| Time: | 7.30pm | Place: | Lower Hall, Icknield Centre, Icknield Way, Letchworth Garden City |
| PRESENT: | Councillor M.E. Weeks (Chairman), Councillor Simon Harwood (Vice-Chairman), Councillor Ian Albert, Councillor John Bishop, Councillor Jim McNally and Councillor Deepak Sangha. |
| IN ATTENDANCE: | Norma Atlay - Strategic Director of Finance, Policy and Governance Ian Couper - Head of Finance, Performance and Asset Management Antonio Ciampa - Accountancy Manager Ian Gourlay - Committee and Member Services Manager Suresh Patel - Audit Executive Director, Ernst & Young Kay Storey - Manager (Govt. & Public Sector), Ernst & Young |
| ALSO PRESENT: | Councillor Julian Cunningham 1 member of the public |
| Meeting attachments |
Agenda Front Pages Venue Location Plan Audio Recording of Meeting |
| Item | Description/Resolution | Status | Action | |
| PART I | ||||
| 57 |
APOLOGIES FOR ABSENCE Apologies for absence were received from Councillor Terry Tyler. |
Noted | ||
| 58 |
MINUTES Minutes RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 19 December 2016 be confirmed as a true record of the proceedings and be signed by the Chairman. |
Agreed | ||
| 59 |
NOTIFICATION OF OTHER BUSINESS There was no other item of business tabled. |
Noted | ||
| 60 |
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 | ||
| 61 |
PUBLIC PARTICIPATION There was no public participation. |
Noted | ||
| 62 |
EXTERNAL AUDIT PLAN FOR THE YEAR ENDING 31 MARCH 2017 Cover Sheet External Audit Plan for the Year Ending 31 March 2017 The Audit Executive Director, Ernst and Young, presented the External Audit Plan for the year ending 31 March 2017. The Audit Executive Director advised that Ernst & Young was required to give an opinion on the Council's financial accounts and a value for money opinion. He referred to Page 7 of the Audit Plan document, which set out the significant risks identified by Ernst & Young. The main significant risk was "Management Override", a risk inherent in all organisations. This basically meant that Management always had an ability the override internal controls. The approach of Ernst & Young to mitigate this risk, such as scrutiny of formal entries on specific areas of the accounts, was set out in the report. The Audit Executive Director stated that the other two identified risks related to property valuation and pensions, where in both cases the Council was reliant on expert opinion. The approach to mitigate these risks was set out in the report. The Audit Executive Director referred to Page 9 of the report, which outlined Ernst & Young's responsibility in terms of value for money. One area of risk had been identified in relation to sustainable resource deployment. This focussed on the Medium Term Financial Strategy and the robustness and rigour of assumptions that underpinned that Strategy. The procedures which determined the value for money conclusion were outlined in the report. The Audit Executive Director drew attention to the timeline for the audit detailed on Page 13 of the report. The testing of routine processes and controls would take place from January to March 2017 and the audit would be completed by the end of August 2017, ready for submission to the meeting of the Committee scheduled for September 2017. The Audit Executive Director concluded by commenting that Ernst & Young's planned fee for the 2016/17 audit would be £52,037, the same as for 2015/16. RESOLVED: That the External Audit Plan for the Year Ending 31 March 2017 be noted. REASON FOR DECISION: To enable the Committee to comment on the External Audit Plan for the Year Ending 31 March 2017. |
Noted | ||
| 63 |
CERTIFICATION OF CLAIMS AND RETURNS ANNUAL REPORT 2015/16 Cover Page Certification Report 2015/16 The Manager (Government & Public Sector), Ernst and Young, presented the Certification of Claims and Returns Annual Report 2015/16. The Manager (Government & Public Sector) advised that this report was required by Public Sector Audit Appointments Ltd to be produced each year by external auditors. The report summarised any work that had been carried out to certify claims, the only one for NHDC being the Housing Benefits subsidy claim. The Manager (Government & Public Sector) stated that officers had identified some manual adjustments which had changed the overall claim figure to £37,993,692. The Manager (Government & Public Sector) explained that the certification guidance required auditors to complete more extensive ‘40+' or extended testing if initial testing identified errors in the calculation of benefit or compilation of the claim. 40+ testing may also be carried out as a result of errors that had been identified in the audit of previous years' claims. Ernst & Young had found errors and carried out extended testing in one area (income calculation for rent allowance benefit cases). There was no 40+ testing required in 2014-15. The Manager (Government & Public Sector) advised that the main issues found were: ► Two cases where the claimant's income was miscalculated in the initial sample of 20 cases, in both cases the claimant was overpaid benefit. As a result of this finding, more extensive checking of a 40+ sample was undertaken. ► Testing of the additional 40+ sample found: ► Two cases where the claimants had been underpaid. ► Two cases where the claimants' income was incorrectly recorded as monthly rather than 4 weekly, which resulted in benefit being overpaid. ► A further case where the claimant's income had not been correctly included in the benefit calculation, resulting in an overpayment. The Manager (Government & Public Sector) had reported the underpayments, and the extrapolated value of the overpayments (£18,756) in a qualification letter. The Department of Work and Pensions (DWP) then decided whether to ask the Council to carry our further work to quantify the error or to claw back the benefit subsidy which had been overpaid. The Manager (Government & Public Sector) reported that the actual fee for the 2015/16 certification work was £7,524, roughly the same as the fee for 2014/15. In response to Members' queries regarding the level of errors found in the sampling exercise, the Strategic Director of Finance, Policy and commented that it should be borne in mind that the extrapolated figure of £18,756 was out of a total Housing Benefit subsidy figure of approximately £38Million. RESOLVED: That the Certification of Claims and Returns Annual Report 2015/16 be noted. REASON FOR DECISION: To enable the Committee to comment on the Certification of Claims and Returns Annual Report 2015/16. |
Noted | ||
| 64 |
CORPORATE BUSINESS PLANNING - BUDGET SETTING 2017/18 Report Appendix 1 - General Fund Estimates (1.9% Council Tax increase) Appendix 2 - General Fund Estimates (£5 Council Tax increase) Appendix 3 - Revenue Efficiency and Investment proposals Appendix 4 - Revised NHDC Sustainability Plan Appendix 5 - Budget Risks for 2017/18 The Head of Finance, Performance and Asset Management presented the report of the Strategic Director of Finance, Policy and Governance in respect of the proposed Revenue Budget for 2017/18. The Head of Finance, Performance and Asset Management advised that the major changes to the report from the draft Budget report considered by the Committee in December 2017 were as follows: - The proposed changes to New Homes Bonus that introduced a baseline percentage were now incorporated into the main report, they were previously provided as an addendum; - The forecast of numbers of new homes had been reviewed. Based on the revised information available, this was not expected to lead to a significant change in the funding; - The Council Tax Base for 2017/18 had been reviewed. This was an increase of 1.4% from 2016/17, and was higher than the previously expected increase of 0.65%. This was expected to generate an additional £75,000 of Council Tax income from 2017/18 onwards; - Budget risks for 2017/18 had been reviewed again, leading to small increase in the amount to allow for in the minimum General Fund balance; - A high level review of budgets, as at the end of November 2016, had been carried out. This had identified £469,000 of underspends against the working budget. Of this there were requests for £191,000 of this to be carried forward into 2017/18. The impact on 2017/18 was expected to be minimal (£5,000); - The decrease in funding meant that further savings needed to be identified and delivered. When combined with the shortfall against the existing target, there was a need to deliver at least a further £1.43 million of savings by 2020/21; and. - A revised NHDC sustainability plan was attached to this report as Appendix 4. The Head of Finance, Performance and Asset Management and Strategic Director of Finance, Policy and Governance clarified the following issues raised by Members regarding the Efficiency/Investment proposals set out in Appendix 3 to the report: - E8 - Whole Council Elections - these were forecast savings in 2020/21 should the Council decide to change to whole Council Elections. Such a decision would require the approval of the Council; - E11 - Green Space Strategy - should the revised Green Space Strategy be approved by the Cabinet, then the figures would change. The revised figures would be included in the paperwork provided to Council; - E15 - Corporate Restructure - the Chief Executive was working on the restructuring report, but was confident that the savings figure quoted would be achievable; and - E27 - Hitchin Town Hall Community Facility - the savings figure of £100,000 quoted was based on the Hitchin Town Hall Ltd Business Case, and was a target for income generation. The facility was already generating income from bookings, and it was anticipated that income would increase once the café facility had opened. The Committee was disappointed that Cabinet had not accepted its recommendation from its last meeting concerning Efficiency Saving E25 - Replace Area Committees with a more informal alternative. The Committee reiterated its view that it was premature/speculative at the current time to identify a savings figure for this proposal, without a fully costed alternative. The Committee was further concerned that it was not clear from the paperwork the rationale for the savings figure of £50,000. RECOMMENDED TO CABINET: That, following the Committee's disappointment that the Cabinet had not accepted its previous recommendation in respect of Efficiency Saving E25 - Replace Area Committees with a more informal alternative, it was recommended that this item be removed as: (i) it was still premature/speculative at the current time to identify a savings figure for this proposal, without a fully costed alternative; and (ii) the rationale for the savings figure of £50,000 was unclear from the paperwork, especially as no alternative had been identified. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the proposed Revenue Budget for 2017/18. |
Noted | ||
| 65 |
CAPITAL PROGRAMME 2017/18 ONWARDS Report Appendix A - Capital Programme Summary Appendix B - Capital Programme Details Appendix C - Capital Investment Proposals for 2017/18 and onwards The Accountancy Manager presented the report of the Strategic Director of Finance, Policy and Governance in respect of the proposed Capital Programme for 2017/18 onwards. The Accountancy Manager advised that the report recommended a provisional Capital Programme of £16Million through to 2020/21, with a Capital spend in 2017/18 of £9Million. In terms of how and where funds would be spent, he referred Members to the summary attached at Appendix A to the report. In terms of the funding of the Capital Programme, the Accountancy Manager confirmed that the largest source of funding would be the Council's own Capital resources. The Council was expecting £5.69Million of capital receipts from asset disposals over the next four years. He referred to Paragraph 8.1 of the report in respect of the proposed Capital Receipts Direction. The Accountancy Manger commented that the Capital projects to be commenced in 2017/18 were set out in Appendix C to the report, and that Appendix B provided the scheme by scheme breakdown for the entire four year programme. RESOLVED: That the proposed Capital Programme 2017/18 onwards be noted. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the proposed Capital Programme for 2017/18 onwards. |
Noted | ||
| 66 |
TREASURY MANAGEMENT STRATEGY 2017/18 Report Appendix A - Treasury Management Policy Statement Appendix B - Treasury Management Practices Appendix C - Treasury Strategy Statement The Head of Finance, Performance and Asset Management presented the report of the Strategic Director of Finance, Policy and Governance in respect of the proposed Treasury Management Strategy for 2017/18. The Head of Finance, Performance and Asset Management advised that there were no major changes to the Treasury Management Strategy for 2017/18 from that approved for 2016/17. However, there were some clarifications to the Property Fund criteria, as follows: (i) Clarification of how the maximum investment period operated in relation to property funds. There were both up-front set up and exit costs for Property Funds. The capital value of these funds also fluctuated over time. Whilst in general it was possible to exit these funds at any time, there were likely to be more optimum times to do so. Therefore, there would not be a requirement to disinvest in line with the maximum period of investment of 5 years, and instead investments would be monitored on a regular basis to balance the need for cash (liquidity risk) with exit costs (market risk); (ii) No more than 25% of investments to be placed with Property Funds; and (iii) As Property Funds and Building Societies were exposed to the property market, the combined value of these investments would not exceed 75% of total investments. The Committee noted that the Treasury Limits for 2017/18 had also remained unchanged from 2016/17. RESOLVED: That the proposed Treasury Management Strategy for 2017/18 be noted. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the proposed Treasury Management Strategy for 2017/18. |
Noted | ||
| 67 |
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 or the Committee Clerk. |
Noted | ||