Meeting documents

Finance, Audit and Risk Committee
Monday, 18th June, 2012 7.30 pm

Time: 7.30pm Place: Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City
 PRESENT: Councillor David Levett (Chairman),Councillor John Booth (subsitute), Councillor David Kearns, Councillor Lorna Kercher and Councillor Lawrence Oliver.
 IN ATTENDANCE: Andy Cavanagh - Head of Finance, Performance and Asset Management
Tim Neil - Accountancy Manager
Fiona Timms - Performance and Risk Manager
Helen Maneuf - Head of Assurance - SIAS
Margaret Mulkerrin - Audit Manager - SIAS
Nigel Schofield - Committee and Member Services Officer
Phil Westerman - Grant Thornton
Denis Thorpe - Grant Thornton
 ALSO PRESENT: Councillor David Leal - Bennett
Item Description/Resolution Status Action
PART I
1 APOLOGIES FOR ABSENCE

Apologies for absence had been received from Councillors Bill Davidson, Michael Muir and Michael Weeks. In accordance with the regulations of North Hertfordshire District Council Councillor John Booth confirmed that he would be acting as substitute for Councillor Davidson. An apology for absence was also received from the Strategic Director of Finance, Policy and Governance.
 Noted   
2 MINUTES
Minutes

RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 1 March 2012 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 meeting and Councillors Kercher and Muir on joining the Committee. The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question. The Chairman thanked the Performance and Risk Manager for the presentation on Covalent. The Chairman thanked Ms Margaret Mulkerrin (Audit Manager - SIAS) for her support to the Audit and Risk Committee and the Finance, Audit and Risk Committee and wished her well in her revised role at Hertfordshire County Council.
 Noted   
5 PUBLIC PARTICIPATION

There was no public participation.
 Noted   
6 ACCOUNTS AUDIT APPROACH MEMORANDUM
Introduction
Report

Mr Phil Westerman of Grant Thornton advised the Committee that the purpose of the memorandum was to provide additional detail on the audit approach for the Audit Plan and an update on the response to key risks following interim audit carried out to date.

Mr Westerman referred the Committee to Table 1 which gave details of the work completed on key audit risks to date and planned further work covering: Financial Performance, Accounting for property, plant and equipment and assessment of the Council's IT Systems.

Mr Westerman advised the Committee that the review to date of the Internal Audit function against the 2006 CIPFA Internal Audit Standards and now operating as Shared Internal Audit Services confirmed that the service contributed positively to the internal control environment and overall governance arrangements at NHDC. The timetable for the Closedown procedure for preparing draft accounts was in place and assurance had been received that the detailed working papers would be available in time for Grant Thornton to commence the audit fieldwork on 4 July 2012. Also, that the draft Annual Governance Statement would be provided before 4 July 2012. Mr Westerman was pleased to advise the Committee that no material weaknesses under Journal entry controls had been found to adversely impact on the Council's control environment or financial statements, but unusual journal entries would be checked as part of the audit.

Further reviews had been undertaken on walkthrough testing, information technology controls and reviews of VAT and PAYE procedures. Although the IT systems were considered to be fit for purpose areas for improvement had been identified but were not considered to be a significant risk to the accounts.

Mr Westerman referred the Committee to Appendix A which listed the events and actions for audit of 2011- 2012 and confirmed that the outcomes of the audit would be reported to this Committee at the meeting scheduled for 20 September 2012.

The Chairman thanked Mr Westerman for the updates on the audit programme and details of interim audit work to date. The Chairman invited comments and or questions from the Committee.

A Member expressed concern that an assurance level given as Adequate did not seem to be a level of assurance that some people might find encouraging and in response Mr Westerman stressed that in accounting terms an adequate assurance level was very much a standard assessment and could not be regarded as ‘weak'. Grant Thornton would invariably take a conservative stance on levels of assurance. Grant Thornton were very confident with the ability of internal audit and if Members wanted a definition of the assurance levels in Grant Thornton papers this could be arranged.

In response to an enquiry as to any extra costs on declared fees for VAT, PAYE audits Mr Westerman confirmed that there would be no extra charges for this work.

RESOLVED: That the proposed approach to accounts audit for 2011-2012 by Grant Thornton be noted;

REASON FOR DECISION:
To ensure that the Committee are fully aware of the accounts audit plan for 2011-2012.
 Noted   
7 RISK MANAGEMENT UPDATE
Report
Appendix A
Appendix A

The Risk and Performance Manager (RPM) presented the report of the Head of Finance, Performance and Asset Management which gave an update on the management of the Strategic and Corporate Risks owned by the Senior Management Team and Cabinet.

The PRM advised the Committee that there had not been much movement since the last meeting. All risks had been reviewed and where appropriate changes had been made to scope of the risk, and updates made to progress against any mitigating actions and were summarised in the Appendix to the Annual Report. The PRM also advised the Committee that the Senior Management Team Top Risk of Organisational Workload had details of risks arising from Government Policy Initiatives attached as sub - risks. The Committee noted that subsequent to the meeting held on 1 March 2012 two additional sub risks had been added viz. Impact of the Localism Act (apart from Planning) and the Public Health and Social Care Bill.

The PRM referred the Committee to Appendix A which listed new Organisational Workload Sub Risks and to Appendix B which was the Annual Risk Management Report for 2011-2012. The PRM advised the Committee that the Annual Risk Management Report should be referred to Cabinet and then to Council for endorsement as per the requirements of the Risk and Opportunities Management Strategy.

Concluding her presentation the PRM reminded Members that the Public Sector Equality Duty for public bodies within the Equality Act of 2010 and the risk of NHDC failing in its duty was recorded on the Risk Register.

The Chairman thanked the Performance and Risk Manager for the risk update and invited questions and or comments from the Committee.

In response to a question the PRM confirmed that all Top Risks were under continual assessment and that much more information was available on Covalent. Movement on the risk matrix as a risk was re-assessed in terms of impact and probability did occur e.g. The Royston Leisure Centre Project was a high top risk before award and moved as the construction phase commenced. The Chairman advised new Members that Risk Training could always be arranged with the Performance and Risk Manager on a one to one basis.

There ensued a discussion on the procedures and merit of allocation of Top Risks to either Cabinet or the Senior Management Team and that there should be more Top Risks shared between Cabinet and SMT. The Committee considered that at least one top risk ‘New Ways of Working' should be a shared top risk with Cabinet and the Head of Finance, Performance and Asset Management confirmed that the proposed Shared Services Project would become a Cabinet Top Risk should the detailed business case be approved.

In response to a question about Risk Assessments the PRM confirmed that there would be a thorough and comprehensive review of all risks undertaken on a phased basis with the appropriate Senior Managers.

RESOLVED:

(1)That the additional sub risks (remaining impact of the Localism Bill - except for planning - and the Public Health and Social Care Bill) to the Organisational Workload Top Risk as shown at Appendix A be noted;

(2)That the requirement of the Risk and Opportunities Management Strategy to produce an Annual Report which summarised changes to Top Risks made in 2011-2012 be noted.

(3)That the Head of Finance, Performance and Asset Management be requested to review the Senior Management Top Risk ‘ New Ways of working' and consider if this risk should become a Cabinet Top Risk if the detailed business case was approved.

RECOMMENDED TO CABINET:

(1)That the Annual Risk Management Report presented at Appendix B be endorsed followed by referral to Full Council.

(2)That the ‘New Ways of Working' Top Risk be a shared Top Risk between Cabinet and Senior Management Team or otherwise demarcated between Cabinet and Senior Management Team

REASON FOR DECISION:
To allow the Finance, Audit and Risk Committee make comments and observations on the Risk Management Update and consider the Annual Risk Management Report.
 Agreed  Head of Finance/Performance and Asset Management
8 DRAFT ANNUAL GOVERNANCE STATEMENT
Report
Appendix A
Appendix B

The Performance and Risk Manager (PRM) presented the report of the Head of Finance, Performance which invited the Committee to review of the Draft Annual Governance Statement (AGS) for 2011-2012. The PRM advised the Committee that the NHDC Constitution

The PRM advised the Committee that the Annual Governance Statement was a corporate document and had been previously reviewed and agreed by the Senior Management Team. Also, external audit, internal audit, Head of Service, Corporate Manager had reviewed the effectiveness of the assurance framework and reviewed their service risks and risk management practices. The PRM reminded the Committee that although the AGS did not have to be included in the Statement of Accounts once the AGS was approved this document must accompany the Statement of Accounts, even though it was separate from the accounts for the purposes of external audit.

The PRM referred the Committee to the Draft Annual Governance Statement presented at Appendix A and the Assurance Statement from the Chairman of this Committee presented at Appendix B. The PRM advised the Committee that actions identified already in the Draft Action Plan from the AGS for 2011-2012 were presented at Table 1 in the report and there were currently six actions to improve the NHDC Governance Framework to be implemented in 2012-2013.

The Chairman thanked the Performance and Risk Manager for the clarification and progress in the preparation of the Draft Annual Governance Statement and invited comments and or questions from the Committee.

In response to a question on insurance claims and the excess of £5, 000 per claim the PRM confirmed that some £30K to £40K was expended each year on excess payments but each excess was charged to the responsible service area. The Chairman advised the Committee that during a recent search on the NHDC website it had been very difficult to find the appropriate link to find listings of expenditure by NHDC that were over £500. Also, the Chairman stated that finding out who ‘your local councillor was took too long and ' at least five clicks via drop down menus' were required. Several Members considered that it was difficult to navigate around the NHDC website and that reducing drop down menus would help. The Chairman was concerned that there was no access to wi fi in house to gain access to say the Planning Control Committee reports.

Another Member wished to see in such annual reports a cross reference to other sources of information and the PRM stated that some actions were not significant and Mr Westerman advised that the Annual Governance Statement was part of the Annual Statement of Accounts and if there were any problems identified Grant Thornton would not be able to approve the combined document.

In response to another question the PRM confirmed that Risk training was available for all Members of this Committee and if training was required she would be pleased to make the appropriate arrangements.

RESOLVED:

(1)That the information in the draft Annual Governance Statement (Appendix A) and the Assurance Statement from the Chairman of this Committee be noted;

(2)That the Head of Finance, Performance and Asset Management be requested to liaise with the NHDC Web Manager to improve access to values of contracts let by this authority on the NHDC web site and improve overall accessibility to the NHDC web site for members of the public;

(3)That the Head of Finance, Performance and Asset Management be requested to include in the Annual Governance Statement the roles of Cabinet Members and Portfolio Holders;

(4)That the Head of Finance, Performance and Asset Management be requested to include in this and future Annual Governance Statements a definitive list (in a table) of the different levels of assurance that can be issued by SIAS and clarification of each level;

(5)That the Head of Finance, Performance and Asset Management be requested to make the appropriate arrangements to approve the draft Annual Governance Statement at the same time as the approval of the Statement of Accounts and no later than September 2012;

(6)That the proposal to receive progress reports on the Annual Governance Statement Action Plan for 2011-2012 at the meetings to be held on 20 September 2012 and 20 March 2013 be agreed.

REASON FOR DECISION:
For the Finance, Audit and Risk Committee to review and comment on the arrangements for Corporate Governance and agree actions to ensure compliance with best practice.
 Agreed  Head of Finance/Performance and Asset Management
9 REVENUE BUDGET OUTTURN 2011-2012
Report
Appendix A
Appendix B
Appendix C

The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance which would be presented to Cabinet on 19 June 2012 and provided an update on the income and expenditure at the end of 2011-2012 for the General Fund and Careline. Earmarked reserves at 31 March 2012 were listed as was the projected General Fund balance for 2012-2013 together with the outturn of the NHDC Treasury Management Duties.

The AM referred the Committee to The Executive Summary at Paragraph 4 which provided more details on: The Net General Expenditure, Allowance for Financial Risks, Careline, Savings, Collection Fund, General Fund and Earmarked Reserves with cross references to Tables: 1, 2,3,4,5, 6 and 7 for a more detailed description.

The AM advised the Committee that the General Fund net expenditure for 2011-2012 was £870K lower than the working budget with the major variances listed in Table 1 and that the total budget to be carried forward into 2012-2013 was £418K and detailed at Appendix B. The Committee noted that there were increases in expenditure for Shared Services (+£35K), Bad debt provision (£43K) and Planning Projects (£31K) and the AM clarified the reasons for the increased allocations.

The AM advised that the Statement of Accounts had yet to be audited and changes might be made if there were changes to the General Fund Balance, also that until the Housing Benefit Claim was audited the accounts were based on unaudited data.

The Committee noted that there were five new earmarked reserves to be listed following receipt of grants and contributions which would be unspent as such monies must now be identifiable within the General Fund. The AM confirmed that there were no conditions attached to these monies only guidance on how they should be spent and that the total value of earmarked reserves was £2.776M at 31 March 2012.

The AM concluded his synopsis of the Cabinet report with reference to Appendix C which detailed the Treasury Management activities for 2011-2012 and set out the total borrowing and interest earned plus the overall outcome of the NHDC Treasury Strategy.

The Chairman thanked the Accountancy Manager for the presentation of the Cabinet Report on the Revenue Budget Outturn for 2011-2012 and invited questions or comments from the Committee.

Several Members remarked on the significant net deficit of £80K on the Careline Trading Account which was an essential service provided by NHDC and it was proposed that a site visit to Careline would be appropriate. The Head of Finance, Performance and Asset Management advised the Committee that a Value for Money assessment was underway and that it was hoped to bring this account to a ‘break even' position but was unlikely to move into profit.

In response to a question the AM confirmed that the authority retained any money recovered from benefit overpayments even thought payment had been claimed and received from the Department of Works and Pensions. The AM also confirmed that Parking charges income related to issued Penalty Charge Notices.

The Committee noted that the Statement of Accounts had yet to be audited and changes to the General Fund balance may occur as a result of the final audit and that the Housing Benefit Claim had yet to be audited.

Comment was made as to the lack of achievement in vacancy control in 2011-2012 to provide extra funding and the AM confirmed that despite the lack of monies from this source there would be ‘invest to save' of some £100K given to the Senior Management Team and that following review of the General Fund position the funding of a Strategic Priorities Fund was considered to be affordable.

RESOLVED: That the Recommendations made to Cabinet in the report of the Strategic Director of Finance, Policy and Governance be noted;

REASON FOR DECISION:
To allow the Finance, Audit and Risk Committee comment as appropriate on the Revenue Budget Outturn for 2011 - 2012.
 Noted   
10 CAPITAL PROGRAMME OUTTURN 2011-2012
Report
Appendix A
Appendix B
Appendix C

The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance which would be presented to Cabinet on 19 June 2012 and provided an update on the final outturn of the 2011-2012 capital programme, the available capital funding resources and that Cabinet would be requested to approve the funding of the capital programme, approve the amount of capital receipts for the 2011- 2012 capital outturn and approval of changes to individual scheme expenditure for 2011-2012 and 2012-2013 onwards.

The AM referred the Committee to Appendix A which included summaries of the Capital Programme by priority and by service with the overall funding service year on year. The AM advised the Committee that the full programme was detailed at Appendix B with the revised costs of schemes and the provisional programme from 2012-2013 to 2015-2016. The AM advised the Committee that the outturn expenditure was £4.784M for 2011-2012 which was a reduction of £1.545M on the forecast issued at the end of the 3rd Quarter. The AM referred the Committee to Table 2 which listed all the scheme which had less expenditure than budgeted for at 31 March 2012 and consequently these schemes would slip into 2012-2013. The AM advised the Committee that there had been a saving of £114K on schemes that commenced or were finished in 2011-2012 as presented at Table 3.

The AM next advised the Committee on the status of Capital Funding for 2011-2012 and that third party contributions and grants (£2.694M in 2011-2012) were sought as much as possible in order to alleviate pressure on the available capital receipts. The AM confirmed that after third party monies and taking IT reserve of £36K the remaining £2.054 would be funded from the drawdown of the authorities cash investments. It was noted that this drawdown would affect interest income with current returns on £2M gave annual interest of about £40K. There had also been a marked reduction of capital receipts (£104K in 2011-2012) against a potential receipt of £1.093M but Treasury Advisors had confirmed that set aside receipts could be used which would be presented to the external auditors for approval.

The Committee noted that the capital programme for 2012-2013 had increased to £7.989M with a working budget of £6.558M and that the projected capital receipts from asset disposals for 2012-2013 was £2.9M with a caveat that as property market conditions were expected to remain difficult such receipts may not be achieved in 2012-2013. Also that if £3.9M was drawn down from cash investments this would reduce interest income by some £80K per annum.

The Chairman thanked the Accountancy Manager for the summary of the report to Cabinet and invited questions or comments from the Committee.

In response to a question the AM confirmed that there were large reserves retained from the housing stock transfer but cautioned that a drawdown of say £2M would result in a loss of some £40K in interest payments. The AM referred the Committee to Appendix C which detailed the funding of Capital Schemes and that each scheme was reviewed on a case by case basis. Another Member queried the lack of recognition and value from potential asset proposals and that a notional value should be given. A Member questioned the expenditure on the re-development of Howard Parks and Gardens and whether a detailed list of expenditure against the budget of £3M was available.

RESOLVED: That the Recommendations made to Cabinet in the report of the Strategic Director of Finance, Policy and Governance be noted;

REASON FOR DECISION:
To allow the Finance, Audit and Risk Committee comment as appropriate on the Capital Programme Outturn for 2011 - 2012.
 Noted   
11 CORPORATE BUSINESS PLANNING PROCESS FOR 2013 - 2014
Report
Appendix A

The Head of Finance, Performance and Asset Management (HF) presented the report of the Strategic Director of Finance, Policy and Governance which detailed the draft timetable for the Corporate Business Planning Process for 2013-2014 and to update the Committee on progress.

The HF advised the Committee that work was well advanced on the process for 2013-2014 and referred the Committee to the draft timetable presented at Appendix A and advised that there would be a continuation of the very valuable Member Workshops this year in September and November to identify council priority services and assist officers to prepare efficiency and investment proposals for discussion in November. These proposals would be presented to this Committee at the meeting scheduled for 6 December 2012. The HF confirmed that savings of £8.7M had been made to date with £1.9M savings in 2011-2012 and that more savings were required in future years.

The HF reminded the Committee that the process intended to meet the Council's Priorities and that Challenge Board would ensure that all Heads of Service and Corporate Managers would be challenged as to their budgets proposals which were to be scrutinised in detail. The HF advised that completed elements of the process were highlighted on the timetable and that there were three services to be tested for value for money viz. Careline, Management Support Unit and the Customer Service Centre, including consideration of the proposed Shared Support Services project with East Herts and Stevenage.

The HF explained that the Council still awaited clarification of the localisation of council tax support and business rates retention which affected the Medium term Financial Strategy due for completion in July 2012 as it was unlikely that confirmation of funding would not be received until late in the 2013-2014 budget process. The Committee noted that the consequence of the lateness of settlement meant that any budget setting would be in a ‘worst case scenario'.

The Chairman thanked the Head of Finance, Performance and Asset Management for the presentation of the Corporate Business Planning Process and invited questions and or comments from the Committee.

Comments were made to certain items within Appendix A where for example the Town and Parish Council conference was now due to take place in November 2012 and as yet there had been no announcement, that clarification was requested as to the identity of key Members who would attend a Policy Day in 2013-2014 and the role of Citizen Panels. The HF advised that a structured feed back was needed from Citizen Panels and it was hoped that a lot more information would be available at Member Workshops and cascaded down to Area Committees with area specific information.

RESOLVED:

(1)That the proposed Corporate Business Planning Timetable for 2013 - 2014 be noted;

(2)That the proposal for Members Workshops in September and October 2012 be noted.

REASON FOR DECISION:
To ensure that the Finance, Audit and Risk Committee are aware of the Corporate Business Planning Process for 2012-2013 and the Members Workshops.
 Noted   
12 SHARED INTERNAL AUDIT SERVICES - ANNUAL REPORT 2011 - 2012
Introduction
Report

The Head of Assurance for Shared Internal Audit Services (HA) presented to the Committee the first SIAS Annual Report for the year 2011-2012.

The HA was pleased to advise the Committee that the SIAS business model had contributed efficiency savings in the order of £300K to the partner organisations and that NHDC had achieved it savings target of £50K. SIAS worked on 290 assurance projects during 2011-2012 and the HA referred the Committee to Appendix A which detailed overall business performance and evaluation measures using a balanced scorecard. The HA advised the Committee that the SIAS Board requested more information on business performance of Shared Services and the Committee noted that the balanced scorecard for 2012-2013 would include such information.

In the first year SIAS received many compliments on the audit service and improvement ideas had been welcomed and implemented. There had been 88 per cent progress against the Audit Plans for all of the local authorities combined using 2928 actual days by 31 March 2012, and 221 audits reached at least draft stage by the same date. All audits met the minimum target, with 10 per cent rated as satisfactory, 19 per cent as very good and 71 per cent as excellent.

The HA advised the Committee that recovered income in 2011-2012 had only been from District Councils but from 2012-2013 onwards income from the County Council would be included as SIAS adopted a traded position.

The HA concluded her presentation by confirming that following a self assessment of the SIAS performance against the CIPFA Code of Practice a peer review of SIAS
was undertaken by a well respected local authority internal audit supported by the Transformation Manager from HCC, and that SIAS would be working to develop the recommendations and proposals of the external assessors.

The Chairman thanked the Head of Assurance for the details of the first year of SIAS.

RESOLVED: That the information provided in the SIAS Annual Report for 2011-2012 be noted;

REASON FOR DECISION:
To allow the Finance, Audit and Risk Committee comment as appropriate on the SIAS Annual Report for 2011 - 2012.
 Noted   
13 SHARED ANNUAL ASSURANCE STATEMENT AND INTERNAL AUDIT REPORT
Introduction
Report

The Head of Assurance for Shared Internal Audit Services (HA) presented this report which gave internal audit's overall substantial assurance on the overall adequacy and effectiveness of the NHDC control environment with comments on significant matters and key themes which was an essential component of corporate governance. The HA thanked all those involved with the audit process which had been very helpful during the transitional period in 2011-2012. As this was the first year of service delivery by SIAS there was as yet no opportunity to have any comparative performance data.

The Annual Assurance Statement for 2011-2012 was in two parts: Financial Systems and Non Financial Systems both of which had Substantial Assurance and the HA advised the Committee that the Corporate governance and risk management framework substantially complied with best practice guidance from CIPFA/SOLACE.

The HA advised the Committee that weaknesses had been identified in one or more partners within SIAS and that NHDC were requested to confirm that the following areas were effective: Authorisation , Write off and refunds procedures, Business Continuity Planning and Disaster Recovery arrangements, Expense claims provenance, Health and Safety, Change Management and project management procedures. Contract Procurement Rules and IT Development Strategy.

The HA referred the Committee to Appendix A which listed the audits undertaken at NHDC and the levels of assurance given after audit.

The Chairman thanked the Head of Assurance - SIAS for the update on the Annual Assurance Statement for 2011- 2012 and the final position for the 2011- 2012 Audit Plan at NHDC.

A Member thanked the Head of Assurance for a comprehensive report and queried if there was an intention to provide benchmarking in future reports as there should be an opportunity to compare audits on the same subject at the other partnership authorities. The HA advised that in the first year of SIAS a benchmarking assessment had not been planned but it might be possible to consider such an exercise in 2012 - 2013, with prospective benchmarking audits for Universal Credit and Financial Regulations. However, it was noted that it was the decision of each local authority to decide on its programme of audits each year.

In response to another question the Head of Assurance advised that all authorities had been requested to confirm that they had effective arrangements in the following areas: Authorisation, write-off and refunds procedures; Business Continuity Planning and Disaster Recovery arrangements; Evidencing of expense claims; Health and safety arrangements; Change management and project management procedures; Compliance with the requirements of Contract Procurement Rules and Development of an IT Strategy, but NHDC did not necessarily have problems with all or any of these subjects and it was a matter of drawing officers attention to possible problems.

With respect to IT audits the Head of Finance, Performance and Asset Management advised that all IT projects would be subjected to a business case analysis. The Audit Manager confirmed that 44 days of cancelled audit had not been charged to NHDC and advised that Risk and Fraud internal audits had commenced. Although there were several audit reports currently in a draft format the HA assured Members that these reports would be presented to the next meeting to be held on 20 September 2012.

RESOLVED:

(1)That the information provided in the SIAS Annual Assurance Statement and Internal Audit Report for 2011-2012 be noted;

(2)That the Head of Assurance - SIAS be requested in the SIAS Annual Report for 2012-2013 or the Annual Audit report to NHDC the inclusion if possible of a comparison of specific audits undertaken at each authority in the SIAS partnership to provide a benchmarking analysis and if this proved to be unattainable that the Head of Assurance be requested to consider ways of reporting on the performance of this authority in comparison with other authorities.

REASON FOR DECISION:
To allow the Finance, Audit and Risk Committee comment as appropriate on the SIAS Annual Assurance Statement and Internal Audit Report for 2011 - 2012.
 Agreed  Head of Finance/Performance and Asset Management
14 PROGRESS AGAINST THE ANNUAL AUDIT PLAN FOR 2012-2013
Introduction
Report

The Audit Manager (AM) advised the Committee that the purpose of the report was to note the progress made by SIAS to deliver the Council's Annual Audit Plan for 2012-2013 at 11 May 2012, the findings for audits assessed as ‘Limited' or No Assurance, some proposed amendments to the approved 2012-2013 Audit Plan, the implementation status of previously agreed high priority audit recommendations and agreement to the removal of completed actions with an update on performance management information as at 11 May 2012. The AM advised the Committee that at 11 June nine per cent of the audit plan had been completed and that currently there were no concerns about completing the 2012-2013 Audit Plan.

The AM advised the Committee that four per cent of the audit days for 2012-2013 had been delivered and referred the Committee to Appendix A which gave full details of progress against the 2012-2013 Audit Plan The AM confirmed that eight audits had been given substantial assurance for the year 2011-2012 since 28 January 2012, but each audit had a number of recommendations and the Committee noted that Appendix B detailed the implementation status of previously agreed high priority audit recommendations. The AM advised that an audit of Careline planned in the 4th quarter for 2011-2012 had been deferred to 2012-2013 and an additional 10 days for this audit had been added to the total number of days for 2012-2013 which now stood at 490 planned days.

The AM next referred the Committee to Paragraph 2.7 for details of the actual performance at 11 May 2012 against the targets that could be monitored during the current audit year and the AM advised the Committee that there were annual targets which would be included in the 2012-2013 Head of Assurance's Annual report viz. External Auditors' Satisfaction and Annual Plan.

The Chairman thanked the Audit Manager for the update on progress against the audit plan 2012-2013 and invited questions or comments from the Committee.

A Member enquired as to the proposed internal audits at NHDC in the second quarter of 2012-2013 and the Audit Manager advised that three audits were planned: Data Protection, Tree Maintenance and Debt Recovery

The Chairman referred to the Audit of Software Licensing and the recording of software held by NHDC in the IT Asset Register when it appeared that an audit of hardware had taken precedence. The AM advised that these audits recommendations were now 90 per cent implemented and was a carry over from 2011-2012.

RESOLVED:

(1)That the details on the updating of progress against the Annual Audit Plan for 2011 - 2012 be noted;

(2)That the proposed amendments to the Audit Plan at 11 May 2012 be agreed;

(3)That the proposed removal of implemented high priority recommendations ( Numbers: 1, 2, 3, 4 (excluding appointments over £50K) 5, 8. 9 11, 12 and 13) as detailed at Appendix B be agreed.

REASON FOR DECISION:
To allow the Finance, Audit and Risk Committee to note and comment as appropriate on the progress against the Annual Audit Plan for 2011 - 2012.
 Noted   
15 THE EFFECTIVENESS OF THE FINANCE, AUDIT AND RISK COMMITTEE
Report
Appendix A

The Head of Finance, Performance and Asset Management (HF) advised the Committee that as this Committee had been in existence for one civic year it was appropriate for Members to consider the effectiveness of the Committee using CIPFA best practice guidelines and feedback from Members.

The HF referred the Committee to Appendix A for the Terms of Reference for this Committee and advised that the review was part of the Annual Governance Assurance Statement. The HF reminded the Committee of the work that was required including reports from SIAS and Grant Thornton the external auditors with regular updates on risk management and if appropriate referral of risks to Cabinet. It was important that the Committee worked to Terms of Reference that conformed to the business needs of the Council and addressed issues such as: Induction for new Committee Members, Learning and Development, Benchmarking, role of external auditor and the new role of an independent member to this Committee.

The HF referred to Appendix B which was the Action Plan and intended to develop the effectiveness of this Committee and the HF opined that the Finance, Audit and Risk Committee was an effective scrutiny body overall for financial, audit and internal control matters based on the work completed in 2011-2012.
A Member queried the response by Cabinet to referrals from this Committee and although it was thought that there had been no refusals by Cabinet at the date of this meeting the HF agreed to look at the Minutes for the meetings of the Audit and Risk Committee 2010-2011 and the Finance, Audit and Risk Committee in 2011-2012 and report back to Members by way of an Information Note.

Another Member questioned as to when there would be an appointment of an Independent Member as indicated in the Action Plan (Action 7) and it was proposed and agreed that officers should commence work towards meeting this action and report back to the meeting scheduled for 20 September 2012.

The Chairman thanked the HF for the informative report and it was agreed to support the proposal that the Finance, Audit and Risk Committee had operated successfully in 2011-2012.

RESOLVED:

(1)That Members were pleased to endorse the officer's recommendation that the Finance, Audit and Risk Committee had operated effectively in 2011-2012;

(2)That the Action Plan as presented at Appendix B and proposed for implementation in 2012 - 2013 be agreed;

(3)That the Head of Finance, Performance and Asset Management be requested to provide to Members of this Committee a record of the referrals made by the Audit and Risk Committee (2010-2011) and the Finance, Audit and Risk Committee (2011-2012) and annually thereafter the subsequent acceptance or decline by Cabinet;

(4)That the Head of Finance, Performance and Asset Management in liaison with the Head of Assurance - SIAS be requested to undertake enquiries about the appointment of an Independent Member to the Finance, Audit and Risk Committee as detailed in the Action Plan at Appendix B and report back to this Committee at the next meeting scheduled for 20 September 2012.

REASON FOR DECISION:
To allow the Finance, Audit and Risk Committee to note and comment as appropriate on the effectiveness of the Finance, Audit and Risk Committee since inception.
 Agreed  Head of Finance/Performance and Asset Management
16 FUTURE MEETINGS - POSSIBLE AGENDA ITEMS
Introduction

The following items were suggested for consideration at future meetings of the Finance, Audit and Risk Committee:
1.Investigation of the efficiencies of statutory duties;
2.To consider the assessment process of future capital schemes, including looking at the net present value of planned investment and all financial and resource implications.
 Agreed