To approve as a correct record the minutes of the meeting of the Audit Committee held on 13 January 2014 (copy attached). 

RESOLVED

that the minutes of the meeting of the Audit Committee held on 13 January 2014 be confirmed and signed by the Chairman as a correct record.

To receive from Members any declarations of interest.

None.

To receive any announcements from the Chairman and any matters of communication.

The Chairman drew attention to an error on the agenda which stated that Councillor Mrs B Coleman, instead of Councillor D Jones, was a member of the Committee. 

The Chairman advised the meeting that a presentation on the outcome of the review of Council procedures relating to the employment of contractors and consultants would take at the end of item 11 (Internal Audit Progress Report).  A copy of the slide pack was circulated to Members in preparation for the presentation.

(Note: Minute A/13/94 below also refers).

To receive petitions from members of the public in accordance with the Public Participation Procedure as set out in Annex 2 of Part A4 of the Constitution.

No petitions were received from members of the public in accordance with the Public Participation Procedure as set out in Annex 2 of Part A4 of the Constitution.

To receive any questions, statements or deputations from members of the public in accordance with the Public Participation Procedure as set out in Annex 1 of Part A4 of the Constitution.

No questions, statements or deputations were received from members of the public in accordance with the Public Participation Procedure as set out in Annex 1 of Part A4 of the Constitution.

To consider a report by Ernst & Young LLP which sets out how the company intends to carry out its responsibilities as the Council’s auditor.

The Committee considered a report from Ernst & Young LLP which set out how the company intended to carry out its responsibilities as the Council’s external auditor.  The report provided Members with a basis to review the company’s proposed audit approach and scope for the 2014 audit in accordance with the requirements of the Audit Commission Act 1998, the Code of Audit Practice, the Standing Guidance, auditing standards and other professional requirements and also to ensure that Ernst & Young’s audit was aligned with the Committee’s service expectations.  The report also summarised Ernst & Young’s assessment of the key risks which drove the development of an effective audit for the Council and outlined the company’s planned audit strategy in response to those risks.

The Ernst & Young representative introduced the report and highlighted particular issues for Members’ attention.  With reference to there no longer being a requirement to certify council tax benefits subsidy claims under the Audit Commission’s certification arrangements the representative stated that the 2013/14 fee figure did not yet reflect any corresponding reduction. She stated that this certification work represented approximately 12% (£6k) of the fee.

The Chief Finance Officer referred to the changes in how councils accounted for business rates from 2013/14 following the localisation of the scheme under which councils had to account for the provision of appeals against rateable values.  He advised that the Valuation Office Agency was experiencing a substantial backlog in processing the appeals and so, having taken advice and reviewed the outstanding appeals, the Council had made what it believed to be suitable provision in the accounts should payments be required as a result of the appeal outcomes.

NOTED

the Audit Plan for the year ending 31 March 2014.

To consider a report from Ernst & Young LLP which provides an update on the progress made by the company in carrying out the Council’s 2013-14 audits.  The report also includes, as an appendix, a briefing document on issues which might have an impact on the Council, the local government sector and the audits undertaken by Ernst & Young.

The Committee considered a report from Ernst & Young LLP which provided an update on the progress made by the company in carrying out the Council’s 2013/14 audit.  The report also included, as an appendix, a briefing document on issues which might have an impact on the Council, the local government sector and audits undertaken by Ernst & Young.

The Ernst & Young representative introduced the report and updated Members on various issues.  With regard to the value for money conclusion assessment she advised the meeting that interim feedback on the conclusion work would be reported to the Committee’s meeting in June. Turning next to the results of work on the Council’s 2012-13 claims and returns the Ernst & Young representative confirmed that the Department of Works and Pensions (DWP) had not required the Council to carry out additional work in respect of the qualification letter on the 2012/13 housing and council tax benefits claim.  Last, with regard to the fees for 2014/15, the Ernst & Young representative stated that the fee would be reduced following the end of the requirement to certify the council tax benefits subsidy claims.

In response to a question by a Member on the impact of the Local Audit and Accountability Act 2014, which made provision for the Audit Commission to end on 31 March 2015, the Ernst & Young representative emphasised that there would be no impact on the Council.  She explained that a transitional body would manage the current round of supplier contracts and when these had finished councils would be free to appoint their own auditors, though this would be overseen by an Independent Auditor Panel.

The Ernst & Young representative drew Members’ attention to an article in the briefing document which set out the call for stronger audit committees.  She pointed out that this actually referred to audit committees operating in the private sector business environment, and there was no requirement to review the membership and skills base of local authority audit committees.  Nonetheless, discussion took place on the possible benefits of augmenting the Council’s Audit Committee with independent members equipped with specialist skills and experience.  The Executive Member for Corporate Resources undertook to consider this matter further.

NOTED

the Audit Progress Report on the 2013/14 audit.

To consider a report which provides an update on the work of the Benefit Fraud Investigation Team.

The meeting considered a report by the Chief Finance Officer which updated the Committee on the work undertaken by the Council’s Benefit Fraud Investigation Team (BFIT).

The Head of Revenues and Benefits advised that a typographical error had occurred in paragraph 1 of the report and stated that the Department for Work and Pensions (DWP) Administration Grant awarded to fund the BFIT was currently £1,280,000 and not £2,280,000 as stated.

The Head of Revenues and Benefits then introduced the report, Members noting the background information on the Council’s BFIT together with the Council’s fraud policies, Team performance information, sanctions available and case studies.  The meeting then considered the planned implementation of a national Single Fraud Investigations Service (SFIS), incorporating the investigative capability of the DWP, BFIT and Her Majesty’s Revenue and Customs (HMRC), led by the DWP and with the role of investigating all social security benefit fraud.  The Head of Revenues and Benefits drew Members’ attention to the start of the forthcoming SFIS roll out in October 2014.  He added that it was expected that some of the Council’s resources would be moved across to the new body though, as the investigation of council tax fraud appeared to be remaining under the remit of local authorities, some staff would still be required by the Council to undertake this role.  Members expressed some concern that the implementation of the SFIS could lead to the focusing of efforts on a relatively small number of major frauds to the detriment of smaller, local offences.

Discussion followed on the performance status of the Central Bedfordshire BFIT in comparison with other, similar, local authorities.  The Head of Revenues and Benefits stated that the Audit Commission was due to supply this information and he would circulate it to Members if required.  Comment was also passed by a Member on the outcome of fraud prosecutions at another local council and the apparent absence of a consistent level of sentencing.

In conclusion the Chairman, on behalf of the Committee, thanked the Head of Revenues and Benefits and his team for the good work they were undertaking.  The meeting also indicated that it would wish to receive regular updates on the Team’s work.

RESOLVED

1          that the Audit Committee affirm its support for the counter benefit fraud work undertaken by the Council’s Benefit Fraud Investigations Team;

2          that an annual update report be submitted to the Committee on the counter benefit fraud work carried out in Central Bedfordshire.

3          that comparative performance data relating to counter benefit fraud work undertaken by local authority Benefit Fraud Investigation Teams be circulated to members of the Audit Committee when made available by the Audit Commission.

To consider a report which presents the 2014-15 Audit Plan for review and approval.

The Committee considered a report by the Chief Finance Officer which set out the 2014/15 Audit Plan for review and approval.

The Head of Internal Audit and Risk introduced the report and reminded Members that the Committee had approved the Strategic Audit Plan covering the three years 2013/16 at its meeting on 8 April 2013 (minute A/13/45 refers).  The Plan before Members represented the second year of the three year Plan which had been revisited and updated following discussion with senior officers.

The meeting was also aware that, previously, the Audit Plan had been supported by an Internal Audit Strategy which had set out the approach adopted to develop the Plan.  However, the new Public Sector Internal Audit Standards required this information to be included within the Plan itself so the Plan for 2014/15 was presented as one document.

In response to a query on the progress made with the Council’s Asset Register the Chief Finance Officer stated that he was content that the Register reflected all known assets.  Discussion followed on the circumstances under which Central Bedfordshire Council would become aware of assets that were not already recorded and the Chief Finance Officer requested that Members inform him of any such assets so that he could investigate.  Following further discussion the Council’s Executive Member for Corporate Resources stated that should additional work and resources be required to undertake investigative work then the Corporate Resources Overview and Scrutiny Committee would consider the issue.

RESOLVED

that the 2014/15 Audit Plan, as set out at Appendix A to the report of the Chief Finance Officer, be approved.

To consider an update on the progress of work by Internal Audit for 2013/14.

The Committee considered a report by the Chief Finance Officer outlining the progress made against the 2013/14 Internal Audit Plan up to the end of February 2014.  The Head of Internal Audit and Risk reminded Members that a presentation on the review of Council procedures relevant to the employment of contractors and consultants would take place at the conclusion of the report.

The Head of Internal Audit and Risk then introduced the following matters from the report for consideration:

·         Fundamental Systems Audits

·         Other Audit Work

·         National Fraud Initiative (NFI)

·         Fraud and Special Investigations

·         Schools

·         Performance Management

Following discussion the Head of Internal Audit and Risk and the Chief Assets Officer then introduced the presentation.  The meeting was aware that the review had arisen out of the debate which had taken place on this issue at the Audit Committee held on 23 September 2013 (minute A/13/66 refers).

A copy of the slide pack is attached at Appendix A to these minutes.

The meeting noted the various issues identified by the review together with the remedial action which had been taken in response.  The Chief Assets Officer stressed that no issue had become apparent regarding the quality of work undertaken by the consultant which had been appointed but it had become apparent that there were weaknesses in the Council’s procurement process.  As a result mechanisms had been put in place to prevent a future reoccurrence; these included the introduction of more project specific tender specifications, a single point of accountability and responsibility for the life of a contract and the requirement for declarations of interest by interim as well as permanent staff. The Head of Internal Audit and Risk added that the review’s findings were of relevance across the Council as a whole, not only for the Technical Consultancy Services Framework contract, and the Procurement Team were currently examining the adoption of a procurement tool to ensure that, in future, the correct procedures were consistently followed throughout the authority.

The Chief Finance Officer advised that the Council had significantly reduced the level of resources employed from the consultant and the value for money risk had therefore been reduced.

However, despite the officers’ assurances a Member was critical of the time taken to undertake the review and expressed concern at its findings.  He then sought clarification on the responsibilities of finance officers, including their role in the monitoring of the contract, and queried why the information relating to the review had not been included within the body of a report but given to the Committee in the form of a separate presentation. 

In response to these comments the Chairman suggested that the time taken in undertaking the review reflected the officers’ thoroughness.  The Chief Finance Officer then reminded the Committee that it had been he who had suggested that the review take place, that it was a review not an audit and that it had been decided to submit the information as a presentation in order to maximise transparency.  He stressed that the  ...  view the full minutes text for item 94.

To consider an overview of the Council’s risk position as at March 2014.

The Committee considered a report by the Chief Finance Officer which provided an overview of the Council’s risk position as at March 2014.  The Head of Internal Audit and Risk introduced the report and drew Members’ attention to the key revisions which had taken place since the Committee’s last meeting (minute A/13/83 refers). 

To assist Members in their discussions the text from the Risk Summary Dashboard which set out the assessment of likelihood and impact was reproduced in a larger format and circulated at the meeting.

With regard to the forthcoming transfer of responsibility for the management of the Council’s residential care homes a Member highlighted that the transfer, which was due to take place before the next meeting of the Committee took place, should be recognised as a high risk on the Dashboard until it had been implemented.  In response the Head of Internal Audit and Risk reminded the meeting that the report recognised that future arrangements for the management of the care homes were a strategic risk even though the risk was not currently included on the Dashboard itself.

The Council’s Executive Member for Children’s Services referred to strategic risk STR0010 and the risk of there being a failure to respond to the increasing number of childcare cases and implement child protection procedures due to insufficient resources and a professional/skilled workforce.  He queried whether the impact would be any greater to Central Bedfordshire Council than to neighbouring authorities because of the Council’s reliance on agency staff.  He also queried the apparent absence of mitigation against the risk.  In reply the Head of Internal Audit and Risk explained that the description/score used within the Dashboard originated from Children’s Services as the client service.  She advised the meeting that the Dashboard was supported by a more detailed document which recorded the mitigation measures and she was therefore able to reassure the meeting that any mitigation was fully recognised.  The Head of Internal Audit and Risk added that this issue was included on the Dashboard because it represented a national problem whatever action was implemented locally. 

The Executive Member for Children’s Services stressed that there was an extremely low chance of failing to respond because the Council used agency staff to fill any shortfall in its workforce.  The Chief Finance Officer also reminded the meeting that the Council had taken action in the budget to make additional resources available to mitigate this risk.

NOTED

the strategic and operational risks facing Central Bedfordshire Council as set out in the Risk Summary Dashboard attached at Appendix A to the report of the Chief Finance Officer.

To consider a summary of high risk recommendations arising from the Internal Audit reports together with the progress made in their implementation.

The Committee considered a report by the Chief Finance Officer which summarised the high priority recommendations arising from Internal Audit reports and the progress made in implementing them.

NOTED

the report on the high risk recommendations arising from Internal Audit reports and the progress made in implementing the recommendations to date.

To consider the Committee’s proposed work programme for 2014/15.

Members considered a report by the Chief Legal and Democratic Services Officer which set out the proposed Work Programme for the Committee for the 2014/15 municipal year.

The meeting was aware that it had earlier approved the submission of an annual report on counter benefit fraud (minute A/13/92 refers).

RESOLVED

that the proposed Audit Committee Work Programme for the municipal year 2014/15, as attached at Appendix A of the report of the Chief Legal and Democratic Services Officer, be approved subject to including an annual counter benefit fraud update to the meeting scheduled for 30 March 2015.