| Time: | 7.30pm | Place: | Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City |
| PRESENT: | Councillor M.E. Weeks (Chairman), Councillor Ian Albert, Councillor Clare Billing (substitute), Councillor Nicola Harris (substitute), Councillor Jim McNally and Councillor Terry Tyler. |
| IN ATTENDANCE: | Norma Atlay - Strategic Director of Finance, Policy and Governance Ian Couper - Head of Finance, Performance and Asset Management Antonio Ciampa - Accountancy Manager Dean Fury - Corporate Support Accountant Fiona Timms - Shared Risk Manager Jeanette Thompson - Senior Lawyer James Ellis - Advisory and Litigation Lawyer Ian Gourlay - Committee and Member Services Manager David De Smet - Principal Auditor (Shared Internal Audit Services) Kay Storey - Manager (Govt. & Public Sector), Ernst & Young |
| ALSO PRESENT: | 1 member of the public. |
| Item | Description/Resolution | Status | Action | |
| PART I | ||||
| 1 |
APOLOGIES FOR ABSENCE The Chairman welcomed Councillors Ian Albert and Terry Tyler to their first meeting of the Committee. Apologies for absence were submitted on behalf of Councillors John Bishop, Simon Harwood (Vice-Chairman) and Deepak Sangha. Councillor Nicola Harris was substituting for Councillor Bishop and Councillor Clare Billing was substituting for Councillor Sangha. |
Noted | ||
| 2 |
MINUTES Minutes RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 23 March 2016 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 (1) The Chairman announced that Members of the public and the press may use their devices to film/photograph, or do a sound recording of the meeting, but he asked them to not use flash and to disable any beeps or other sound notifications that emitted from their devices. In addition, the Chairman had arranged for the sound at this particular meeting to be recorded; and (2) The Chairman advised that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question. |
Noted | ||
| 5 |
PUBLIC PARTICIPATION There was no public participation. |
Noted | ||
| 6 |
ANNUAL EXTERNAL AUDIT AND CERTIFICATION FEES 2016/17 Cover Page External Audit Fees 2016/17 The Manager (Government & Public Sector), Ernst and Young, presented the Annual External Audit and Certification Fees 2016/17. The Manager (Government & Public Sector) advised that the report contained a letter which the external auditors were required to provide to the Council each year setting out the level of indicative fees which had been set by the audit regulator. For 2016/17, the indicative audit fee would be £52,057 (the same as for 2015/16) and the indicative fee for certification of the housing benefit subsidy claim would be £5,648. RESOLVED: That the Annual External Audit and Certification Fees 2016/17 be noted. REASON FOR DECISION: To keep the Committee informed of the level of External Audit and Certification Fees for 2016/17. |
Noted | ||
| 7 |
THE EFFECTIVENESS OF THE FINANCE, AUDIT AND RISK COMMITTEE Report The Principal Auditor (SIAS) presented a report on the effectiveness of the Finance, Audit and Risk Committee The Principal Auditor drew Members' attention to Table 1 of the report, which detailed the Committee's responsibilities and how these had been discharged in 2015/16. The Principal Auditor referred to Paragraph 8.6 of the report, in which SIAS had made a number of recommendations to ensure continuous improvement for the Committee, as follows: - An induction programme be provided to all new Members; - All Members be asked to complete the skills self-assessment to identify areas of strength and training needs; and - A training programme be delivered to satisfy any training needs identified. A Member noted that the report concentrated on quantitative measures of success and asked about qualitative measures. The Strategic Director of Finance, Policy and Governance replied that the qualitative element could be found in the minutes of previous Committee meetings. The Chairman added that, going forward, it would be a matter for Committee Members to "drill down" into the reports provided to them, and ask appropriate questions. The Committee was pleased with the plans for Member training and asked that the training self-assessment forms were sent to all Committee Members and substitutes. RESOLVED: (1) That the view that the Finance, Audit and Risk Committee operated effectively during 2015/16 be endorsed; and (2) That, in order to ensure continuous improvement for the Committee, the recommendations at Paragraph 8.6 in the report, and detailed below, be implemented during the Civic Year 2016/17: - An induction programme is provided to all new Members; - All Members are asked to complete the skills self-assessment to identify areas of strength and training needs; and - A training programme is delivered to satisfy any training needs identified. REASON FOR DECISION: To ensure that the Council complies with the requirement in the Code of Practice for Internal Audit in Local Government 2006 in that an Audit Committee reviews its own remit and effectiveness. |
Noted | ||
| 8 |
ANNUAL ASSURANCE STATEMENT AND INTERNAL AUDIT REPORT 2015/16 Cover Page Report The Principal Auditor (SIAS) presented the Annual Assurance Statement and Internal Audit Report 2015/16. The Principal Auditor advised that SIAS was subject to an annual self-assessed effectiveness review, the outcome of which for 2015/16 was that SIAS had achieved a substantial level of conformance with the Public Sector Internal Audit Standards, and was considered to be operating effectively. An independent Peer Review had confirmed this effectiveness rating. The Principal Auditor confirmed that no matters had arisen during 2015/16 which had threatened the independence of the internal audit function. This statement would require confirmation by the NHDC Section 151 Officer (the Strategic Director of Finance, Policy and Governance). The Principal Auditor reported that SIAS had provided a Substantial Assurance opinion for both Financial and Non-Financial Systems, with the caveat that, whilst there was a largely sound system of control, there were some minor weaknesses which may put a limited number of the system objectives at risk. The Principal Auditor stated that the report listed the audit work carried out during 2015/16 to support the Substantial Assurance overall conclusions. The report also contained SIAS Performance Indicators and results, together with the SIAS approach to Quality Control. The Principal Auditor explained that the Public Sector Internal Audit Standards also required that each local authority formally adopted an audit charter, setting out the internal audit responsibilities to those charged with the governance of the Council. The charter, which had only been amended slightly from the 2014/15 version, was attached at Appendix D to the report. The Strategic Director of Finance, Policy and Governance (as Section 151 Officer) provided the requisite assurance that the scope and resources for internal audit had been subject to no inappropriate limitations in 2015/16. The Committee considered that the SIAS Performance Indicators were very challenging and some were possibly never attainable, particularly in terms of client satisfaction. The Principal Auditor replied that officers generally appreciated that SIAS had a job to carry out. In terms of a 95% client satisfaction rating in 2015/16, the 5% dissatisfaction was due to a Council Tax audit undertaken by a BDO (the sub-contractors used by SIAS) auditor, who was unfamiliar with internal audit and had adopted a process more akin to an external audit approach. This had been fed back to BDO, and there had been no recurrence of this situation in subsequent audits. In response to Members' questions, the Principal Auditor commented that final audit reports were submitted to service managers, with only any high priority recommendations being reported to the Committee. The Asset Management audit had been completed, with a substantial level of assurance, and the other two outstanding audits would be reported to the September 2016 meeting of the Committee. The Committee asked the Contracts and Procurement Group to provide an update on the measures to be taken to satisfy the recommendations of the Ongoing Financial Viability of Contractors audit. RESOLVED: (1) That the Annual Assurance Statement and Internal Audit 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 be noted; (3) That the SIAS Audit Charter be accepted; (4) That the assurance from management that the scope and resources for internal audit had been subject to no inappropriate limitations in 2015/16 be noted; and (5) That a report be submitted to the next meeting of the Committee in respect of the Ongoing Financial Viability of Contractors audit. 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 2016/17 AUDIT PLAN Cover Page Report The Principal Auditor (SIAS) presented an update report on progress against the 2016/17 Audit Plan. The Principal Auditor advised that, since the last update report in March 2016, SIAS had issued 9 final reports. SIAS had currently delivered 10% of billable days and 3% of planned projects had been completed. The Principal Auditor stated that Appendix A to the report showed the current status of all audits within the Plan. Appendix B showed the implementation status of high priority recommendations, and Appendix C showed the agreed start dates for all the audits in the 2016/17 Plan. In response to a Member's question regarding the status of the Absence Management audit, the Principal Auditor replied that the audit was currently in fieldwork and that he had a mid-point review meeting with the auditor carrying out the audit in the next few days. An assurance was given that the audit would include comparisons with other public and private sector organisations, although officers commented that the level of sickness absence at NHDC already compared favourably in this respect. RESOLVED: (1) That the Internal Audit Progress Report for the period to 20 May 2016 be noted; (2) That the amendments to the Audit Plan, as at 20 May 2016, be approved; and (3) That the implementation status of high priority recommendations be noted. REASON FOR DECISION: To allow the Committee to review, comment and challenge the current status of the Internal Audit Plan. |
Noted | ||
| 10 |
RISK MANAGEMENT UPDATE AND ANNUAL REPORT ON RISK MANAGEMENT 2015/16 Report Appendix A - The Development of Careline Risk Appendix B - Annual Report on Risk and Opportunities Management 2015/16 The Shared Risk Manager presented a report which provided an update on Risk Management and the Annual report on Risk Management 2015/16. The Shared Risk Manager advised that Careline had had a successful first year and there were more opportunities that could be taken to "grow" the service. The service had recently been restructured and Hertfordshire County Council (HCC) remained committed to funding Careline. An internal audit had given substantial assurance, providing reassurance to both HCC and NHDC that the relationship was being well managed. In view of this, it was no longer considered a Top Risk for the Council, but was now designated as a Service risk. Details of the risk were attached as Appendix A to the report, which showed the work that had been completed to manage this risk. In the review of the Risk and Opportunities Management Strategy later in the year, the splitting of the ownership of Top Risks between Cabinet and SMT risks would be reconsidered. The Shared Risk Manager explained that the Annual Report summarising the risk management framework and changes made to the Top Risks in the financial year 2015/16 was attached as Appendix A. As business continuity and the management of health and safety were key to risk management, sections on these 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 reply to a Member's question in respect of the risk matrices contained in the report, the Shared Risk Manager commented that Risk Levels 7 to 9 equated to "red" status, Levels 4 to 6 to "amber" status, and Levels 1 to 3 to "green" status. In response to a Member's question regarding risk monitoring, the Strategic Director of Finance, Policy and Governance stated that this was the responsibility of Executive Cabinet Members. Risk implications were contained in every committee report and were highlighted in the quarterly Revenue Budget monitoring reports to Cabinet. Members and substitutes of the Committee would be invited to attend the next meeting of the Risk Management Group. RESOLVED: That the SMT Top Risk of the Development of Careline be now treated as a service risk. RECOMMENDED TO CABINET: That the Annual Report on Risk and Opportunities Management 2015/16, as set out at Appendix B to the report, be supported and referred to Council for approval. REASON FOR DECISION: To comply with the Risk and Opportunities Management Strategy, which stipulates that an Annual Risk Management report is taken to Council. |
Agreed | ||
| 11 |
FINANCE, AUDIT AND RISK COMMITTEE ANNUAL REPORT 2015/16 Cover Page Finance, Audit and Risk Committee Annual Report 2015/16 The Chairman of the Committee (Councillor Michael Weeks) presented the Finance, Audit and Risk Committee Annual Report for 2015/16. The Chairman thanked Members of the Committee and officers for their help and support during 2015/16. In response to a Member's question, the Shared Risk Manager undertook to provide Committee Members with details of the dates of forthcoming Risk Management Group meetings. RECOMMENDED TO COUNCIL: That the Annual Report of the Finance, Audit and Risk Committee 2015/16 be noted. REASON FOR DECISION: To comply with the requirements of the Council's Constitution. |
Noted | ||
| 12 |
DRAFT ANNUAL GOVERNANCE STATEMENT FOR 2015/16 Report Appendix A - Draft Annual Governance Statement 2015/16 Appendix B - Draft Assurance Statement 2015/16 The Senior Lawyer presented a report in respect of the Draft Annual Governance Statement (AGS) 2015/16. The Senior Lawyer advised that the Draft AGS followed the recommended CIPFA 2012 template. A new CIPFA Framework was due for implementation in 2016/17. The Senior Lawyer explained that the draft AGS was now before Members for comment; the AGS would then be updated to incorporate appropriate Members comments and to take account of any recommendations from SIAS; the AGS would come back before the Committee in September 2016, in conjunction with the Statement of Accounts for 2015/16. The Senior Lawyer commented that she had endeavoured to incorporate into the AGS the various decisions made by the Council over the year in summary form, in order to provide an overview of what the Council had been undertaking in 2015/16. Where actions arising from SIAS audit reports had been identified, these were shown as requiring follow up action by a series of arrows in the document, which it was intended would be addressed by the time the AGS was reported back in September 2016 and March 2017. A Member acknowledged that all NHDC Committee reports contained an "Equalities Implications" section. However, it was unclear to him how the effectiveness of equalities issues were monitored through the AGS. He felt that the AGS did not provide sufficient linkages back to the various Equalities Implications contained in reports. The Senior Lawyer replied that the Equalities Policy was due for review, and she undertook to request officers involved in that review if there was any way in which some form of cumulative equalities assessment could be included, which could be linked and fed into the AGS. The Chairman asked Members to provide the Senior Lawyer with any further comments they may have on the draft AGS by the end of July 2016. RESOLVED: (1) That the Draft Annual Governance Statement for 2015/16 (Appendix A to the report) and Chairman's Assurance Statement (Appendix B to the report) be noted, and any further comments be provided on the drafts by the end of July 2016, in order for them to be finalised and approved (in September 2016); (2) That the Senior Lawyer investigate the possibility of incorporating some form of cumulative assessment of equalities implications in the final version of the Annual Governance Statement; and (3) That the actions that the authority planned to take in Section 3, table 2 and Section 4 of the Annual Governance Statement to further enhance NHDC's governance arrangements be noted. REASON FOR DECISION: To offer Members of the Committee the opportunity to assess and comment on the Annual Governance Statement before it is finalised; and to provide the Committee with assurances that NHDC is examining and, where necessary, improving its governance arrangements. |
Agreed | ||
| 13 |
REVENUE BUDGET OUTTURN 2015/16 Report Appendix A - General Fund Summary Appendix B - Carry Forward Budgets requested for 2016/17 Appendix C - Collection Fund as at 31 March 2016 The Accountancy Manager presented the report of the Strategic Director of Finance, Policy and Governance in respect of the Revenue Budget Outturn 2015/16, and advised that the report was before this Committee for consideration prior to presentation to Cabinet on 14 June 2016. The Accountancy Manager advised that the reference in Recommendation 2.3 of the report should be to Paragraph 8.7 (not 8.6) and in Recommendation 2.4 should be Paragraph 8.8 (not 8.7). In respect of Recommendation 2.5, the reference should be to Paragraphs 8.16 - 8.18 (not 8.15 - 8.17), and the net amount to be transferred from earmarked reserves should be £331,000 (not £291,000). The Accountancy Manager stated that the outturn result on the 2015/16 General Fund Budget was an underspend of £750,000 against the working budget, and a total of £660,000 was proposed to be carried forward (as set out in Appendix B to the report). Excluding those carry forwards, the permanent impact on the Base Budget of the variances set out in the report would be a reduction in 2016/17 of £44,000. The Accountancy Manager reported that it was proposed to use £44,000 of the underspend to top up the reserve in the Strategic Priorities Fund. This transfer of underspend, together with the over-achievement of the vacancy control target, and the carry forward of the unspent Strategic Priorities Fund in 2015/16, would give a total Fund for projects of £100,000 in 2016/17. The Accountancy Manager explained that Table 1 in the report detailed the more significant budget variances and carry forward requests. Table 6 confirmed the General Fund balance of £7.085million. The Council also had £4.606million held in earmarked reserves, as set out in Table 8. In respect of the Collection Fund, the Business Rates pooling gain had been confirmed by Hertfordshire County Council as £91,000. In debating the report, the Committee requested that a report be submitted to its next meeting in respect of car parking, in particular the revenue generated by Controlled Parking Zones / Residents' Parking Schemes and a breakdown of the charges/income received from each of the Council-controlled car parks across the District. RESOLVED: (1) That the Revenue Budget Outturn 2015/16 be noted; and (2) That a report be submitted to the next meeting of the Committee in respect of car parking, in particular the revenue generated by Controlled Parking Zones / Residents' Parking Schemes and a breakdown of the charges/income received from each of the Council-controlled car parks across the District. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the Revenue Budget Outturn 2015/16. |
Noted | ||
| 14 |
CAPITAL PROGRAMME OUTTURN 2015/16 Report Appendix A - Capital Programme Summary 2015/16 Onwards Appendix B - Capital Programme Detail 2015/16 Onwards Appendix C - Capital Scheme Funding 2015/16 Onwards The Corporate Support Accountant presented the report of the Strategic Director of Finance, Policy and Governance in respect of the Capital Programme Outturn 2015/16, and advised that the report was for consideration prior to presentation to Cabinet on 14 June 2016. The Corporate Support Accountant advised that Table 1 in the report showed the revisions to the capital spend throughout the year. The capital budget started 2015/16 at £12.384million and had reduced down at third quarter to £4.61million. Spend for the year had been £3.524million, which was a reduction in budget of just over £1million. The Corporate Support Accountant stated that the report requested changes to capital budgets in 2016/17 of £1.258million, mainly due to re-profiling of schemes into 2016/17 (totalling £941,000) and an increase in the budget for the North Herts Leisure Centre Scheme of £0.317million. There was a total of £145,000 of changes to Capital Schemes commencing in 2015/16. The Corporate Support Accountant advised that the funding of the 2015/16 Capital Programme comprised £877,000 of capital receipts, £1.368million from the draw down of investments, and £1.279million from third party contributions and grants, including £378,000 of Section 106 receipts. This had left a balance of capital receipts to use for future expenditure of just under £5.5million. In reply to a Member's question, the Strategic Director of Finance, Policy and Governance explained that Equality Impact Assessments were carried out by the officers responsible for each scheme. The assessments were not reported to the Finance, Audit and Risk Committee, but (where necessary) were often appended to committee reports at the outset of capital projects. RESOLVED: That the Capital Programme Outturn 2015/16 be noted. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the Capital Programme Outturn 2015/16. |
Noted | ||
| 15 |
ANNUAL TREASURY MANAGEMENT REVIEW 2015/16 Report Appendix A - Annual Treasury Management Review 2015/16 The Corporate Support Accountant presented the report of the Strategic Director of Finance, Policy and Governance in respect of the Annual Treasury Management Review 2015/16, and advised that the report was for consideration prior to presentation to Cabinet on 14 June 2016. The Corporate Support Accountant advised that the Council had approved the 2015/16 Treasury Strategy in February 2015. The more significant changes to the previous Strategy included: - No more than 10% of outstanding investments to be placed with any one counter party; and - Limit sector exposure - no more than 75% of investments with Building Societies. The Corporate Support Accountant stated that, at the start of 2015/16, the Council had 78% of its investments with Building Societies and 22% with Banks. At the end of the year there was 51% with Building Societies, 36% with Banks, 12% with other Local Authorities and 1% with Money Market Funds. The Corporate Support Accountant explained that the Council had generated £452,000 of interest throughout the year. The average amount of interest on new deals arranged by Tradition was 1.15%, and the average on in-house deals was 0.56%. The average rate on all outstanding investments at the end of 2015/16 was 1.22%. The Corporate Support Accountant commented that, at the end of the 2015/16, the Council had more then £38million in investments and £4million in its current account, which also generated interest. At the end of the year, the Council had £7.75million (18.5%) invested for longer than 364 days. RESOLVED: That the Annual Treasury Management Review 2015/16 be noted. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the Annual Treasury Management Review 2015/16. |
Noted | ||
| 16 |
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. It was noted that reports had been requested to be submitted to the next Committee meeting on the Ongoing Financial Viability of Contractors audit; and on car parking, particularly the revenue generated by Controlled Parking Zones / Residents' Parking Schemes and a breakdown of the charges/income received from each of the Council-controlled car parks across the District. |
Noted | ||