To approve as a correct record the minutes of the meeting of the Audit Committee held on 3 April 2017 (copy attached). 

RESOLVED

that the minutes of the meeting of the Audit Committee held on 3 April 2017 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 following announcements and communications were made:

·         this was the last meeting that Ralph Gould, Head of Financial Control, would attend prior to his retirement.  The Chairman, on behalf of the Committee, thanked Mr Gould for his excellent guidance to Members and wished him well.  In response Mr Gould thanked the Committee for its best wishes and expressed his pleasure at having worked at the Council.

·         At the Chairman’s request, and arising from Mr Gould’s forthcoming retirement and the recent retirement of Kathy Riches, the former Head of Internal Audit and Risk, the Director of Resources outlined the resulting changes which had taken place at both individual and team level within Finance and introduced those officers concerned who were present at the meeting.

·         all attendees were asked to silence their mobile telephones.

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 receive a presentation on the unaudited Statement of Accounts for 2016/17.

Members received a presentation on the unaudited Statement of Accounts for 2016/17.  The presentation, entitled ‘Unaudited Statement of Accounts 2016/17 – Presentation to Members 29/6/2017’ was introduced in turn by the Assistant Director of Finance, the Financial Controller and the Head of Financial Control.  A concluding summary was provided by the Director of Resources.

Paper copies of the presentation were circulated at the meeting.  A copy of the presentation is attached at Appendix A to these minutes.

In addition paper copies of the document entitled ‘Extracts from Unaudited Statement of Accounts for the year 2016/17 - Presentation to Members 29/06/2017 – Core Statements and Note 31’ were also circulated at the meeting.  A copy of the document is attached at Appendix B to these minutes.

Points and comments included:

·         the Director of Resources would sign off the draft Statement of Accounts at the end of the meeting.  The Council’s external auditors, Ernst & Young LLP would carry out the audit over the summer and the fully audited Statement of Accounts would be submitted to the Audit Committee on 27 September 2017 for approval.

·         the statutory deadline for producing the draft Statement of Accounts was currently 30 June.  Following changes to the Accounts and Audit Regulations this would be 31 May with effect from the 2017/18 draft Statement (i.e. from 31 May 2018).  Central Bedfordshire had used 2017 as a trial for the change and produced the draft Statement of Accounts so that it was ready to sign on 8 June 2017.  The experience gained would enable a faster preparation process for 2018.  

·         new software for the production of the statement of accounts (commonly known as the ‘Big Red Button’) had been developed by the Chartered Institute of Public Finance and Accountancy (CIPFA) and trialled by a small number of Councils in 2016/17.  Central Bedfordshire was in the first tranche of councils to use it in closing its accounts. The Council had provided a high level of input to the development of the product and had influenced its reporting. Updates by CIPFA should take place later this year for a wider rollout in 2017/18 and it was anticipated that this should help speed up the production of the Statement of Accounts.

·         various questions and points of clarification were raised by Members. 

In conclusion the Chairman thanked the officers for their presentation.

NOTED

the presentation on the unaudited Statement of Accounts for 2016/17.

To consider a letter from Ernst & Young LLP to the Chief Executive setting out the proposed fees for the audit of the Council’s 2017/18 financial statements, Value for Money conclusion and certification of claims and returns.

The Committee received a letter from the Council’s external auditors, Ernst and Young LLP, to the Chief Executive.  The letter confirmed the audit and certification work that the company proposed to undertake for the 2017/18 financial year and the related fees.

Points and comments included:

·         An explanation by the Director of Resources of the current position regarding the arrangements for the appointment of local auditors as from 2018/19.  The Director stated that six different audit companies had been appointed by the Public Sector Audit Appointments Ltd (PSAA) to cover the national area.  The largest company was Grant Thornton UK LLP followed by Ernst and Young and then the remainder.

·         It had been suggested that, nationally, as a result of the changes to way in which auditors were appointed, there would be an 18% reduction in fees paid by local authorities.

NOTED

the 2017/18 annual audit and certification fees letter to the Chief Executive from Ernst & Young LLP.

To consider the draft Annual Governance Statement for 2016/17.

Members considered a report by the Monitoring Officer which sought Members’ approval of the draft Annual Governance Statement for 2016/17.  The Committee noted that the Statement, a copy of which was attached at Appendix A to the report, had adopted a new format in line with the guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA)/Solace in 2016.

Points and comments included:

·         consideration was being given to revising the content of the Statement so that future iterations would be more concise and include assessments rather than be merely descriptive.  Members noted that there was no standard format that could be adopted for the Statement.

·         the opinion that the draft Statement accurately reflected the governance arrangements and the management of risk within the Council.

RESOLVED

that the draft Annual Governance Statement for 2016/17 be approved for submission to the Leader and Chief Executive to be formally signed off.

To consider an update on the work of the Corporate Fraud Investigation Team.

The Committee considered a report which provided an update on the work of the Council’s Corporate Fraud Investigation Team (CFIT) for 2016/17 and those areas which the CFIT intended to concentrate on over the coming twelve months.  The Committee noted that the work programme for the team was jointly developed and delivered by the CFIT and Internal Audit.

Points and comments included:

·         the real savings/income of £241,304 for 2016/17 arising from counter fraud work compared with the total cost of the CFIT of £160k demonstrated the value of the team.

·         nationally, less than half (45.7%) of councils in England had a corporate counter fraud team tackling non-benefit fraud.  In London 93.5% of councils had a corporate fraud team but only 37.4% of councils in the rest of the country had such a team.

·         the publication of the CFIT’s successes was subject to decisions by the local media.  The sanctions taken against those committing fraud were often quite low and it was the threat of publicity which acted as a greater deterrent.

·         at a Member’s suggestion the Chairman undertook to contact the Local Government Association and seek their publication of the Central Bedfordshire Council’s success in its anti fraud work.  The Chairman, on behalf of the Committee, congratulated the CFIT for its successes.

·         the possibility of increasing the level of savings by enlarging staffing numbers in the CFIT.  The Head of Revenues and Benefits advised that there was limited scope to increase the team’s size.  He acknowledged that there were cases which required investigation and more referrals were being made to the team, particularly by Housing.

·         with regard to those persons who were entitled to benefits but didn’t claim the meeting noted that Investigation Officers were therefore able to offer guidance.

·         an update on Blue Badge fraud, its possible extent and the number of applications for a badge.  The Fraud, Welfare and Partnerships Manager stated that there was an element of education in the response to Blue Badge misuse and no formal action was taken unless it was believed that the misuse had been deliberate.

·         care home fees and the obtaining of information from the Probate Office to establish the estate size.  The Head of Revenues and Benefits stated that the information was not accessed automatically but only as part of an investigation following allegations of hidden assets.  Following a query the Head of Revenues and Benefits undertook to establish how another local authority was able to establish the estate size of one of its residents.

NOTED

the update on the work of the Corporate Fraud Investigation Team for 2016/17 and the main areas of work identified for 2017/18.

To consider an update on the governance of the Local Government Pension Scheme.

The Committee considered an update on the governance of the Local Government Pension Scheme (LGPS).

Points and comments included:

·         the creation of pooled investment vehicles for the England and Wales LGPS was progressing and eight pools had submitted business plans to the government.  The Bedfordshire Fund was a member of the Border to Coast Pension Partnership Ltd (BCPP) which had been registered with 12 shareholders reflecting the 12 participating Administering Authorities.

·         The initial transfer of assets to the BCPP pool was expected in 2019.  Members noted all member Funds had contributed money towards the transfer costs.  The Bedfordshire Fund had committed £350k which would be covered by a reduction in management fees.  The Vice-Chairman, as a former trustee, offered his thanks to the Head of Financial Control for his work in this area.

·         the BCCP would be based in Leeds which had been chosen because of its attractive financial centre and communication advantages.

·         the general election had delayed the implementation of further public sector pension and exit payment reforms and it was unclear when the changes would be introduced.

·         the Bedfordshire Fund had implemented an investment strategy and benchmark, linked to the Fund’s liabilities, that sought to provide less volatile returns compared to those Funds with a greater weighting to equities.  At the Bedford Borough Council Pensions Committee on 27 June 2017 the Fund Administrator reported that the market value of the Fund at 31 March 2017 was £2,068m, an increase of £75m since 31 December 2016.

NOTED

the Local Government Pension Scheme update.

To consider the annual report to those charged with governance on the overall adequacy and effectiveness of Central Bedfordshire Council’s financial and other management internal controls.

The Committee considered the annual report by the Head of Internal Audit and Risk to those charged with governance on the overall adequacy and effectiveness of Central Bedfordshire Council’s financial and other management internal controls.  The meeting noted that under the Public Sector Internal Audit Standards (PSIAS), which came into effect in April 2013, the Head of Internal Audit and Risk was required to deliver such a report to those charged with governance, timed to support the Annual Governance Statement (minute AUD/17/8 above refers).

Points and comments included:

·         a query regarding the unplanned resourcing issues which had affected Internal Audit throughout 2016/17.  The Head of Internal Audit and Risk stated that most of these issues had now been resolved.

·         the postponement, at the request of the service area, of the review of Section 106 Agreements.   The Head of Internal Audit and Risk explained that another review on this issue was being carried out and a second would not be undertaken at the same time.  He added that he believed the review was nearing completion.

·         a review of the use of the SWIFT Financials software had covered various areas and the overall weaknesses found had resulted in a limited overall opinion.  Members noted that a replacement was being sought.                                                                                                                                                                                                                                                                                                                 

NOTED

that the 2016/17 Internal Audit Annual Audit Opinion is that the Council’s Internal Control environment continues, overall, to be adequate.

To consider an overview of the Council’s risk position as at June 2017.

The Committee considered a report which provided an overview of the Council’s risk position as at June 2017.

Points and comments included:

·         whilst the strategic risks had been reconsidered and the key revisions set out for Members’ information, operational risks had been omitted from the update pending a more detailed review of the processes.

·         Members felt the different layout used made the data easier to read and should possibly be adopted for future reports.

·         reference by a Member to a recent outcome of partnership working and that the resulting financial impact suggested that the residual likelihood score relating to strategic risk reference STR0009 (Failure of partnerships as a result of conflicting priorities etc) should be increased rather than revised down despite the mitigating actions set out.  The Director of Resources undertook to include this matter for discussion within the ongoing review of risk management activities.

·         the need to monitor the operation of EU General Data Protection Regulation which, once enforceable, could lead to fines of up to £37m for non compliance.  It was noted that the Regulation was far stronger than the current Data Protection Act.  The Head of Internal Audit and Risk stated that the impact of the new Regulation was being considered within the Council.

NOTED

the strategic and operational risks facing Central Bedfordshire Council as set out in the risk Register Dashboard attached at Appendix A to the report of the Director of Resources.

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

The Committee considered a report which summarised the high priority recommendations arising from Internal Audit Reports and the progress made in implementing them.

NOTED

the report setting out the high priority recommendations arising from Internal Audit reports and the progress made in implementing the recommendations to date.

To consider the Audit Committee’s work programme.

Members considered a report which set out the Committee’s work programme.

RESOLVED

1          that the proposed Audit Committee work programme for 27 September 2017 and 8 January 2018, as attached at Appendix A of the report of the Committee Services Officer, be approved subject to resolution 2 below;

2          that the Chief Information Officer be requested to submit a report, if possible, on the impact etc of the EU General Data Protection Regulation to the next meeting of the Committee on 27 September.