess Charges and Sundry Debtors The HF referred the Committee to Appendix A which detailed recovery action and total debts being pursued. The HF advised the Committee that the Debtors Team had provided further context and background in Appendix B. The HF then described in some detail each debt recovery procedure and when the Magistrates Court was requested to provide a Liability Order. The collection of Housing Benefit and Sundry Debtors was managed in house and all debts followed a Corporate Recovery Process and any referrals for benefit fraud were passed to the legal department for prosecution. With regard to Car Parking Penalty Notices the HF advised that collection was made in house and the issue of statutory notices. If the fine was not paid then a Warrant of Execution was issued by the Traffic Enforcement Centre and then passed to an external agency fro collection. The Committee noted that the Revenues Team undertook all contacts with the Enforcement Agents. The HF was pleased to advise the Committee that it was always the intention to reach agreement with debtors even if payment was by instalments and that Court Action was not taken lightly. Regarding audits of the debt recovery process the HF was able to confirm that that Debt Recovery was given a substantial assurance and that an audit of sundry debtors was given a substantial assurance. The HF next described the use of two enforcement companies to chase debtors and this had been successful, likewise with Sales Ledger bad debts had fallen away significantly due to the collection of payment in advance and collection had been taken back in house as this was felt to bring a better collection and payment rate. A member of the Revenues Team would follow up a reminder letter with a personal telephone call. With regard to non payment of rent (possibly due to upward rent reviews) for NHDC property it had been much better to threaten the surrender of the lease to improve the payment of rent. The HF concluded his presentation by confirming that the total provision in 2012-2013 for all categories of potential bad debt was £1.006M at 31 March 2013 and that at 31 March 2013 costs and write offs of £948 had been accounted for. The Chairman thanked the Head of Finance, Performance and Asset Management and invited comments and or questions from the Committee. A Member questioned a long outstanding debtor who was a leaseholder of an NHDC property and who could be a major investor in a town centre development. The Strategic Director of Finance, Policy and Governance (SD) advised the Committee that when a challenge was made on a rent review then due rent was not paid. Consequently if agreement by arbitration took a considerable time then the outstanding unpaid rent could become a large sum. With reference to the NHDC property in question the SD confirmed that a payment schedule was agreed to repay all the owed rent by the end of September 2013. The SD confirmed that the collection of debts from individuals was always the biggest problem and stated that the collection of debts from companies and individual was undertaken in the same way. The SD stated that problems of non payment for service would not in the first instance prevent the provision of that service. The Head of Revenues and Benefits (HR) advised the Committee that the collection of debts was laid down by statute and must follow a set pattern. The Council always tied to be flexible in seeking payment of debts as the main objective was to safeguard the Council's income at the same time recognising that individuals could be in real hardship and assistance was given wherever possible, payment schedules agreed. There was a very good working relationship with the Citizens Advice Bureau especially on multiple debts incurred and advice was accepted from the CAB. The HR confirmed that the collection process had been developed over many years and there was much more attention to debtors as soon as the debt was registered. The SD stated that with the responsibility to collect Business Rates firmly with NHDC the authority would be much more pro-active as this income was part of the overall funding each year as the demise of a business would result in no business rates and possibly no rental income. The Chairman enquired about the issue of parking penalty notices, collection of fines, factoring of the debt to other agencies, the Traffic Enforcement Centre, debts over £600 and the HR clarified the process. It was agreed after a short discussion to request an additional internal audit on the process of issuing penalty notices, enforcement and collection of fines. RESOLVED: (1)That the information in the report be noted and that officers be thanked for the work undertaken to prepare the report; (2)That the Head of Finance, Performance and Asset Management be requested to make the necessary arrangements with the SIAS Audit Manager to include an extra internal audit of the process of the Issue of fixed Penalty Notices, the Enforcement of Fixed Penalty Notices and the Collection of Fines within the Internal Audit Plan for 2013 - 2014. REASON FOR DECISION: For the Finance, Audit and Risk Committee to review the Debt Recovery Process. |
Agreed | Head of Finance/Performance and Asset Management |
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| 16 |
LENDING TO HOUSING ASSOCIATIONS Report Declaration of Interest: Councillors Bill Davidson and David Kearns declared another non pecuniary interest as they were NHDC nominated appointees to the Board of North Hertfordshire Homes and advised the Chairman that they would remain in the room for the duration of this item and vote if required. The Head of Finance, Performance and Asset Management (HF)reminded the Committee that at the meeting held on 28 January 2013 (Minute 60 refers) it had been agreed that at a future meeting should receive a report that considered the possibility of NHDC including loans to Housing Associations (for example North Hertfordshire Homes (NHH)) as part of its investment strategy. With regard to North Hertfordshire Homes the HF confirmed that the NHDC Housing Stock Transfer had been used as security at transfer and could not be used a second time. The HF advised the Committee that NHH at 31 march 2012 had assets of £300M funded by £261M of loans and £39M of reserves in addition to which NHH had a complicated arrangement of its loan and the HF stated that banks would only lend at certain rates and for certain periods. Housing Associations were ‘Industrial and Provident Societies and therefore did not enjoy the same financial protection as wholly Public Sector bodies. The HF described to the Committee the factors taken into account as to the feasibility of such loans e.g. Credit Ratings of Housing Associations; Credit Rating Scores and Investment Rates. Another major factor was how any such loan could be secured or unsecured assets and the HF advised that Housing Associations had invariably borrowed money using their housing stock as security. The Committee noted that there could be considerable costs for legal advice and guarantees and or indemnities which had yet to be quantified The HF advised that on his enquiry about loans to Housing Associations from other authorities in Hertfordshire and beyond it was confirmed that no other authority lent to Housing Associations as part of their Treasury Management Strategy. Also, this topic had been placed on CIPFA' s Technical Information Service online forum which was used by some 160 Member Councils and no Council had responded to state that they were lending to Housing Associations. The HF advised the Committee that the conclusion reached by officers was that lending to Housing Associations was unlikely to generate sufficient benefits that would be attractive to NHDC and that achieving higher yields from investments was a secondary issue with the primary considerations being security and liquidity of funds. The Chairman thanked the Head of Finance, Performance and Asset Management for the report and invited comments and or questions from the Committee. In response to a question the Strategic Director of Finance, Policy and Governance (SD) stated that NHDC could make grants to Housing Associations under the Capital Programme of £500K each year. A Member considered that loans to a Housing Association should be considered as part of the NHDC Strategic Policy and that a loan to NHH (of say £10M) which was assessed as a Grade VI organisation could be made against the housing stock for say 30 years at six per cent interest. The SD stated that the security of public funds was essential and that if NHDC did loan £10M then the authority might have to borrow at a higher rate of interest to cover loss of income. The SD urged caution that Full Council must set the Investment Strategy and that funds under Treasury Management should not be used and that lending issues should be clearly defined. The HF confirmed that NHDC would not loan £10M to one single entity. RESOLVED: (1)That the conclusion reached by officers that Council should not include loans to Housing Associations as part of the Investment Strategy be noted; (2)That the Committee agreed that there should be no use of funds within the Treasury Management programme for loans to Housing Associations; (3)That the Head of Finance, Performance and Asset Management be requested to continue the approach whereby funds were identified in the Capital Programme to provide grants to Housing Associations. REASON FOR DECISION: For the Finance, Audit and Risk Committee to note the report and consider alternative ways of providing funds to Housing Associations. |
Agreed | Head of Finance/Performance and Asset Management |
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| 17 |
EXTERNAL COSTS INCURRED BY NHDC DURING THE CHURCHGATE PROJECT Report The Head of Finance, Performance and Asset Management (HF) reminded the Committee that on 20 March 2013 (Minute 70 (4) refers) there was a request to present a report on the external costs incurred by NHDC during the Churchgate Development project in the period 2002-2013 and reminded Members that the Development Agreement with Simons Developments was terminated on 19 March 2013. There was also a request to ascertain if any of the outputs achieved (and costs) could be re-applied to a future Churchgate Project. The HF provided a brief summary of the history of the Churchgate Project since the commencement of planning policy work in the early 2000s and provided cross references to meetings and officers' reports presented in the ensuing period. The HF made reference to the appointment of a Development Partner using competitive dialogue and the signing of a Development Agreement with Simons Developments. The HF gave the Committee a summary of the costs incurred by NHDC: car park survey, archaeological study, market options, ground conditions survey, topographic survey, planning authority functions, examples of Planning Authority Activities and examples of Competitive Dialogue Activities. The HF then listed the costs incurred as the Landlord, Planning Authority Costs and Consultancy Costs for the initial tender exercise, competitive dialogue process and the Development Agreement. The Committee noted that the total sum expended on support costs since the commencement of a tender exercise was £588K of which £524K was held to be capitalised, however, the HF confirmed that an application to the Department for Communities and Local Government to allow ‘capitalisation' of this £524K was refused and consequently this cost would now be a charge to the revenue account. The HF advised that the sum of £524K was split as £324K funded by capital receipt and a contribution of £200K from the developer, and that the £200K had been held on the balance sheet as a long term debtor. The HF confirmed that as the Churchgate Project had been closed the general fund would be reduced by £524K and the capital receipt reserve would be increased by £324K and the long term debtor would be deleted. In response to a question the Strategic Director for Finance, Policy and Governance (SD) confirmed that all costs and adjustments for the Churchgate Project had been stated in the accounts for 2012-2013. The HF stated that it was not expected that any of the expenditure could be re-used other than costs for work such as ground surveys, topographical survey and archaeological investigations totalling £93K which might not need to be repeated. The HF advised the Committee that no decision as yet had been made as to whether these costs should be held by Council pending capitalisation against a future scheme or charge these costs against Revenue. The Chairman with support from the Committee noted the work undertaken to compile this report and thanked the Head of Service and Officers for the amount of detail provided and clarification of the capitalisation and revenue issues There ensued a short discussion on the merits of retaining £93K previously spent on preliminary works for the Churchgate Project. Whilst it was agreed that this expenditure had been accounted for there was some measure of support to hold this £93K in light of the expected report to Council on 18 July 2013. The SD advised the Committee that expenditure must be accounted for in the financial year that the costs were incurred and this sum was listed as a potential re-use should another development of Churchgate and Surrounding Area be proposed in the future. In response to a question the SD confirmed that the Churchgate ‘costs' had been covered by large savings made on the renewed contracts for Leisure Centres in North Hertfordshire, along with the risk allowance. The Committee conclude the debate by expressing concerns about the possibility of a similar project evolving for Hitchin Town Centre or other Town Centre in North Hertfordshire and avoiding the many problems with Churchgate and the costs incurred. It was agreed that Council should take due regard of the problems encountered on Churchgate and that Council should be requested to note the concerns of this Committee and insist on a cautionary approach at all times with a strong measure of security to protect the Council's interests on all matters should there be any future proposals any other town centre development scheme in North Hertfordshire such as the Churchgate Project. RESOLVED: (1)That the information in the report be noted and welcomed; (2)That the decision by the Department for Communities and Local Government to refuse the request to allow capitalisation of 524K of costs be noted; (3)That the option to hold an estimate of approximately £93K be acknowledged and that the Strategic Director Finance, Policy and Governance be requested to ensure that the potential retention of this sum be included in the Churchgate Report to Council on 18 July 2013; (4)That the Council should take the opportunity to learn from the protracted manner in which it took decisions relating to Town Centre development schemes. RECOMMENDED TO COUNCIL: That Council be requested to carefully consider the likelihood of deliverability of Town Centre Schemes and the measures required to protect the Council's interests on all matters should there be any future proposals for any other town centre development scheme in North Hertfordshire such as the Churchgate Project. REASON FOR DECISION: For the Finance, Audit and Risk Committee to note the report and urge caution in any future proposals for town centre developments in North Hertfordshire. |
Agreed | ||
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UPDATED CONTRACT PROCUREMENT RULES Report Appendix A Appendix B The Head of Finance, Performance and Asset Management (HF) advised the Committee that the purpose of the report was to provide an update to the NHDC Contract Procurement Rules which included a revision of procurement bandings that would be more appropriate to current financial considerations. Also included in the report at Appendix A (Draft amended Contract Procurement Rules) was an updated flow chart to show tendering options. The HF referred the Committee to Appendix B which summarised the changes to the Contract Procurement Rules. The HF confirmed that subject to this Committee's agreement the Contract Procurement Rules should be forwarded to Cabinet for their agreement and then to Council for adoption. The HF referred the Committee to Section 7 of his covering report which gave the main changes including the new bandings for procurement of Goods and Services under £100K and the new bands for Works Procurement below £250K using the quotation procedure. The HF was pleased to confirm to the Committee that the recording of quotations and use of transparent procedures would have an overall effect of applying a more proportionate approach to low value procurements. Conversely the HF advised that work contracts of low risk and complexity could have a significant value. The Committee noted that the Contract Procurement Rules had been updated to meet the increased use of the e-tendering system for procurements. Transparency would be improved by the decision to publish all contract notices in excess of £50K via the e-tendering system. Notice of such tenders would be via the OJEU website, NHDC website and Contracts Finder website. A further benefit of using e-tendering would be no further need to open tenders manually and the HF advised the Committee that the financial thresholds at which there could be variation to contract had been increased. Also, the EU financial thresholds reference had been replaced with a link to The Cabinet Office website which would provide users of the Rules with access to current threshold information without the need for a revision of the NHDC Procurement Rules. The HF advised the Committee that another change was that the appropriate Portfolio holder would not be required to attend for tenders openings where the budget exceeded £50K. The Chairman thanked the Head of Finance, Performance and Asset Management for the concise description of the changes to Contract Procurement Rules and the Committee acknowledged the work undertaken by the Head of Service and Officers in producing the amended document. The Chairman invited comments and/or questions from the Committee Of particular concern to several members was the change to an oral estimate being required for works contract values under £10,000 should be reconsidered and that it would be preferable to have a written quotation for all services. After a short discussion the HF agreed to this request even though it was noted that even oral estimates would be recorded in writing. RESOLVED: (1)That the changes (with amendments) to the NHDC Contract Procurement Rules as described at Section 7 of the report be agreed; (2)That officers be thanked for the work undertaken to ensure the efficient operation of Contract Procurement Rules. RECOMMENDED TO CABINET: That Cabinet be requested to approve the changes to the Contract Procurement Rules (with amendments) (Appendix A) prior to adoption by Council. REASON FOR DECISION: For the Finance, Audit and Risk Committee to approve the review and endorse the Council's Contract Procurement Rules which was a key action in the Council's Procurement Strategy. |
Agreed | ||
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FUTURE MEETINGS - POSSIBLE AGENDA ITEMS There were no items put forward for future meetings. A Member requested and it was agreed that the Committee should receive in advance an indication of reports scheduled for future meetings of the Finance, Audit and Risk Committee. |
Agreed | ||