Meeting documents

Finance, Audit and Risk Committee
Monday, 16th January, 2012 7.30 pm


Date:	Thursday, 8th December, 2011	Time:	7.30pm	Place:	Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City

PRESENT:	Councillor David Levett (Chairman),Councillor John Booth (Vice-Chairman), Councillor Paul Clark, Councillor Bill Davidson, Councillor David Kearns and Councillor Marilyn Kirkland.
IN ATTENDANCE:	Norma Atlay - Strategic Director of Finance, Policy and Governance John Robinson - Strategic Director of Customer Services Andy Cavanagh - Head of Finance, Performance and Governance Tim Neill - Accountancy Manager Anthony Roche - Senior Lawyer Fiona Timms - Performance and Risk Manager Nigel Schofield - Committee and Member Services Officer Denis Thorpe - Grant Thornton Phil Westerman - Grant Thornton
ALSO PRESENT:	Councillor Michael Paterson - Vice-Chairman of Overview and Scrutiny Committee Two Democratic Services Officers (Part-Time)

Item	Description/Resolution	Status	Action
PART I
32	APOLOGIES FOR ABSENCE There were no apologies for absence.	Noted
33	MINUTES Data/Finance, Audit and Risk Committee/201201161930/Agenda/Minutes RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 19 September 2011 be confirmed as a true record of the proceedings and be signed by the Chairman.	Agreed
34	NOTIFICATION OF OTHER BUSINESS There was no other item of business tabled.	Noted
35	CHAIRMAN'S ANNOUNCEMENTS The Chairman welcomed everyone to the meeting and to the last meeting of this Committee in 2011 and took the opportunity to wish everyone a Happy Christmas. The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question.	Noted
36	PUBLIC PARTICIPATION There was no public participation.	Noted
37	COST OF DEMOCRACY - INTERIM REPORT Report Appendix A Appendix B Appendix C The Head of Finance, Performance and Asset Management (HF) reminded Members that at the meeting held on 19 September 2001 (Minute 31 refers) it had been agreed to receive a report on the Costs of Democracy at this meeting. The HF explained that it had been difficult to fully extract those costs which should be correctly assigned to Costs of Democracy and listed the identified costs under this heading and then the details applicable to each heading. The HF referred the Committee to Table 1 which compared NHDC to the Audit Commission â€˜nearest neighbour' group and also the nearest â€˜geographical neighbour' group which showed that the NHDC Cost of Democracy was above average but demonstrated a steady downwards trend over the past five years both in terms of percentage of total council budget and was also notable in terms of a reducing percentage of decreasing overall budget. The HF next referred the Committee to Appendix A which showed the overall financial Costs of Democracy and to the summary at Table 2 which also showed a firm fall in the charges to Costs of Democracy of some Â£165K since 2008-2009. The Committee noted that the costs did not include attendance allowances paid to officers below Grade 12 nor the costs of Time Off in Lieu (TOIL), although the HF did explain that officers who were eligible for TOIL very rarely took the time accrued. The HF advised the Committee that an average direct cost for a committee meeting was Â£3,600 - made up of pre meetings, member briefings, report writing, minute preparation and was listed more fully at Appendix B, but the HF cautioned that some reports took longer than others to prepare with the September meeting of FAR incurring costs of Â£4,200 from two officers. Another example was the cost of Â£2,300 (119 hours) preparing a report for the Scrutiny Task and Finish Group - Teenagers, however the Committee were pleased to note that the new arrangements for a Task and Finish Group to take place on one day had reduced costs to about Â£1,400. Other costs that were considered for this report were the costs of keeping the District Council Offices open (Â£250 per evening) and the use of external locations (not all five Area Committees) as detailed at Table 3. The HF confirmed that the costs of subscriptions to local authority associations (Â£20,000) were paid from Corporate Budgets, not Costs of Democracy. Bearing in mind the request for the inclusion of potential savings measures in this report the HF advised the Committee that several options were included that had been proposed by officers previously, although not necessarily presented to Members: Cease the Annual Chairman's reception (Â£6,500); Reduce the size of the Committee Secretariat and the number of Committee meetings - although there could be savings from Â£5,000 to Â£30,000 at a 50 per cent reduction officers had not recommended any significant reduction as the team was regarded to be at a minimal size already and were a critical part of the elections process and there could be a potential for significant negative reputational issues; Reduce the courier service to Members from two deliveries per week to one (savings of up to Â£6,000); Reduction of the training budget by 50 per cent could save some Â£3,000; Reduce secretarial support to the Chairman and associated costs such as chauffeur driven cars, catering, print, Christmas Cards could save up to Â£7,500; A move to four yearly elections (as recommended by the Electoral Commission but not adopted by Council in September 2006) had previously estimated in 2006 that up to Â£87,000 in total could be saved over the four years. The HF referred the Committee to Table 5 which summarised the potential efficiencies and the Committee noted that there were risks as well as opportunities for each of the proposed efficiencies and each item would require careful review and examination before approval. The Chairman thanked and congratulated the Head of Finance, Performance and Asset Management for the input in preparing this comprehensive report and the details provided on the Costs of Democracy. Several Members of the Committee strongly expressed their concerns at the total costs attributed to â€˜The Costs of Democracy' and that in the report there were many costs attributed to this heading that could be possibly allocated elsewhere and that there should be a more definitive assessment of charging to this heading. The Committee were also interested that the comparison with other authorities for total spend as presented at Table 1 and the comparison with allowances paid to Members in other authorities where NHDC was the lowest average cost of the ten Herts Authorities even though NHDC had the fourth highest number of Councillors. There ensued a discussion on all aspects of the report and in particular prospective efficiencies within the Costs of Democracy as listed at Paragraph 4. There was support for moving to one Members' Despatch per week and charging external bodies for copies of Committee Agenda but no consensus for cancelling the Chairman's Annual Reception or Secretarial support to the Chairman. With regard to a move to a four year election cycle the Committee regarded the stated cost savings as not being validated against the three year cycle due to the stated costs of potential by - elections. A Member expressed a view that savings could be made by reducing the subscriptions made to Local Government organisations which totalled some Â£20,000 per annum but information from officers that there was value from such memberships indicated that at the moment these subscriptions should continue. Of particular concern to the Committee was the cost of officer time in preparing reports for Committees and that this perhaps could temper the request for technical reports in the future. There was no support for diminishing the role of Area Committees which in turn would maintain the Committee and Member Secretariat at current levels. Throughout the discussions the Committee were mindful of the high costs attributed to Costs of Democracy and there were several questions as to whether there had been a correct allocation of costs by officers or in a direct cost e.g. printing and postage. The HF advised that whilst preparing the report it had not been possible to specifically validate whether costs had been correctly charged to Costs of Democracy, although advice was given to Officers every year as outlined at Paragraphs 3.1 and 3.2 of the report. The Committee noted that neighbouring authorities had not responded at all to a request for comparative data and that it might be appropriate to purchase benchmarking information from CIPFA a report that might provide more information to allow a better insight into our neighbours. Members also questioned the allocation of charges by for example the Monitoring Officer and Planning Officers to the Costs of Democracy as these were statutory duties for NHDC to undertake. The Chairman thanked Members and Officers for their participation in the debate which had indicated that more investigation and clarification of charging was required. The HF acknowledged the request of the Committee and sought agreement which was given to bring another report on the Costs of Democracy to the meeting scheduled for 1 March 2012. RESOLVED: (1)That the Head of Finance, Performance and Asset Management be thanked for the detailed interim report; (2)That the information provided on the Costs of Democracy be noted; (3)That the details of the efficiencies with the Cost of Democracy area which had been considered in previous years and discounted as listed at Paragraph 4 and specifically at Table 5 be noted; (4)That the information provided at Appendices A, B and C be noted. (5)That the Head of Finance be requested to make the appropriate enquiries to ascertain if our nearest neighbours and geographical neighbours were members of the CIPFA Democratic Services benchmarking â€˜club' and if they were to make arrangements to purchase from CIPFA the Democratic Services benchmarking club data, which would allow a more in - depth comparative analysis of relative costs and services. (6)That the Head of Finance be requested to present a further report on the Costs of Democracy using the CIPFA report and a more detailed analysis of the direct costs and officer time allocated to Costs of Democracy at the next meeting of the Finance, Audit and Risk Committee to be held on 1 March 2012. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee make comments and observations on the outcome of the analysis of Costs of Democracy.	Agreed	Head of Finance/Performance and Asset Management
38	GIFTS AND HOSPITALITY REVIEW Report Appendix A Appendix B Appendix C Appendix D The Senior Lawyer (SL) presented the report of the Monitoring Officer which was primarily focussed on Officer Gifts and Hospitality and reflected the findings of the Internal Audit of both Members and Officers receipt and recording of such gifts or hospitality. However, a review of the approach to Members gifts and hospitality was not pursued due to potential changes arising from the Localism Act and the SL advised the Committee that the only Audit recommendation for Members was an additional question on the declaration form. The SL confirmed that Appendix B included the question as to the reason for acceptance and how the gift was disposed of and advised the Committee that this form with amendment would be presented in MIS in the lead up to Christmas. The SL next described to the Committee the findings of the Internal Audit on the review of the Officers Gift and Hospitality and added that a general review was due in any event. Audit identified as a high risk that officers had to be reminded that unsolicited gifts had to be passed to the Chairman for inclusion in the Chairman's raffle at the annual Civic Reception. A further audit finding had been the lack of a six monthly review by the appropriate Strategic Director and this should be included in the revised Policy. The SL confirmed that the Monitoring Officer would remind officers in January and July each year of the need to adhere to the Policy. The SL referred the Committee to Appendix C which was the amended Officer Gifts and Hospitality Policy (changes in red) and to Appendix D which detailed the proposed changes (in red) in the Officer declaration form together with a list of the specific changes at Paragraph 4.8 to provide a greater degree of managerial discretion and flexibility. The SL concluded his presentation and advised that there could be more changes arising from the Localism Act 2011 and certainly where consistency between both Member and Officer policies was necessary. There were some issues of clarity of wording identified in the policies during the review but these had remained in situ for the moment to ensure consistency with the existing Member Code. The Chairman thanked the Senior Lawyer for the report and noted that subject to any comments made by the Committee the revised Officer Gifts and Hospitality Policy and revised Officer Form required endorsement by Cabinet at the next meeting to be held on 13 December 2011. There followed a short discussion which centered on the destination of gifts received by either officers or Members and the Chairman advised that as he had been a Chairman of NHDC before it was understood that it was at the discretion of each Chairman as to whether to accept the gift for the Chairman's Charity or pass to another charity. The SL in response to a question advised the Committee that the Members Policy on Gifts and Hospitality was within the remit of the Standards Committee to refer to the Joint Staff Consultative Committee and Council. The Committee approved the proposed changes and agreed to forward the documents to Cabinet for approval on 13 December 2011. RESOLVED: (1)That the information provided in the Internal Audit Report as presented at Appendix A be noted; (2)That the amended Member Gift and Hospitality Form as presented at Appendix B and approved by the Standards Committee on 23 November (Minute 6 refers) be agreed; (3)That the proposed and amended (changes in red) Officer Gifts and Hospitality Policy as presented at Appendix C be agreed; (4)That the proposed and amended (changes in red) to the Officer Special Consent form as presented at Appendix D be agreed; RECOMMENDED TO CABINET: That the amended Officer Gifts and Hospitality Policy as presented at Appendix C and the Officer Special Consent Form as presented at Appendix D be endorsed. REASON FOR DECISION: For the Finance, Audit and Risk Committee to review and comment on the Gifts and Hospitality Policy.	Agreed
39	RISK MANAGEMENT UPDATE Report Appendix - Top Risks 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 (SMT) and Cabinet. The PRM advised that the Audit and Risk Committee at the meeting held on 19 September 2011 (Minute 25 refers) expressed concern about the probability and impact for two large projects: North Herts Museum and Community Facility at Hitchin Town Hall and the ongoing redevelopment of Howard Park and Gardens in Letchworth Garden City. It was considered that recent delays to both projects enhanced the risk factor where contact dates had not been met on either project and consequently should be considered as high risk. The PRM advised that the SMT had reviewed each risk but decided that the Howard Park and Gardens Project was not considered to be a Top Risk for the Council, but should continue to be included on the Risk Register and maintain a Project Risk Log. Also, that the overall impact score was â€˜9' which reflected the worse case scenario but in reality it was considered that the risk was lower than â€˜9' and that the project would be completed albeit slightly behind schedule. However, the Top Risk of delivering the North Herts Museum and Community Facility at Hitchin Town Hall had an amended assessment to an increased impact score of â€˜3' where financial losses might exceed Â£100,000. In addition there was a significantly increased reputational risk perceived by stakeholders and although the quantifiable risk had not increased for this project officers had agreed that the major risks were at a critical phase in the project life cycle. The PRM concluded the updating on the risks management by reference to the Risk and Opportunities Management Policy and Strategy for 2010-2013. The PRM advised the Committee that there appeared to be no fundamental changes in the way risk and opportunities were managed at NHDC apart from superficial changes such as CMT changing to SMT and the Audit and Risk Committee becoming the Finance, Audit and Risk Committee. The Committee noted that the changes would be incorporated next year to reflect the new priorities for NHDC in 2012 - 2013. The Chairman thanked the Performance and Risk Manager for the updating on the Top Risks as detailed at Appendix A and invited comments and or questions from the Committee. The Committee were in agreement with the proposals for the amendments to the Top Risks and the impact score increase for the North Herts Museum and Community Facility. There followed a brief debate on the risk and impact scores for Waste and Recycling Service, Financial Management and Climate Change Strategy and whether these risk levels and impact scores could be re-visited. The Strategic Director for Customer Services advised that there remained a risk on Land Refill taxation as this was directly linked to our recycling levels. The SD also advised that NHDC would not be taking up Government grants to move to weekly waste collection which would cost much more than the current budget. The PRM advised that the Cabinet Risk on Financial Management covered the full scope of all financial matters at NHDC and were regularly reviewed by the Senior Management Team. The Strategic Director of Finance, Policy and Governance clarified that it was very difficult to assess financial costs in case of challenge to tender adjudication as there was no cost to the failed tenderer but considerable unknown costs for NHDC. With regard to Climate Strategy the Committee were advised that there were difficult baseline issues and that NHDC had reduced its carbon footprint with the concentration of all staff at District Council Offices, however a Member reminded the Committee that NHDC were leaders under the Nottingham Declaration on Climate Change and the current level of risk should be carefully examined. The Chairman reminded Members that Covalent had much more detail on the assessment and management of risks. RESOLVED: (1)That the amendments to the Top Risks as summarised at Appendix A be agreed; (2)That the proposal to increase the impact score for the Delivery of the Outcomes from the Museum Service Fundamental Service Review to a â€˜3' be agreed; (3)That the minimal changes following review of the Risk and Opportunities Management Policy and Strategy be noted. RECOMMENDED TO CABINET: That the proposal to increase the impact score for the Delivery of the Outcomes from the Museum Service Fundamental Service Review to a â€˜3' be endorsed. REASON FOR DECISION: To allow a review of the Top Risks and confirm changes to impact scores.	Agreed
40	SECOND QUARTER REVENUE MONITORING 2011 -2012 Report Appendix A Appendix B Appendix C The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance and advised the Committee that this report would be presented to Cabinet on 13 December 2011 and covered the income and expenditure for the period July to September 2011 for the General Fund and the Council's Trading account, Careline. The AM advised the Committee that the General Fund expenditure was projected at Â£16.469M which was an increase on the working budget of Â£0.142M and that an overspend of Â£72K was covered within the General Fund reserve balance. The Committee noted that there had been an increase to the base budget of Â£35K for 2012-2013. The AM referred the Committee to the Executive Summary and to Table 1 which listed the significant changes to the General Fund and commented on each of the nine items in turn. With regard to the Trading Account despite savings of Â£21K on computer leasing fees, Cirrus maintenance contract and the non renewal of a Housing Association Contract meant the budgeted net deficit for Careline in this second quarter was Â£98K. With regard to Carry Forward Projects (Table 2) the AM confirmed that out of the Â£290K carried forward from 2010-2011 to 2011-2013 some Â£71K had been spent. The Committee were pleased to note that there were no projects at red status, and noted that the six at amber status should be spent by 31 March 2012, but there was a risk that some of the projects may not be completed in time. The AM referred the Committee to Table 3 which summarised the efficiency proposals at the end of the second quarter and to Table 4 which gave the budget items in more detail. The Committee noted that the efficiencies stood at Â£1.748M which was 91 per cent of the target, of which four were at red and three were at green status and that here had been several case of over achievement notably on Hitchin and Royston Market contracts. Notwithstanding the previous information the AM referred the Committee to the five Key Corporate â€˜Financial Health' Indicators listed at Table 5 which had a significant affect on the overall Council's net budget and could be influenced by the external environment. The AM advised that Appendix B contained the Covalent reports for the period July to September 2011. Of particular note was the drop in car parking income and planning application income of which the car parking tickets was showing a trend year on year, and though the fees from planning applications was slowing down due to the lack of major applications with a larger fee and had affected the income. The Committee expressed some concern that fees to Building Control had fallen (Â£21K in reserve) and that there was a risk that this service would reach a deficit and as a consequence there could be a call on the General Fund and potentially the setting of new fees in 2012-2013. The AM stated that due to revisions described above it would be necessary to increase the contribution from the special reserve in order to maintain the General Fund balance. The AM referred the Committee to Tables 6 and 7 which showed the projected balance of the General Fund at 31 March 2012 and Minimum General Fund Balance respectively and to Table 8 which listed the 12 earmarked reserves (plus special reserve) that could be used to fund revenue expenditure with a net total of Â£653K, leaving a balance at 31 March 2012 of Â£2.440M. The AM commented that keeping sufficient funds in the Council's reserves was addressed at Agenda Item 11- Corporate Business Planning Process. The Chairman thanked the Accountancy Manager for the update on the Second Quarter Revenue Monitoring Report for 2011-2012 and invited questions and or comments from the Committee. In response to an enquiry on the monies not spent due to the non-completion of projects by the year end the Accountancy Manager advised that although un spent monies were expected to be retained and kept in the General Fund there would always be an opportunity for Members to justify the retention of a project and the finance for that project. With regard to the collection and stated income of Parking Penalty Charge Notices the Accountancy Manager confirmed that there had been a fall off in Notices issued and there had been an adjustment to the way projected income was presented. It was noted that not all penalty charges would be collected and that there would be a revision of the bad debts every two months. Another query concerned the under collection of Â£74K due to a lower number of planning applications and the Strategic Director of Finance, Policy and Governance advised that NHDC might be able to set its own (and increased) fees in the future. The Accountancy Manager confirmed that the additional costs of Â£17K incurred by Careline would be adjusted in the next financial year. The AM noted the concern expressed by the Committee where for the last four years Careline had been in and out of profit. The AM advised that the Portfolio Holder for Housing and Environmental Health was looking at several options for Careline that included offering a service to other local authorities and that there was a possibility that an Internal Audit would be appropriate. RESOLVED: That the information provided in the Draft Report: Revenue Monitoring - Second Quarter 2011 - 2012 which would be presented to Cabinet on 13 December 2011 be noted. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee comment as appropriate on the draft report Second Quarter Revenue Monitoring for 2011-2012.	Noted
41	SECOND QUARTER CAPITAL MONITORING 2011 - 2012 Report Appendix A Appendix B Appendix C The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance and advised the Committee that this report would be presented to Cabinet on 13 December 2011 which was an update to Cabinet on the capital programme for 2011-2012 at the end of September and the available capital funding resources. The AM referred the Committee to Appendix A which detailed the capital programme by priorities and by service plus the overall funding analysis and projected availability of capital receipts. At Appendix B was the full programme with a revised costs of schemes with provisional programmes for the next two years and at Appendix C the anticipated funding source for each capital scheme was shown. At Table 1 the Committee noted the slippage in five schemes in 2011-2012 and that there was a decrease of Â£683K since the last report in September 2010. At Table 2 the AM advised that the two schemes at Howard Gardens, Letchworth and at Lumen Road, Royston had a combined increase of Â£119K with confirmation awaited that an Environment Agency grant would cover the whole project at the gas works site in Royston. The AM confirmed that the Portfolio Holder for Finance and IT had approved an additional Â£50K for agreed variations to the contract at Howard Gardens which was expected to be completed in this financial year. The Committee noted that the balance of useable capital receipts was Â£2.729M at the start of 2011-2012 and onwards with a total funding of Â£3.732M from either capital receipts or borrowing. The AM advised that prudential borrowing might be needed towards the end of the financial year and that any such borrowing would be in the parameters of the Treasury Strategy, however this may be replaced by use of housing stock set aside subject to external audit approval. The Committee noted that applications for third party funding would be sought wherever possible, for example the application to the Heritage Lottery Fund for just under Â£1M towards the North Herts Museum and Community Facility at Hitchin Town Hall. The AM concluded his presentation with confirmation that the capital programme would be kept under close review due to the limited availability of capital receipts and the cost of borrowing to support the general fund. The Chairman thanked the Accountancy Manager for the update on the Capital Monitoring at the Second Quarter and invited Members to make comments and or questions to this report. In response to a question concerning the sum of just under Â£1M for the North Herts Museum and Community Facility at Hitchin Town Hall it was confirmed that this project was listed as a high risk and that the NHDC funding was profiled over a 12 month period. Referring to Table 1 a Member queried why the Housing Association did not apply for the full amount available (Â£480K) and he undertook to speak with the management about this as soon as possible. RESOLVED: That the information provided in the Draft Report: Capital Monitoring - Second Quarter 2011 - 2012 which would be presented to Cabinet on 13 December 2011 be noted. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee comment as appropriate on the draft report Second Quarter Capital Monitoring for 2011 - 2012.	Noted
42	CORPORATE BUSINESS PLANNING - DRAFT BUDGET 2012 - 2013 Report Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 The Accountancy Manager presented the report of the Strategic Director of Finance, Policy and Governance which reported the estimated net District Expenditure for 2012-2013, to make a consideration for the Council Tax to be set for 2012-2013, recommend an indicative budget level and evaluate the known and unknown key factors which might impact on Council finances within the mid term 2012-2017. The AM reminded the Committee that the Council's mid term financial strategy was adopted on 8 September 2011 (Minute 34 refers) and that there were 20 assumptions currently used to form the Strategy. The AM advised that the pay inflation assumption was now set at one per cent and that the vacancy savings target of three per cent of salary budget would yield some Â£300K for the base budget in 2012-2013. The AM next described to the Committee the four key risks used as part of the financial assumptions after 2012-2013 due to the uncertainty around the outcome of the Local Government resource review and other significant national policy proposals. The AM stressed that the budget proposals in this report were based on the available information and were provisional figures and further work remained to refine the estimates in time for the final budget recommendation to Council in the new year. The Committee noted that further government announcements made before January 2012 could have an impact on Council Finances. The AM reminded Members that each year the position of balances and reserves must be reviewed and that there must be a reserve balance in case of unexpected increases in costs, reductions in revenue and unforeseen expenditure requirements. The AM advised the Committee that monies had to be kept in reserve for risks and unforeseen risks. Total identified risks had a value of Â£3.3M but only a proportion of the risk value was taken into consideration for budgetary purposes. Accordingly, the proposed value of risks was reduced to Â£890K and consequently it was considered that a minimum General Fund balance of Â£1.660M would be appropriate for 2012-2013. The AM referred the Committee to Table 4 which listed other reserves and provisions for the current year giving a total revenue reserve of Â£2.440M and advised that any use of the special reserve would occur on a phased basis to prevent erratic movements in Council Tax increases. The AM proceeded to update the Committee on the following reserve items: Housing and Planning Delivery Reserve; IT Reserve; Environmental Reserve; Performance Reward Reserve; Insurance Reserve; Mausoleum Reserve; S106 Monitoring; Building Control, Museums Exhibits Reserve; Property Maintenance and Leisure Management Maintenance Reserve; and Collection Fund. With regard to completing the budget forecast for 2012-2013 the AM referred the Committee to the Efficiency and Investment Proposals (as presented at Appendices 2 and 3) and advised that efficiencies already achieved for next year had reached Â£360,000 and other proposed efficiencies totalled Â£230,000. This sum was greater than the original target of Â£500,000 and the Committee accepted that the more that could be saved next year the better it would be for future years as Government support would fall away. The AM stated that future savings could be made from alternative ways of working for example shared working with Stevenage BC and East Herts DC and if savings could not be made from such initiatives then inevitably there might have to be service reductions. The AM referred the Committee to Appendices 3 and 4 which gave details of draft revenue investment and draft capital investment respectively and the AM advised the Committee that as there had been very little receipt to date from asset disposals that in order to fund the capital programme it would be necessary to borrow up to Â£1M at a cost of Â£22K . The AM concluded his report by reference to the outcomes of levying an increase in Council Tax against the receipt of the council tax freeze grant and the Committee noted that if an excessive increase (above 3.5 per cent) was made then a referendum might be required. If council tax was increased this would give an improved income against the grant in future years and it was emphasised that the North Herts proportion of the overall bill was relatively small. The Chairman thanked the Accountancy Manager for the presentation and invited comments or questions from the Committee. The AM confirmed that in addition to the Members Workshops all five Area Committees would have the opportunity to review the Corporate Business Planning - Draft Budget 2012-2013 during the January cycle of meetings. A Member queried the Section 106 monies in hand to Â£56K and if this sum was being used and the Strategic Director of Finance, Policy and Governance (SD) advised that although there was a S106 administration fee every effort was being made to allocate S106 deposits to schemes as soon as possible and to avoid any payments back to developers. In response to another question the SD stated that not quite all the grants listed at Table 2 were â€˜ring fenced' but the Council did have some discretion in transferring a few of the listed grants to other headings. With reference to any future Council Tax increases a proposal was made that increases should be incremental year on year. RESOLVED: (1)That the Accountancy Manager be thanked for providing a full version of the Corporate Business Planning Draft Budget for 2012-2013 prior to the meeting; (2)That the position of the General Fund Balance be noted; (3)That the inclusion of the investment and efficiencies proposals in the budget estimates for 2012-2013 be noted. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee comment as appropriate on the Corporate Business Planning Draft Budget for 2012 - 2013.	Noted
43	ANNUAL AUDIT LETTER Introduction Annual Audit Letter Mr Phil Westerman from Grant Thornton thanked the chairman for the opportunity to address the Committee. Mr Westerman advised the Committee that the Annual Audit Letter summarised the key issues arising from the audit work carried out at NHDC during 2010 - 2011 including: The audit of the 2010-2011 end of year accounts; assessment of the Council's arrangements for securing economy, efficiency and effectiveness to ensure Value for Money was achieved and certification of grant claims and returns to various government departments and other agencies. Mr Westerman was pleased to confirm to the Committee that there was an unqualified opinion of the Councils Financial Statements, the working papers were of a good standard and the financial statements had been prepared in accordance with the Code of Practice on Local Authority and that an unqualified opinion had been given on Value for Money at NHDC. The Committee noted that no claims had been qualified and three had been amended. Although the Annual Audit had been successful Grant Thornton had three key areas for consideration by NHDC which would improve the arrangements for the 2011 - 2012 Audit viz. The achievement of financial plans to comply with the Government's Comprehensive spending Review and the announcement of the Local Government Finance Settlement; That suitable monitoring arrangements should be put in place to maintain the high standard of Internal Audit Support following the creation of the Shared Internal Audit Service at Hertfordshire County Council and the recommendations made regarding the accuracy of the Council's property and equipment records and valuation processes should be instigated. Mr Westerman concluded his report with confirmation that the grants analysis as listed at Section 4 of the Annual Audit Letter was underway and would be reported on at the next meeting of this Committee on 16 January 2012. The Chairman thanked Mr Westerman for the presentation of the Annual Audit Letter and upon enquiry there were no questions of Grant Thornton but the Committee were pleased to note the continued non qualification of the NHDC financial statements and annual accounts. RESOLVED: (1)That the main audit conclusions from Grant Thornton concerning the 2010-2011 Accounts in the Annual Audit Letter be noted and welcomed; (2)That confirmation by Grant Thornton on proper arrangements for the use of resources and the unqualified Value for Money statement in the year ended 31 March 2011 be noted and welcomed; (3)That the key areas for action by NHDC identified by Grant Thornton: Achieve financial plans following the Comprehensive Spending Review and Local Government Finance Settlement, suitable monitoring arrangements for Internal Audit support (SIAS) and response to the accuracy of the Council's property, plant and equipment records and valuation processes be noted. REASON FOR DECISION: To allow the Finance, Audit and Risk Committee comment as appropriate on the Annual Audit Letter.	Noted
44	FINANCIAL RESILIENCE REPORT Introduction Financial Resilience Mr Denis Thorpe of Grant Thornton thanked the Chairman for the opportunity to address the Committee and advised the Committee that this was the first time that a Financial Resilience - Value for Money report which had to determine whether NHDC had the proper arrangements in place for securing financial resilience. Mr Thorpe confirmed that the audit had examined: The key indicators of financial performance; the approach to strategic financial planning; approach to financial governance and the approach to financial control. The Committee noted that the traffic light system had been used to rate the findings and especially that there were no red items and that there were 18 green rating and only five ratings at amber and were pleased to note that the four key indicators were all at green. The Chairman thanked Mr Thorpe for the presentation and enquired if there were any comments on the report or the recommendations for the four key indicators. The Committee noted the comments and observations made by Grant Thornton at this first Financial Resilience - Value for Money report on the last financial year and that there would be a review of a three year trend. RESOLVED: (1)That the details of the Overview of Arrangements observations and summary level assessment be noted; (2)That the recommendations for: Key Indicators of Performance; Strategic Financial Planning; Financial Governance and Financial Control be noted; (3)That the comments and observations on the Key Indicators be noted; (4)That the comments and observations on Strategic Financial Planning be noted; (5)That the comments and observations on Financial Governance be noted; (6)That the comments and observations on Financial Control be noted; REASON FOR DECISION: To allow the Finance, Audit and Risk Committee comment as appropriate on Financial Resilience at NHDC.	Forwarded
45	FUTURE MEETINGS - POSSIBLE AGENDA ITEMS Introduction There were no suggestions for any additional reports other than the Cost of Democracy update as per Minute 37 above.	Noted

Published on Thursday, 5th January, 2012

9.32p.m.