Meeting documents

Finance, Audit and Risk Committee
Thursday, 19th September, 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 J. Cunningham (Vice-Chairman), Councillor John Booth, Councillor Bill Davidson, Councillor David Kearns, Councillor Ian Mantle and Councillor Lawrence Oliver.
IN ATTENDANCE:	Norma Atlay - Strategic Director of Finance, Policy and Governance Andy Cavanagh - Head of Finance,Performance and Asset Management Tim Neill - Accountancy Manager Fiona Timms - Performance and Risk Manager Nigel Schofield - Committee and Member Services Officer Helen Maneuf - SIAS Head of Assurance Phil Westerman - Grant Thornton - Senior Statutory Audit Richard Lawson - Grant Thornton - Manager Assurance
ALSO PRESENT:

Item	Description/Resolution	Status	Action
PART I
20	APOLOGIES FOR ABSENCE There were no apologies for absence.	Noted
21	MINUTES Minutes RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 13 June 2013 be confirmed as a true record of the proceedings and be signed by the Chairman.	Agreed
22	NOTIFICATION OF OTHER BUSINESS There was no other item of business tabled.	Noted
23	CHAIRMAN'S ANNOUNCEMENTS The Chairman welcomed everyone to the meeting 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
24	PUBLIC PARTICIPATION There was no public participation.	Noted
25	ANNUAL REPORT TO THOSE CHARGED WITH GOVERNANCE FOR 2012-2013 Introduction Letter of Representation Report The Manager for Assurance (MA) at Grant Thornton thanked the Chairman for the opportunity to address the Committee with the findings of the external auditor following the audit of the financial statements for the year ended 31 March 2013, and was pleased to advise the Committee that it was anticipated that there would be an unqualified opinion on the financial statements for 2012-2013 as set out at Appendix B. The MA referred the Committee to the draft letter of representation which preceded the draft report on the Audit Findings for North Hertfordshire District Council and confirmed that there had been no changes to the Audit Plan as issued at 20 March 2013. The MA advised the Committee that the audit was substantially complete although work was being finalised on the following: review of the final version of the financial statements; agreement on the final management letter of representation; updating the balance sheets to the date of signing the auditor's opinion; a review of the Whole of Government Accounts and the receipt of outstanding investment letters. Although the audit had not identified any adjustments that would affect the Council's financial statements there were a number of recommendations to improve the presentation of the Council's financial statements and the MA described to the Committee the key messages that arose from the audit of the financial statements. This included the devaluation of land assets with a significant impairment of Â£2.3M which had been offset by an upward revaluation of property, plant and equipment of Â£2M. The accounting treatment of assets held for sale with Â£3.75M reclassified from assets held for sale to surplus assets to reflect their correct allocation in the Balance Sheet. The accounting treatment of the Leisure Contract provision had been reassessed as the likelihood that the risk would be realised had been diminished which resulted in a Â£0.6M credit to the financial statements. Although the Local Council Mortgage Scheme value was considered to be insignificant at the moment it should be regarded as a financial guarantee and therefore the disclosure of the fair value of the guarantee was required. There had been a notable improvement in the maintenance of non-current assets and the quarterly meetings between finance and estates teams had improved the reconciliation process. The MA advised the Committee that following the review of the Council's arrangements to secure economy, efficiency and effectiveness in its use of resources it was proposed to give an unqualified Value for Money Opinion. The MA referred the Committee to Appendix A which included one recommendation viz. The Council should consider the implementation of stronger logical access settings for the new payroll system due for launch in April 2014. The Chairman thanked Mr Lawson for the details of the Annual Report to Those charged with Governance and invited comments and or questions from the Committee. A Member questioned the change in the value allocated for Community Centres and why it had taken place in this audit. The Senior Statutory Auditor advised that the external auditor had to consider all accounting policies including property assets and it should be noted that current policies of the Council could change and that that in the light of market values in 2013 and the flat market there would be a need to revisit policies. The Member was concerned that there were many interested parties and the issues have not changed with Jackmans Community Centre being a good example and that the re-development of John Barker Place on the Westmill Estate in Hitchin was another example. The Accountancy Manager advised that there was a Community Halls Strategy and the Head of Finance, Performance and Asset Management confirmed that there were no present proposals to sell off amenity land for development. A Member questioned as to the possibility of the audit fees being greater than the estimate as no final figure had been stated in the report. The Assurance Manager advised that the audit fee was set by the Audit Commission but the Grant Certification Fee was left open in case additional work was required. The Statutory Auditor assured Members that it was very unlikely that extra work would be required on Grant Certification and that the fee would remain as stated. A Member next enquired about password control on the new payroll system and the auditor's request for the implementation of stronger logical access settings which required password rotation, strong passwords, a minimum password length, a lock out after three failed attempts to enter a password and no re-use of a previous password. The Assurance Manager regarded the proposals as good practice and the Strategic Director of Finance, Policy and Governance (SD) advised the Committee that the new contractor for payroll would include these aspects for control and security. The Committee reviewed Appendices A, B and C and in particular Appendix C where the use of â€˜other' as to the possibility of a Material Misstatement risk it was not clear what â€˜other' might be whereas it was clear what â€˜none' meant. The large sums that related to Employee Remuneration might be better represented by â€˜some'. The Statutory Auditor agreed that the use of â€˜other' was not suitable and the internal audit team would look at this description again. In response to an enquiry on Financial Resilience and the uncertainty of the value of grant received annually from central Government the Statutory Auditor agreed that that there were major issues for Local Authorities and that the approach by NHDC was sensible and structures were in place to meet the uncertainty of income. The discussion concluded by the Statutory Auditor confirming that all outstanding issues as detailed above and in the Executive Summary would not affect the unqualified opinion. The Committee noted that the outstanding information related to the auditor's request to the banks and building societies with whom NHDC held investments for details in writing of the amounts invested at 31 March 2013 and it was essential to receive such documentation. The Chairman proposed and it was agreed that Grant Thornton should be thanked and congratulated for the work undertaken in the audit and preparation of the Financial Statements for 2012-2013. RESOLVED: (1)That Grant Thornton be thanked for the good work undertaken in the preparation of this report; (2)That the Draft Letter of Representation be approved; (3)That the proposal to issue an unqualified opinion on the financial statements for 2012-2013 be welcomed; (4)That the recommendations to improve the presentation of financial statements be noted; (5)That the proposal to give an unqualified Value for Money conclusion be welcomed. REASON FOR DECISION: To enable the Finance, Audit and Risk Committee consider the Annual Audit Report for 2012-2013 from Grant Thornton.	Agreed
26	ANNUAL GOVERNANCE STATEMENT FOR 2012-2013 Report Appendix A The Performance and Risk Manager (PRM) presented the report of the Head of Finance, Performance and Asset Management (HF) which detailed the final Annual Governance Statement (AGS) for 2012-2013 covering the financial year for 2012-2013 and the period between 1 April 2013 and the completion of the Statement of Accounts (Agenda Item 12). The PRM reminded Members that assurance statements used in the preparation of the AGS provided the Council with an opportunity to review the strength of its governance and internal control arrangements and in particular highlighted areas where governance could be reinforced. The PRM referred the Committee to Table 1 which listed the nine actions arising from the 2012-2013 AGS for implementation in 2013 - 2014 and to Appendix A which was the Annual Governance Statement for 2012-2013 presented for review before final approval. The PRM advised that an update on progress on actions would be made to this Committee at the meeting scheduled for 19 March 2014. The PRM concluded the presentation by stating that the last sentence in paragraph 4.4 within Appendix A should be removed as this statement was not applicable. The Chairman thanked the Performance and Risk Manager for the presentation and invited questions and or comments from the Committee. In response to a question the PRM confirmed that Actions 1.1, 2.1 and 4.0 in Table 1 were complete as per the date of September 2013 (since publication of this agenda) and Action 3.1 had been completed (completion date was July 2013) but Action 2.2 which concerned the establishment of a single department responsible for the identification, provision and recording of Member training was still to be completed. The PRM advised the Committee that as yet the Council had not received confirmation from the Department of Work and Pension (DWP) as to the move into the Universal Credit payment. The subsequent transfer of records from the Council to the DWP would be carefully managed to ensure that there would be no impact on Housing Benefit claimants. RESOLVED: (1)That the final Annual Governance Statement for 2012-2013 be approved at the same time as approval of the Statement of Accounts; (2)That the progress against the 2012-2013 Action Plan as detailed at Table 1 be noted; (3)That the Annual Governance Statement at Appendix A be agreed subject to the deletion of the last sentence in Paragraph 4.4. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee assess and consider the Annual Governance Statement before approval and that a review of the Action Plan would allow the Committee to be given assurances that the Council was improving its governance arrangements.	Agreed
27	RISK MANAGEMENT UPDATE Report Appendix A The Performance and Risk Manager (PRM) presented the report of the Head of Finance, Performance and Asset Management which provided an update on the management of the Strategic and Corporate Risks owned by the Senior Management Team and Cabinet. The PRM reminded Members that the NHDC Risk and Opportunities Management Strategy required this Committee to consider regular reports on the Council's Top Risks. The PRM advised the Committee that there had been four substantial changes to Risks and two new Top Risks viz. Waste and Recycling Service Risk amended to remove the sub risks of the Alternative Financial Model, Food Waste and Cardboard which had been replaced with one new sub risk that related to the New Waste and Recycling Service, and that the issue of the Northern Transfer Station Risk was still present and would be retained as a sub-risk. The Asset Management Risk had been updated to include the risks relating to failure to reach agreement on the future development of the Gernon Road site including Town Lodge. A new top risk for Office Accommodation was also being proposed. The PRM confirmed that there had been a substantial change to the description of the Sustainable Development Top Risk by division into two risks of National and Regional Planning Issues and Neighbouring Authorities Plans and Consultations together with the overall impact of the risk which had been reduced from a â€˜3' to a â€˜2' and the risk matrix score was reduced from an â€˜9' to a â€˜7'. It was proposed that the Hitchin Town Centre Development Risk had been deleted and replaced by Churchgate and Surrounding Area, with a lower impact score changed from a â€˜3' to a â€˜2' and the risk matrix score reduced from an â€˜8' to a â€˜5'. The PRM advised the Committee that in addition to the new Cabinet Top Risk for Office Accommodation (above) there was a new Top Risk for the Local Plan which was under preparation. The PRM next took the Committee through the details of the significant amendments in each risk as listed above, for the current risks proposed for change and in particular the new risks. With regard to Office Accommodation the PRM confirmed that negotiations to purchase the main District Council Offices continued and that there would be risks arising from the proposed refurbishment and the possibility of third parties renting office space from NHDC. With regard to the Local Plan there were risks in preparing the plan and receiving final approval from an Inspector at the Planning Inspectorate at Examination and the PRM referred the Committee to Appendix A for more information on the risks described above. The PRM referred the Committee to Table 1 - Risk Matrix for Cabinet Risks and Table 2 - Risk Matrix for Senior Management Team Risks which indicated in graphic form the new and amended top risks in relation to likelihood and impact for all risks. The Chairman thanked the Performance and Risk Manager for the clarification of the proposed changes to risk descriptions, renaming and new risks and invited questions and or comments from the Committee. There ensued a lengthy debate on many aspects of Risks, the allocation of matrix scores, impact and likelihood of risks as described at Table 1. For example did the allocation of Risk scores result in any changes to the management of the risk with a Member referring the PRM to the completion of the Outcomes of the Museum FSR (North Hertfordshire Museum and Community Facility at Hitchin Town Hall). The PRM confirmed that the Risk Management Group and then the Senior Management Group reviewed all risks and all parameters and possible outcomes were discussed and assessed. The Strategic Director of Finance, Policy and Governance (SD) confirmed that should a risk score suddenly move from say a â€˜5' to a â€˜9' then resources would be moved to deal with the problem. A Member whilst welcoming the split in the Sustainable Development Top Risk into two parts questioned whether consideration had been taken of the views or stated intentions of neighbouring authorities viz. West of A1(M) or East of Stevenage or development proposals in Central Bedfordshire and should the risk be considered as a high risk rather than a medium risk. Members were reminded that a likelihood score of a â€˜2'' meant the risk may occur up to three times a year which seemed appropriate to the risk. In response to a question the PRM confirmed that Members were welcome to attend meetings of the Risk Management Group and that details of the next meeting would be circulated. The PRM also stated that the handling and determination of Top Risks was well embedded in Management but there were occasions when Managers did not record the details of assessed risks in writing and that the need to keep records was reinforced and that service managers should take ownership of the risks. The SD reassured Members that the elements of all risks were well managed by the Risk Management Group and the Senior Management Team and that Managers were required to use the standard risk template for reporting purposes. The PRM stated that the Council's Project management documentation included a project risk matrix to ensure that risks related to project delivery were considered and managed appropriately. With reference to Appendix A which gave full details of the amended Cabinet Top Risks and a Member questioned whether Top Risk 52 - Sustainable Development should in fact be determined as a sub risk of Top Risk 54 - The Local Plan as both risks could be regarded as linked risks. A Member also expressed concern with two descriptions within Top Risk 54: The value of any engagement with the Local Strategic Partnership and the impact of a delay in undertaking and analysing SNAP Preferred Options consultations and whether there was any value to be gained by the involvement of these two items in Top Risk 54. The Committee reviewed the proposals for new Top Risks and amended Top Risks and were pleased to agree the proposals with particular emphasis on the new Top Risk for the Local Plan, and that Cabinet be requested to endorse these recommendations and ensure that the completion of the Local Plan was supported by sufficient resource. RESOLVED: (1)That the proposal to remove the sub risks of the Alternative Financial Model, Food Waste and Cardboard from the Waste and Recycling Service Risk be agreed; (2)That the proposal to replace these three sub risks with one new sub risk relating to the New Waste and Recycling Service be agreed; (3)That the proposal to create a new Cabinet Top Risk for Office Accommodation be agreed; (4)That the updating of the Asset Management Risk to include the failure to reach agreement on the future development of the Gernon Road Site (including Town Lodge) be agreed; (5)That the proposal to make a substantial change to the description of the Sustainable Development Top Risk by the establishment of two new sub risks of National and Regional Planning Issues and Neighbouring Authorities Plans and Consultations be agreed; (6)That the proposal to delete the risk of Hitchin Town Centre Development and be replaced by a Top Risk entitled â€˜ Churchgate and Surrounding Area' be agreed; (7)That the proposal to include the Local Plan as a new Cabinet Top Risk be agreed and welcomed; (8)That The Strategic Planning and Projects Manager be requested to ensure that the Local Plan was presented to Cabinet in draft format as scheduled on 28 January 2014 prior to public consultation and that sufficient resources be allocated to the project. RECOMMENDED TO CABINET: (1)That the proposal for a new Cabinet Top Risk - â€˜Office Accommodation' be endorsed by Cabinet; (2)That the proposal to include The Local Plan as a new Cabinet Top Risk be endorsed by Cabinet and that the importance of completing the Local Plan be recognised and sufficient resources be allocated to the project; (3)That the proposals to remove or add sub risks and change the name of a risk as proposed at (1), (2), (4), (5) and (6) above be endorsed by Cabinet. REASON FOR DECISION: To enable the Finance, Audit and Risk Committee review the proposals for either amended Cabinet Top Risks or new or renamed Cabinet Top Risks and review Senior Management Risks and recommend endorsement to Cabinet if appropriate.	Agreed	Planning Projects Manager
28	NORTH HERTS DISTRICT COUNCIL - SIAS UPDATE ON PROGRESS AGAINST THE 2013 - 2014 AUDIT PLAN Introduction Report The Head of Assurance Services - SIAS (HAS) presented the report which detailed progress against the Annual Audit Plan for 2013-2014. The HAS advised that the report described the progress by SIAS in the delivery of the Council's Annual Audit Plan for 2013-2014 at 23 August 2013, the outcomes of the audit for the period 18 May 2013 to 23 August 2013, proposed amendments to the approved Audit Plan for 2013-2014, the implementation status of previously agreed high priority recommendations and an update on performance management information at 23 August 2013. The HAS confirmed that at 23 August 2013 twenty nine per cent of the 2013-2014 Audit plan days were delivered against a profiled target of 30 per cent and the annual target of 95 per cent and that at Appendix A was a status update on each individual project within the audit plan. The Committee noted that three reports had been completed from the 2012-2013 schedule (Corporate Governance, Fraud Baseline and VAT) since 17 May 2013 of which Governance and VAT had substantial levels of assurance with Fraud having a baseline assessment and therefore there was no overall assurance opinion. The HAS advised that since the last meeting of FAR held on 13 June 2013 two reports had been completed viz. Council Tax amendments (full assurance) and Open Data (substantial assurance). The HAS referred the Committee to Appendix B which showed the implementation status of previously agreed high priority audit recommendations using the standard template schedule. The HAS stated that there had been no deletions to date from the 2013-2014 Audit Plan and that two additional audits would be included in the 2013-2014 plan viz. Parking Enforcement and Value for Money Reviews with the allocated days for each audit taken from contingency. The Chairman thanked the Head of Assurance for the update on the completion of 2012-2013 audits and the progress with the 2013-2014 Audit Plan and invited questions and or comments from the Committee. It was very clear from the ensuing discussion that although there was acceptance of the progress of the 2013-2014 Internal Audit Members considered that the report itself did not present sufficient information or clarification on profiling of planned projects. It was noted that the planned days were on target but there was five per cent less completion of the planned audits. A Member questioned whether the audits were late or was the profiling in error and the HAS advised that all audit work was on schedule. At the time of preparing the report there were several audit reports at the draft stage and it was difficult to accurately profile the delivery of draft reports and that this was an area of development for SIAS. However, the HAS was content with progress to date and considered that at this point the target for the year would be met. The HAS stated that officers were working hard on profiling and that there had been much effort by officers on performance. Members also questioned the need for external partners to undertake internal audits for SIAS and the HAS advised that it was always in the programme for the first two years of SIAS that Price Waterhouse Coopers (PWC) would undertake some of the Internal Audit Plan in the new and emerging service. In response to a question the HAS confirmed that PWC rates were very competitive and that there had been no adjustment of these charges into the Internal Audit Budget and all rates charged to customers were the same. The Strategic Director for Finance, Policy and Governance (SD) confirmed that NHDC paid a standard day rate for audit work whoever did the work The HAS advised that towards the end of 2014-2015 there would be a fresh look at alternative auditors to PWC, and the Statutory Auditor from Grant Thornton confirmed that it was standard practice to use external resources for internal audit. In response to a question on the allocated 12 days to the parking enforcement audit the HAS confirmed that the required days would be taken from spare days in the Audit Plan and that it was part of contingency within the Audit Plan. A Member expressed concern that as the additional Parking Enforcement Internal Audit had been requested by the Committee there had been no presentation of the scoping document to the Committee nor the Chairman or Vice - Chairman and would this audit be done in the third or fourth quarter in 2013-2014. Another Member also considered that as the report had been requested in addition to the agreed Internal Audit Plan the Committee should consider the full audit report at a future meeting. The Head of Finance, Performance and Asset Management assured the Committee that there were monthly meetings between himself and the SIAS Audit Manager and the SD advised that as s151 officer she had to approve the audits put forward as part of the audit process and would if necessary question the need for an audit. Following this discussion the Committee agreed that the HAS should provide the Scoping Document for the Parking Enforcement to Members as soon as possible and that the outcomes of this additional audit should be presented to this Committee at a future meeting. The Committee also requested that should any further audits be agreed that the scoping documents should be presented to the Committee in advance of the audit. Also, that the HAS should in the next progress report provide more written evidence on the progress of audits and the profiling of audit progress on planned projects. RESOLVED: (1)That the contents of the 2013-2014 Internal Audit Progress Report be noted; (2)That the SIAS Head of Assurance be requested in the next Progress Report to provide more clarification on profiling targets against actual targets; (3)That the proposed amendments (Parking Enforcement and VfM Reviews) to the 2013-2014 Audit Plan at 23 August 2013 be agreed; (4)That the implementation status of the three high priority audit recommendations as detailed at Appendix B be noted; (5)That the SIAS Head of Assurance be requested to provide all members of the Committee with the scoping document for the Parking Enforcement Internal Audit as soon as possible; (6)That the SIAS Head of Assurance be requested to provide at the next meeting of the Finance, Audit and Risk Committee scheduled for 5 December 2013 the full internal audit outcomes report for Parking Enforcement; (7)That the SIAS Head of Assurance be requested to ensure that should any additional internal audits to the agreed Internal Audit Plan be requested by this Committee that the scoping document must be presented for approval prior to the commencement of the audit. REASON FOR DECISION: To approve the Internal Audit Plan for 2013-2-014 and make the appropriate arrangements for approval of any additional audits to the overall audit plan.	Agreed
29	NORTH HERTS DISTRICT COUNCIL - SIAS ANNUAL REPORT FOR 2012-2013 Introduction Report The SIAS Head of Assurance (HAS) presented the report which would be presented to all the authorities served by SIAS and covered the first full year of operation since creation of the partnership in July 2011. The AM advised the Committee that Watford Borough Council and Three Rivers District Council had joined SIAS on 1 April 2013 and that Appendix A showed the SIAS balanced scoreboard at 31 March 2013 and at Appendix B the SIAS Cost Centre Outturn for 2011-2012 and at Appendix C were the Definitions of Assurance and Priority of Recommendations. The HAS identified the main components of the report; A smarter, leaner way of working, - including the controlled Risk Self-Assessment, the Galileo Audit Management System, and Galileo working Papers; A solid business performance, Investing in the SIAS team, A vision for sharing across the partnership which included scoring for an emerging risks workshop and A First Class Customer Service. The HAS next described to the Committee the performance ratings of audits in 2012-2013 with 39 full assurance, 162 substantial assurance, 30 moderate assurances, 2 with limited and none with no assurance. Prioritisation of Recommendations for 2012-2013 gave 132 at high level, 444 at medium level and 378 at low level. The SIAS business performance for 2012-2013 gave 3,695 billable days delivered by 31 March 2013 which was 98 per cent of actual audits completed by 31 March and that 359 audits were delivered to at least draft stage by 31 March 2013. The HAS advised that there had been an external audit of SIAS by Veritau (owned by North Yorkshire County Council and York City Council) which concluded that SIAS had a good reputation and profile and a number of recommendations had been made regarding: working with Price Waterhouse Coopers, Communications, Team meetings with staff and managers, building skills and competencies, the effective use of IT and shared learning (including a development day for Audit Committee Members and a joint risk and assurance identification workshop for Chief Financial Officers). The Chairman thanked the Head of Assurance for the summary of the first full year report on the Internal Audit Service and invited questions and or comments from the Committee. There was one question from a Member that queried the additional fees paid to Partner/consultancies costs against budget (+ Â£24,373) which the HAS confirmed had been incurred from the hire of external auditors such as Price Waterhouse Coopers as clarified at Minute 28 above. This overspend was covered by an underspend on salaries as there were vacancies in the Internal Audit Team. RESOLVED: That the Shared Internal Audit Services Annual Report for 2012-2013 be noted. REASON FOR DECISION: For the Finance, Audit and Risk Committee to assess the SIAS Internal Audit Services Annual Report for 2012-2013.	Noted
30	SHARED SERVICES - COSTS AND SAVINGS WITHIN THE HALTED JOINT PROJECT WITH STEVENAGE AND EAST HERTS COUNCILS Report The Head of Finance, Performance and Asset Management (HF) reminded the Committee that Members had previously requested a report on the expenditure incurred in the assessment of the Shared Services Project and what the anticipated savings would be against actual savings achieved. The HF reported that the tri - council (NHDC, East Herts and Stevenage BC) project had closed because the detailed business case did not provide NHDC with enough evidence that sharing services including IT, HR, Facilities Management, Print, Estates and Procurement would be viable and provide sufficient savings to warrant implementation. The HF advised that the estimated potential savings identified in the initial strategic business case in the region of Â£250 per annum for each authority were eroded due to additional start up costs and resulted in a reduction to a cumulative net saving over five years of approximately Â£619K and that savings would accrue from Year 3 onwards as identified in the detailed business case. The HF referred the Committee to Table 1 for further amplification. The HF confirmed that the NHDC Chief Executive and Strategic Director of Finance, Policy and Governance had met with their counterparts at East Herts and Stevenage and sought to delay a decision on implementation of a shared service project until further work had been carried out but this view was not shared by the other two authorities. The NHDC Management Team had then reviewed savings within NHDC which gave an initial estimate of Â£900K over five years subsequently reduced in the Corporate Business Planning Process to Â£740K over the same timescale which were detailed in Table 2 showing the costs and savings associated with a restructure of IT and HR. The HF advised that during the preparation of the tri council business case some Â£87K per authority had been spent in terms of internal staff and some Â£21K per authority on external expertise. The savings identified at Table 2 were included in the 2013-2014 budget with Â£153K saved in 2013-2014 (part year) and Â£166K per annum thereafter. The HF was pleased to advise the Committee that IT had identified several income streams, such as providing support to another Hertfordshire Authority for National Land Property Gazetteer consultancy work although the HF stressed that such income could not be guaranteed on a regular basis. The Chairman thanked the Head of Finance, Performance and Asset Management for the report. RESOLVED: That the Head of Finance, Performance and Asset Management be thanked for the report and that the contents of the report be noted. REASON FOR DECISION: For the Finance, Audit and Risk Committee to review the overview of the costs and savings relating to the Shared Services Project.	Noted
31	STATEMENT OF ANNUAL ACCOUNTS FOR 2012-2013 Report Appendix A The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance (SD) which sought the approval of the Finance, Audit and Risk Committee regarding the Statement of Accounts for 2012-2013. The AM referred the Committee to Appendix A which presented the externally audited Statement of Accounts for 2012- 2013. The AM advised that the SD had signed the Statement of Responsibilities at Page 1 of Appendix A which certified that the statement of accounts gave a true and fair view of the financial position of the Authority at 31 March 2013. The AM advised that there had been a few amendments to the draft accounts concerning comparative details from 2010-2011. The AM confirmed that the Statement of Accounts was the reporting of the Council's financial position and was largely a matter of fact and of a technical nature. The Committee noted that critical judgements had been taken in the application of accounting procedures (Note 2) and that key assumptions had been used about the Future and other major sources of estimation uncertainty (Note 3). The Committee also noted that the Portfolio Holder for Finance and IT had been kept informed of the progress of the year end accounts and the audit examination. The AM stated that officers were not aware of any events that had occurred since the year end that would affect the Statement of Accounts and there had been no changes to the amounts included in the Statement of Accounts. The Chairman thanked the Accountancy Manager for the presentation and invited questions and or comments from the Committee. A Member expressed concern about the amount of money set aside for Pensions Liability that was a large portion of the Balance Sheet (cÂ£52M) and each year this sum would increase. The AM advised that the large sum was based on actuarial advice using a range of assumptions and that the net figure had fluctuated year on year. The AM also advised that NHDC used a financial model that limited increases to one per cent per annum and the SD confirmed that the actuaries based their advice on a model that covered a 20 year period which would give NHDC a 100 per cent funding for pensions. The SD also advised that the contributions from the employer and employee had now levelled out at around 15 per cent for those in service. In response to another question concerning a change in the employment profile where there would be more individuals in a deferred pension than employees making contributions the SD confirmed that in such a situation once the liability was agreed then the Authority could consider making a cash payment into the fund. The discussion concluded with the AM agreeing to amend text at Section 16 - Agency Services that would clarify payments to Hertfordshire County Council for highway verge and grounds maintenance. RESOLVED: That the 2012-2013 Annual Statement of Accounts (with amendment) as set out in Appendix A be approved and signed by the Chairman. REASON FOR DECISION: To ensure that any queries raised by the Finance, Audit and Risk Committee are addressed before the approval of the Statement of Accounts for 2012-2013.	Agreed	Accountancy Manager
32	FIRST QUARTER REVENUE MONITORING 2013-2014 (DRAFT) Report Appendix A The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance which was in draft format prior to presentation to Cabinet on 24 September 2013 and confirmed that there were no changes to the report. The report was to inform Cabinet of the summary position on income and expenditure for the period April to June 2013 for the General Fund, highlight any significant variances on the working budget with an explanation of the impact upon next year's base budget, highlighted the position with regard to the carry forward balances and efficiencies approved for the year. The AM concluded the introduction by stating that the â€˜financial health' of the Council was regularly monitored and reported as corporate financial health indicators which were at â€˜green' but accepting that this was the first report of the 2013-2014 The AM advised the Committee that there was a forecast Â£69K decrease in net expenditure in the General Fund budget for 2013-2014 and that there would be a Â£3K increase in the net expenditure for the 2014-2015 General Fund Budget. The AM referred the Committee to Table 1 which detailed significant changes to the General Fund, to Table 2 which detailed progress of carry forward budgets, to Table 3 which listed the 2013-2014 efficiency proposals, to Table 4 which indicated the key corporate financial health Indicators, to Tables 5 and 6 which presented the Projected General Fund Balances as at 31 March 2014 and Approved Minimum General Fund Balances respectively and finally to Table 7 which listed the Earmarked Reserves for 2013-2014. The AM concluded his presentation by advising the Committee that the process and purpose of quarterly monitoring reports to Cabinet was to provide a control mechanism to help mitigate against the risk of an unplanned overspend of the overall Council Budget. The Chairman thanked the Accountancy Manager for the outline presentation of the quarterly monitoring of the Revenue Budget for the first quarter of 2013-2014 and invited questions and or comments from the Committee. The Committee were pleased to note the overall content of the Revenues Report and in particular the net decrease in expenditure of Â£69K. However, Members expressed concern at the increase in bank charges of Â£19K due in the main of payments to NHDC by credit card where the authority incurred a fee on every transaction. A Member stated that many suppliers were on- charging this fee to the purchaser which could be 2.5 per cent up to 5.0 per cent. Consequently the Committee agreed to request that Cabinet should consider making a charge to those customers making payments by credit card. The Strategic Director advised the Committee that the Finance Team were reviewing this charge on the General Fund and that a decision by Cabinet would be welcomed. RESOLVED: (1)That the contents of the first quarterly revenue budget monitoring report for 2013-2014 be noted; (2)That the significant changes to the General Fund as listed at Table 1 which resulted in a net decrease of Â£69K be welcomed; (3)That the increase in bank charges be addressed by Cabinet through consideration of the introduction of a charge to those customers making payments by credit cards. RECOMMENDED TO CABINET: That Cabinet be requested to review the possibility of making a charge to those customers who make payments to this authority by credit card. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee to comment if appropriate on the first quarterly revenue budget monitoring report for 2013-2014.	Agreed	Accountancy Manager, Head of Finance/Performance and Asset Management
33	FIRST QUARTER CAPITAL MONITORING FOR 2013-2014 (DRAFT) Report Appendix A Appendix B Appendix C The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance which was in draft format prior to presentation to Cabinet on 24 September 2013. The purpose of this report to Cabinet was to provide an update on the capital programme for 2013-2014 at the end of June 2013 which indicated the impact upon the 2014-2015 capital programme and upon available capital funding resources. In broad terms the projected expenditure for 2013-2014 stood at Â£9.378million which was a decrease of Â£1.042million previously reported in June 2013. The Committee noted that the decrease in spend was partly due to a revision in the timetable for completion of schemes which led to a re-profile in future years of Â£1.706million and partly due to a net increase in the expected spend on schemes of Â£664K. The AM referred the Committee to Appendix A which gave a summary of the Capital programme by priorities and by service and included the overall funding analysis and projected availability of capital receipts. The AM next referred the Committee to Appendix B which detailed the revised costs of schemes as well as the provisional programme from 2013-2014 to 2016-2017 and that at Appendix C was listed the expected funding source for each capital scheme. The AM advised the Committee that Table 1 listed the schemes that would start or continue in 2014-2015 and that Table 2 listed the changes to capital schemes commencing in 2013-2014 with Chart 1 showing the distribution of capital spend on the Council's priorities. The AM advised the Committee that there would be an amendment in the comments column of Table 1 concerning the delivery of grants to Housing Associations which would be in 2013-2014 through to 2017. And at Table 2 the AM stated that the increase of Â£664K in Capital Schemes was due in the main to the grant of Â£500K from DCLG for waste collection and recycling from flats. The Committee noted that the balance of useable capital receipts available to fund capital expenditure for 2013-2014 and onwards was Â£1.243million and that the 2013-2014 capital programme of Â£9.4million required a total of Â£7.million from the Council's capital resources. The Committee also noted that Â£5.8million would be drawn down from set aside receipts and the sale of council land and assets would amount to approximately Â£2.5million supported by a total of Â£2.2million from third party contributions and grants including Â£496K of Section 106 receipts. The Chairman thanked the Accountancy Manager for the update on the Capital Programme including schemes and expected funding and invited questions and or comments from the Committee. In response to a question the AM confirmed that the allocation of funds to purchase the freehold of the District Council Offices would be reported in Quarter 2 as the cost had not been approved by Council until the meeting held on 18 July 2013 (Minutes 36 and 38 refer) RESOLVED: That the contents of the First Quarter Capital Monitoring report (with clarification at Table 1 - Housing Association Grants) for 2013-2014 be noted. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee to comment if appropriate on the first quarterly capital budget monitoring report for 2013-2014.	Noted
34	FIRST QUARTER TREASURY MANAGEMENT REPORT FOR 2013-2014 Report Appendix A The Accountancy Manager presented the report of the Strategic Director of Finance, Policy and Governance (SD) which was in draft format and would be presented to Cabinet on 24 September 2013. The purpose of the report was to inform Cabinet of the Treasury Management Activities in the first quarter of 2013-2014 and to inform Cabinet of the performance against the Prudential and Treasury indicators The AM reminded the Committee that considerations for Treasury Strategy could be summarised under the following headings; Security, Liquidity and Yield and that the 2013-2014 Treasury Strategy had been adopted by Council on 13 February 2013 (Minute 106 refers) which had no major changes since agreement for the 2012-2013 Strategy. The AM referred the Committee to Appendix A which provided the Treasury Management update at the end of the first quarter in 2013-2014 and the Committee noted that the Council had generated Â£229K of interest during the first quarter. Unfortunately the average rate of interest remained low at 0.75 per cent on new deals with an average rate for all outstanding investments - including in house deals at 30 June 2013 of 1.5 per cent. The AM advised that future interest rates were not expected to be higher than one per cent and might be less. The amount of interest to be generated during 2013-2014 was expected to be in the order of Â£0.656million which was Â£0.023million less than the budget figure of Â£0.679million and was due to lower interest rates and a reduction in the amount of NHDC funds available for investment. The Chairman thanked the Accountancy Manager for the update on the Capital Programme including schemes and expected funding and invited questions and or comments from the Committee. In response to a question the AM confirmed that Â£53.385 million was the total amount of â€˜cash' available for investment and the SD stated that the total had previously stood at Â£66million of which some Â£20 million had been usable with the remainder â€˜set aside'. The Committee accepted that there was little likelihood of interest rates improving and the SD considered that it was sound policy to utilise capital in order to relieve pressure on the Revenue Account at the present time due to low interest rates. RESOLVED: That the position of the Treasury Management Activity at 30 June 2013 be noted. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee to comment if appropriate on the first quarterly Treasury Management monitoring report for 2013-2014.	Noted
35	FUTURE MEETINGS - POSSIBLE AGENDA ITEMS Introduction It was agreed that the Performance and Risk Manager should make the appropriate arrangements to provide Risk Training at the next meeting of this Committee scheduled for 5 December 2013.	Agreed	Performance and Risk Manager