| Time: | 7.30pm | Place: | Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City |
| PRESENT: | Councillor M.E. Weeks (Chairman), Councillor John Booth (Vice-Chairman), Councillor Mrs A.G. Ashley (substitute), Councillor John Bishop, Councillor Lorna Kercher and Councillor Deepak Sangha. |
| IN ATTENDANCE: | Norma Atlay - Strategic Director of Finance, Policy and Governance Andy Cavanagh - Head of Finance, Performance and Asset Management Fiona Timms - Performance and Risk Manager Antonio Ciampa - Group Accountant Dean Fury - Corporate Support Accountant Janis Wilderspin - Interim Contracts Lawyer Ian Gourlay - Committee and Member Services Manager Terry Barnett - Audit Manager (Shared Internal Audit Services) David De Smet - Principal Auditor (Shared Internal Audit Services) Mark Chalkley - Auditor (Shared Internal Audit Services) Richard Lawson - Engagement Manager (Grant Thornton) |
| ALSO PRESENT: | At commencement of meeting one member of the public. |
| Meeting attachment |
Agenda Front Sheets |
| Item | Description/Resolution | Status | Action | |
| PART I | ||||
| 1 |
APOLOGIES FOR ABSENCE An apology for absence had been received from Councillor Jim McNally. Councillor Allison Ashley was attending as his substitute. |
Noted | ||
| 2 |
MINUTES Minutes RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 18 March 2015 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 Councillor Michael Weeks in line with the Code of Conduct advised that 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 |
PRESENTATION - SIAS METHODOLOGY Header Page The SIAS Audit Manager, assisted by the SIAS Principal Auditor, gave a presentation on SIAS Methodology. The SIAS Audit Manager advised that the presentation would comprise the Annual Audit Plan; work allocation process; assignment planning; fieldwork; and reporting and follow up. In respect of the Annual Audit Plan, the SIAS Audit Manager commented that this process commenced in December/January each year. It focussed on a risk based approach, with a review of the Corporate Risk Register. SIAS officers met with NHDC Senior Management and officers and the Chairman of the Committee to identify key areas of concern, highlight recent and forthcoming changes, as well as future and emerging risks. Potential areas for coverage would be risk assessed and prioritised, Plan days available were applied, main and secondary lists compiled, Senior Management approval obtained, with the Final Plan being approved by the Committee in March each year. In relation to the work allocation process, the SIAS Audit Manager explained that this was carried out by the SIAS management Team once the Audit Plan was agreed. Work was allocated across the Team in accordance with timings (start months), as agreed with NHDC management. Specialist audits were allocated as appropriate, including use of SIAS's external partner BDO. The process was monitored throughout the year and adjusted in accordance with change requests (and reported to the Committee). Progress was monitored weekly by SIAS and reported upon at each Committee meeting. In terms of assignment planning, the SIAS Principal Auditor advised that the appointed auditor began background research (eg) reviews of planning meeting notes, other forms of assurance, policies and procedures, web-based research etc. The outcomes from previous audits were also reviewed. The auditor met with NHDC Senior Management to discuss the detailed scope of the audit, confirm timings and key contacts for the review, and to ensure that coverage was tailored to budgeted audit days. A Terms of Reference document would then be issued confirming the areas of focus for the audit, which would require the formal agreement of the area to be audited. In respect of Fieldwork, the SIAS Principal Auditor stated that this must be of sufficient volume and quality to allow the auditor to form an opinion on the adequacy of the controls designed to mitigate risks in each assurance area and to confirm that they were operating correctly. This would entail one or more of the following: - Conducting interviews; - Obtaining evidence; - Walkthrough of the process to identify and test controls; and - Sample testing of individual controls. The SIAS Principal Auditor commented that fieldwork findings were documented and controls evaluated using a new improved working paper template. Where necessary, recommendations to improve the control environment were drawn up. A SIAS quality assurance review was carried out, and review points were discussed, with further work being carried out, if required. An exit meeting was held with relevant management to discuss the outcomes of the review. The SIAS Audit Manager concluded the presentation by explaining that the draft audit report was issued, listing findings and any associated recommendations. Each control area was given an assurance rating, which built to an overall Assurance Opinion for the audit. NHDC Management then formally responded, either agreeing or not agreeing to the recommendations and providing details of actions to be taken, by whom and by when. A final audit report is then issued to relevant NHDC officers, with the results being reported to the Committee. Implementation of the recommendations was then monitored. The SIAS Audit Manager and SIAS Principal Auditor answered a number of questions raised by Members of the Committee. The Chairman thanked the SIAS Audit Manager and SIAS Principal Auditor for their presentation. RESOLVED: That the presentation by the SIAS Audit Manager and Principal Auditor on SIAS Methodology be noted. |
Noted | ||
| 7 |
THE EFFECTIVENESS OF THE FINANCE, AUDIT AND RISK COMMITTEE Report and Appendix The SIAS Audit Manager presented a report on the effectiveness of the Finance, Audit and Risk Committee. The SIAS Audit Manager reported that Committee was operating effectively. He referred to an Action Plan attached at Appendix A to the report, which contained the following two actions: 1. Continue to explore opportunities for Members to gain a deeper understanding of the methodology used by the Shared Internal Audit Service in carrying out its work; and 2. Consider further enquiry as to any specific training requirements that its Members may have in respect of discharging their responsibilities. The Committee debated the report, and the following suggestions were noted with regard to potential future training and development for Members: - Attending an audit (possibly the initial opening meeting and the exit meeting); - Attending the Risk Management Group; and - The arranging of a half day session for Members (possibly in conjunction with other Local Authorities) for finance training. RESOLVED: (1) That the view of the SIAS Audit Manager that the Finance, Audit and Risk Committee is operating effectively be endorsed; (2) That the Action Plan attached at Appendix A to the report be agreed for implementation during the Civic Year 2015/16; and (3) That the SIAS Audit Manager continue to seek attendance/input from Members regarding audit training/familiarisation. REASON FOR DECISION: To ensure that the Finance, Audit and Risk Committee is operating effectively. |
Agreed | ||
| 8 |
ANNUAL ASSURANCE STATEMENT AND INTERNAL AUDIT ANNUAL REPORT 2014/15 Header Page SIAS Annual Assurance Statement/Annual Report 2014/15 The SIAS Audit Manager presented a report in respect of the Annual Assurance Statement and Internal Audit Annual Report 2014/15. The SIAS Audit Manager advised that the Head of Assurance (SIAS) had confirmed that, during the year, there had been no matters arising which had threatened the independence of the internal audit function. The Head of Assurance had further confirmed that there had been no inappropriate scope or resource limitations on the internal audit function during the year. The Head of Assurance was also able to report a substantial level of conformance with the Public Sector Internal Audit Standards and considered the internal audit service to be effective. The SIAS Audit Manager referred to the overview of Internal Audit activity in 2014/15 set out Section 3 of the report. Two high priority recommendations were made during the year as follows: - National Non Domestic Rates (NNDR) Avoidance - one recommendation in respect of the need for a formal process regarding how the authority should deal with suspected NNDR avoidance. This recommendation had been implemented; and - Data Protection and Freedom of Information - one recommendation regarding the need to put in place data sharing agreements for all known data sharing arrangements. This recommendation was agreed, with an implementation date of 1 July 2015. In terms of the performance of SIAS in 2014/15, the Committee noted that the Service had met or exceeded its targets in all cases. The SIAS Audit Manager highlighted the service developments that had take place in 2014/15. The SIAS Audit Manager informed the Committee of the progress of SIAS in seeking compliance with Public Sector Internal Audit Standards, and reported that during the year SIAS had operated according to its Quality Assurance and Improvement Programme. He also drew attention to the proposed SIAS Audit Charter, attached at Appendix D to the report, which required adoption in order to comply with the requirements of the Public Sector Internal Audit Standards. RESOLVED: (1) That the Annual Assurance Statement and Internal Audit Annual Report 2015/16 be noted; (2) That the results of the self-assessment, as required by both the Public Sector Internal Audit Standards and the Quality Assurance and Improvement Programme, and as set out in the report, be noted; (3) That the SIAS Audit Charter, as set out at Appendix D to the report, be accepted; and (4) That an assurance be given from management that the scope and resources for internal audit were subject to no appropriate limitations in 2014/15. REASON FOR DECISION: To review and note the Annual Assurance Statement and the Internal Audit Annual Report for 2014-2015. |
Agreed | ||
| 9 |
SHARED INTERNAL AUDIT SERVICES - UPDATE ON PROGRESS AGAINST THE 2015-2016 AUDIT PLAN Header Page SIAS - Update on Progress against the 2015/16 Audit Plan The SIAS Principal Auditor presented a report providing an update of progress against the 2015-2016 Audit Plan. The SIAS Principal Auditor advised that, since the last meeting of the Committee held in March 2015, 14 final reports and assignments had been issued relating to the 2014/15 Audit Plan and 2 from the 2015/16 Plan. As at 22 May 2015, 15% of planned audit days had been utilised and 7% of the work against planned projects had been carried out. Appendix A to the report provided details of progress against the 2015/16 Audit Plan; Appendix B set out the implementation status of high priority recommendations; and Appendix C set out the agreed start dates for 2015/16 Audit Plan items. RESOLVED: (1) That the Internal Audit Progress Report for the period up to 22 May 2015 be noted; (2) That the amendments to the 2015/16 Audit Plan, as at 22 May 2015, and as set out in the report, be approved; and (3) That the removal of the implemented high priority recommendations, as set out in the report, be agreed. REASON FOR DECISION: To assess the progress with and effectiveness of the Internal Audit Plan 2015/16. |
Agreed | ||
| 10 |
AUDIT COMMITTEE UPDATE FOR 2014/15 - JUNE 2015 The Engagement Manager (Grant Thornton) gave a brief oral update on the work of the Council's external auditor for 2014/15. The Engagement Manager advised that Grant Thornton had performed an interim audit in March 2015, and he reported that they had: - Successfully completed a walkthrough of the employee remuneration, operating expenses and welfare benefits systems, with no issues to report; - Performed testing of employee remuneration for 10 months of the year, with no issues to report; and - Performed testing on financial system journals for 10 months of the year, with no issues to report. RESOLVED: That the oral report of the Engagement Manager (Grant Thornton) in respect of the Audit Committee update for 2014/15, as at June 2015, be noted. REASON FOR DECISION: To keep the Committee informed of progress of the work undertaken by the Council's external auditors. |
Noted | ||
| 11 |
RISK MANAGEMENT UPDATE AND ANNUAL REPORT ON RISK MANAGEMENT 2014/15 Report Appendix A - Annual Report on Risk Management 2014/15 The Performance and Risk Manager presented the report of the Head of Finance, Performance and Asset Management which provided an update on Risk Management and the Annual Report on Risk Management 2014/15. The Performance and Risk Manager advised that, where due for review, Top Risks had been updated, but that this had not resulted in any amendments to the assessment of them. The Performance and Risk Manager drew attention to the Annual Report on Risk and Opportunities Management 2014/15 set out at Appendix A to the report, which summarised the Risk Management Framework and changes made to the Top Risks in 2014/15. As business continuity and the management of health and safety were key to risk management, sections on these matters had been included in the annual report. The Risk and Opportunities Management Strategy stipulated that the annual report should be referred to Cabinet and then to Full Council. In connection with the Waste and Street Cleansing Contract Renewal Risk, a Member commented that there appeared to be anomalies in the frequency that certain roads were cleared of fallen leaves and wanted this considered in the specification for the new contract. The Member requested that the Area Committees were consulted on the contract specification. The Performance and Risk Manager undertook to refer this matter to the Contract Manager for Waste Services, with a request that the Member be provided with a response. RESOLVED: That the update on the management of the Strategic/Corporate risks owned by the Senior Management Team (SMT) and Cabinet be noted. RECOMMENDED TO CABINET: That the Annual Report on Risk and Opportunities Management 2014/15, as set out at Appendix A to the report be supported and referred to Council for approval. REASON FOR DECISION: To comply with the requirements of the Risk and Opportunities Management Strategy. |
Agreed | ||
| 12 |
FINANCE, AUDIT AND RISK COMMITTEE - ANNUAL REPORT FOR 2014/15 Header Page FAR Commitee Annual Report 2014/15 The Chairman of the Committee (Councillor Michael Weeks) presented the Finance, Audit and Risk Committee Annual Report for 2014/15. The Chairman thanked Members of the Committee and officers for their help and support during 2014/15. RECOMMENDED TO COUNCIL: That the Annual Report of the Finance, Audit and Risk Committee 2014/15 be noted. REASON FOR DECISION: To comply with the requirements of the Council's Constitution. |
Agreed | ||
| 13 |
DRAFT ANNUAL GOVERNANCE STATEMENT FOR 2014-2015 Report Appendix A - Draft Annual Governance Statement 2014/15 Appendix B - Statement from Chairman of FAR Committee The Performance and Risk Manager presented a report in respect of the draft Annual Governance Statement 2014/15. The Performance and Risk Manager advised that the Accounts and Audit Regulations 2015 required the Council to prepare an Annual Governance Statement (AGS). The draft AGS was being presented for comment at this stage, and would then, post the 16 July 2015 Council meeting, be presented to a Committee (intended to be Finance, Audit and Risk) once it had the remit to consider the review and approve the AGS as per the new 2015 Regulations. The Performance and Risk Manager stated that a review of the preparation and presentation style of the AGS was undertaken by the authorities that were part of the Shared Internal Audit Service in 2014/5. As a result, the format of the AGS for 2014/15 was slightly different from previous years, in an attempt to encourage wider readership. The draft AGS for 2014/15 was attached as Appendix A to the report. The AGS was reviewed by the Council's external auditors and would be commented on in their Annual Report to those Charged with Governance that would be presented to the 24 September 2015 meeting of the Committee. The Performance and Risk Manager drew attention to the Key Improvement Areas set out in the final pages of the AGS. It was acknowledged that, following the aftermath of the Council's former car parking machine coin collector (CoinCo) going into liquidation, the Council would be instigating improved monitoring procedures as part of the new contract/specification for provision of this service. RESOLVED: (1) That the draft Annual Governance Statement (AGS) 2014/15 set out at Appendix A to the report, and supporting documentation, be approved; and (2) That progress against the AGS Action Plan be reported to the Committee in September 2015 and March 2016. REASON FOR DECISION: To offer the Committee the opportunity to comment on the AGS; and by reviewing the Action Plan during the year to provide the Committee with assurances that the Council is improving its governance arrangements. |
Agreed | ||
| 14 |
REVENUE BUDGET OUTTURN - 2014-2015 Report Appendix A - General Fund Summary Appendix B - Carry Forward Budgets requested for 2015/16 Appendix C - Collection Fund as at 31 March 2015 The Group Accountant presented a report on the Revenue Budget Outtturn for 2014/15. The Group Accountant advised that the next expenditure on the General Fund for 2014/15 was £14.831million, an underspend of £381,000 on the working budget of £15.212million. There was a net increase in spend in 2015/16 of £28,000, of which additional expenditure of £39,000 related to the carry forward of budgets from 2014/15 to 2015/16. The Group Accountant referred to Table 1 in the report, which showed the significant variances to the General Fund, and to Table 3, which showed that £143,000 of the carried forward budgets from 2013/14 to 2014/15 had been unspent. Of this amount, £113,000 would be carried forward into 2015/16. The Group Accountant explained that the total final amount to be carried forward from 2014/15 to 2015/16 would be £464,000, as set out in Appendix B to the report. It was also proposed to transfer £50,000 from the underspend in 2014/15 into a Strategic Priorities Fund in the following year. This would bring the total un-committed amount in the fund to £99,000. The fund provided the Corporate Board with authority to approve the allocation of the funds during the year for invest to save or continuous improvement projects as the opportunities arose. The Group Accountant stated that a total of £1.514million of efficiency proposals was approved within the 2014/15 budget and a total of £1.650million (or 109%) were achieved in 2014/15, an over-achievement of £136,000. During the debate, officers undertook to respond to a Member who asked for details as to how many Controlled Parking Zone parking permits were currently issued. It was further clarified that the primary reason that the Key Corporate health Indicator of Building Control Fees was at red status was due to the competition to this service provided by the Private Sector Approved Inspectors. The proposed Hertfordshire Authorities Building Control Consortium would be designed to redress this imbalance, thereby allowing the Public Sector to compete on a more level playing field with the Private Sector. Members noted the net variance in IT Support and Maintenance detailed in Table 1 of the report. It was therefore agreed that the Head of Revenues, Benefits and IT be invited to attend the next meeting of the Committee to provide a consolidated overview of future proposed investment and development of IT systems at NHDC. RESOLVED: (1) That the Revenue Budget Outturn 2014/15 be noted; and (2) That the Head of Revenues, Benefits and IT be invited to attend the next meeting of the Committee to provide a consolidated overview of future proposed investment and development of IT systems at NHDC. REASON FOR DECISION: To enable the Committee to consider and comment on the Revenue Budget Outturn 2014/15. |
Noted | ||
| 15 |
CAPITAL PROGRAMME OUTTURN - 2014-2015 Report Appendix A - Capital Programme Summary 2014/15 Onwards Appendix B - Capital Programme Detail 2014/15 Appendix C - Capital Scheme Funding 2014/15 The Corporate Support Accountant presented a report on the Capital Programme Outturn for 2014/15. The Corporate Support Accountant advised that the outturn capital expenditure for 2014/15 was £4.532million. This was a reduction of £1.792million on that previously reported at the end of the third quarter. The decrease in spend was in part due to a revision in the timetable for completion of schemes, leading to the re-profiling into future years of £921,000 (as detailed in Table 1 of the report), and also to a net decrease in the expected spend on other schemes of £871,000 (as detailed in Table 2 of the report). The Corporate Support Accountant stated that the 2014/15 capital spend required funding of £3.73million from the Council's capital resources. A total of £566,000 was proposed to be used from useable capital receipts and the remaining £3.165million was proposed to be used from the set aside receipts. The Corporate Support Accountant reported that no asset disposals were completed during 2014/15, but that a significant capital receipt should shortly be received in the region of £4million, following the disposal of land for development at Lloyd Way, Kimpton. The Committee noted that the Council operated a 10% tolerance limit on capital projects and, on this basis over the next four-year programme, it should be anticipated that the total spend over the period could be £2.82million higher than the estimated £28.2million. In response to questions asked by Members in respect of Table 2 of the report (Changes to Capital Schemes commencing in 2014/15), it was confirmed that the decrease in spend on Disabled Facility Grants was mainly due to staff resource issues. It was intended that the situation would be improved during 2015/16 as a consequence of the appointment of an external agent to support the work. It was further confirmed that the need for housing association grant funding support from local authorities had reduced and hence this budget had been removed from the Capital Programme from 2015/16. Instead, individual bids for funding would be considered for approval on a scheme by scheme basis. RESOLVED: That the Capital Programme Outturn 2014/15 be noted. REASON FOR DECISION: To enable the Committee to consider and comment on the Revenue Programme Outturn 2014/15. |
Noted | ||
| 16 |
ANNUAL TREASURY MANAGEMENT REVIEW - 2014-2015 Report Appendix A - Annual Treasury Management Review 2014/15 The Corporate Support Accountant presented a report on the Annual Treasury Management Review for 2014/15. The Corporate Support Accountant advised that the Council had operated within the treasury and prudential indicators set out in the Treasury Management Strategy Statement and in compliance with the Treasury Management Practices. The Council did exceed its investment limit with the Council's general banking provider, Lloyds Banking Group, for a small number of days. This would not occur again as Members approved a change to the 2015/16 Treasury Strategy whereby balances held in the Council's current account were not subject to counter party limits. The Corporate Support Accountant stated that the Council had generated £489,000 of interest during 2014/15. The average interest rate agreed on new deals during the year by the cash managers was 1.03% for Sterling and 1.20% for Tradition. The average interest rate on all outstanding investments at 31 March was 1.24%. The Corporate Support Accountant commented that the Council's counterparty list comprised mostly UK building societies and UK banks with a Fitch (a credit rating agency) credit rating greater than BBB, but also included other Local Authorities and Public Corporations. £3.5million of Cash Manager Investments that had matured in the final quarter of 2014/15 had been used to fund capital expenditure and not reinvested. The Corporate Support Accountant explained that investments were split between two Cash Managers and the In-House Team. The In-House investments covered the day to day cash flow activity of the Council, whilst the Cash Managers' investments took advantage of higher long term interest rates when they became available. The Council had borrowed £570,000 on 14 April 2014 for 1 day to cover an overnight shortfall in cashflow. The Corporate Support Accountant advised that the Council had indicated that it was prepared to accept the risk of long term (greater than one year) investment deals within the limits expressed in the Treasury Strategy, which allowed no more than £20million (out of a total of £35.72million) to be invested for longer than 364 days at any one time. At the end of the 2014/15 year, the Council had £7.75million invested for longer than 364 days. RESOLVED: That the Annual Treasury Management Review 2014/15 be noted. REASON FOR DECISION: To enable the Committee to consider and comment on the Annual Treasury Management Review 2014/15. |
Noted | ||
| 17 |
UPDATED CONTRACT PROCUREMENT RULES AND SOCIAL VALUES ACT RECOMMENDATIONS Report and Appendices The Interim Contracts Lawyer presented the report of the Head of Finance, Performance and Asset Management on the updated Contract Procurement Rules and Social Values Act recommendations. The Interim Contracts Lawyer advised that the Contract Procurement Rules were reviewed on a periodic basis to ensure that they remained relevant and appropriate to the Council's needs. This review had been conducted by the Contracts and Procurement Group and led by the Procurement Officer and the Interim Contracts Lawyer. Responsibility for the rules rested with the Head of Finance, Performance and Asset Management and the Corporate Legal Manager. Both officers had reviewed and agreed the proposed changes. The Committee was advised that the Rules were last reviewed by Cabinet at its meeting on 13 June 2013 and approved by Full Council on 30 July 2013. Legislative changes, such as the new Public Contract Regulations 2015, which came into force on the 26 February 2015, had necessitated changes to the current Procurement Rules. The Interim Contracts Lawyer stated that the revised Contract Procurement Rules were provided at Appendix A to the report, with all proposed changes highlighted. In addition, a list of the main changes was provided at Appendix B to the report. She summarised the key changes: - The addition of a requirement to post an official NHDC decision notice on the Council's website; - Contract award notices must now be published within 30 days of award of contract (previously this was 48 days); - The Rules had been updated to reflect the fact that PQQs were no longer to be used for below EU threshold procurements, in line with new legislation; - References to the manual tender receipt and opening procedures had now been removed, as no longer required. All tenders now went through the e-tendering system; - The new EU Regulations had introduced 2 new procedures, Innovation Partnerships and Competitive Procedure with negotiation - the Rules had been updated to reflect procedures around their use; and - All new contracts over £5,000 must now be forwarded for inclusion on the Council's contract register in line with new Transparency requirements. In response to questions on the Social Values Act policy note set out at Appendix C to the report, the Head of Performance, Finance and Asset Management confirmed that a report on the Social Values act, including procurement implications, would be submitted to a future meeting of Cabinet. In broad terms, the Act provided the opportunity to consider a wide variety of social benefit in awarding goods and service contracts. RESOLVED: That the proposed changes to the Contract Procurement Rules, as described in Section 7 and Appendix B of the report, be supported. RECOMMENDED TO CABINET: That the updated Contract Procurement Rules, as set out at Appendix A to the report, be supported and referred to Council for approval. REASON FOR DECISION: To contribute towards effective organisational internal control and to comply with the requirements of the Council's Procurement Strategy. |
Agreed | ||
| 18 |
FUTURE MEETINGS - POSSIBLE AGENDA ITEMS The Chairman requested that should any Members have any suggestions for agenda items at future meetings would they please advise himself, officers or the Committee Clerk. |
Noted | ||