To approve as a correct record the minutes of the meeting of the Audit Committee held on 9 April 2018 (copy attached). 

RESOLVED

that the minutes of the meeting of the Audit Committee held on 9 April 2018 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 asked Members to silence their mobile telephones.  He then welcomed Councillor Costin, who had previously been a member of the Committee and who had re-joined in the new municipal year.

To receive petitions from members of the public in accordance with the Public Participation Procedure as set out in Annex 2 of Part 4G of the Constitution.

No petitions were received from members of the public in accordance with the Public Participation Procedure set out in Part 4G 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 4G of the Constitution.

No questions, statements or deputations were received from members of the public in accordance with the Public Participation Procedure set out in Part 4G of the Constitution.

To receive a presentation on the unaudited Statement of Accounts for 2017/18.

The Committee received a presentation on the unaudited Statement of Accounts for 2017/18.  The presentation, entitled ‘Unaudited Statement of Accounts 2017/18 – Presentation to Members 30/05/2018’ was introduced by the Director of Resources, the Head of Corporate Finance and the Financial Controller.

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

In addition to the above, paper copies of the document entitled ‘Extracts from Unaudited Statement of Accounts for the Year 2017/18 – Presentation to Members 30/05/2018 – Core Statements, EFA and Note 31’ were also circulated.  A copy of the document is attached at Appendix B to these minutes.

Points and comments included:

·         The Director of Resources reminded Members that 2018 was the first year in which the Council was required, as were other local authorities, to complete its draft Statement of Accounts by 31 May.  He explained that he would sign off the draft and it would be given to Ernst & Young LLP, the Council’s external auditors, for audit.  The fully audited Statement of Accounts would then be submitted to the Audit Committee at its meeting on 30 July 2018 for approval.  The Director added that a public inspection period would begin on 31 May 2018 and last for 30 days.

·         A Member queried the reference in Note 31 – Officers’ Remuneration to the apparent level of compensation paid to the former Director of Improvement and Corporate Services for her loss of office given her salary and the time she was employed by the Council.  In response the Director of Resources explained that the payment, which took place in 2016/17, was confidential so he had no details available.  However, he believed that it included a sum in lieu of notice and any actuarial strain, if there was any, and possibly accrued annual leave.  Further, it might not have been received by the former officer but, instead, represented a cost to the Council e.g. a payment to the Pension Fund.  The Member queried how he could access further information on this matter.  The Director responded that he was unable to provide additional information as the payments were personal and had taken place during the 2016/17 financial year.  Following comment by the Member, in which he indicated that his role as such on the Council justified access to the information he had requested, the Director offered no further opinion at that point.

·         The Vice-Chairman commented that when the capital programme slipped the inflation rate had to be greater than the interest rate.  The Director of Resources responded that the budget was not inflated and savings were sought to compensate.  He added that, overall, slippage evened out over time.  A Member commented that capital receipts were also delayed so more money was received due to the inflation rate increasing land values.  The Member then sought information on assets held by the Council for sale.  In reply the Director acknowledged that capital receipts had been inflated  ...  view the full minutes text for item 62.

To consider the draft Annual Governance Statement for 2017/18.

The Committee considered a report which sought the Committee’s approval of the Council’s draft Annual Governance Statement (AGS) for 2017/18.

A copy of the draft Annual Governance Statement was attached at Appendix A to the report.

The Principal Lawyer, LGSS Law Ltd referred to paragraph 5 of the report and advised that the wording in the first sentence should be amended by deleting the words ‘the beginning’ and replacing them with ‘section 6’.

Points and comments included:

·         The Chairman commented on how the AGS developed from year to year and the document was not merely a reworking.  He then referred to a reference in section 7 of the Statement to a strategic risk of failure to deliver community cohesion within the context of demographic growth in Central Bedfordshire and how it continued to have an impact on governance.  In response the Director of Resources reminded the meeting of a national report regarding community cohesion.  He explained how, to achieve this locally,  the Council involved town and parish councils, volunteers and community organisations in community engagement.

·         A Member referred to a reference in the Statement to another strategic risk which related to a failure to deliver a major transformation programme within Children’s Services.  He commented that the transformation was not taking place as quickly as he believed it would.  The Director acknowledged that savings had not been achieved as envisaged and, as a result, the issue had been readdressed and was being monitored.

RESOLVED

that the draft Annual Governance Statement for 2017/18 be approved subject to the correction of any typographical errors.

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 of the Head of Internal Audit and Risk to those charged with governance on the overall adequacy and effectiveness of the Council’s financial and other management internal controls.

Points and comments included:

·         The Chairman sought clarification regarding those planned audits in 2017/19 which had been cancelled.  In response the Head of Internal Audit and Risk explained that they had been cancelled for a range of reasons including Internal Audit team capacity and timing, when it was no longer considered appropriate for an audit to take place.  The Director of Resources stressed that service areas were not permitted themselves to defer or cancel audits.  An informal risk assessment was carried out on proposed deferrals and if a risk of fraud was identified the audit would continue.

·         A Member commented that, with regard to the rolling programme of school reviews, only one school had been completed.  In response the Head of Internal Audit and Risk stated that the standard approach had been followed and five other reviews were currently in progress.

·         Following a query by the Chairman the Head of Internal Audit and Risk stated that appointments had been made to two vacant positions within the Internal Audit team and staff numbers were now up to strength.

·         A Member queried how difficult it was to achieve a Full Assurance opinion following a review and how often that happened.  In reply the Director of Resources explained that achieving a Full Assurance opinion was difficult as it could be interpreted as ‘nothing could go wrong’.

·         The Vice-Chairman referred to the review of Swift Financials and how the software related issues had originally been raised under the Bedfordshire County Council (legacy authority) some 10 years earlier.  He stressed the need to make progress.  In response the Head of Internal Audit and Risk stated that he was unaware of the historical context but assured Members that management would be looking to address the control weaknesses as part of the coming project to replace the current software.

NOTED

that the Head of Internal Audit and Risk’s opinion on the Council’s Internal Control environment continues, overall, to be adequate.

To consider a report and presentation on the findings of the Northamptonshire County Council Best Value Inspection, a comparison of the financial and governance positions of Central Bedfordshire Council and Northamptonshire County Council and proposed changes to Central Bedfordshire Council’s existing processes.

The Committee considered a report which discussed the findings of the Northamptonshire County Council (NCC) Best Value Inspection and compared the financial and governance position of Central Bedfordshire Council (CBC).  Arising from the outcomes of the Best Value Inspection the report also set out management actions (in the form of recommendations) for implementation to Central Bedfordshire Council’s existing processes.

Accompanying the report at Appendix A was a slide pack entitled ‘Lessons Learned from the Northamptonshire Best Value Inspection Report’.  The Director of Resources worked through the presentation and expanded on the content where necessary.

Points and comments included:

·         The Chairman referred to the comment in the presentation on the failure to allow Scrutiny at NCC to consider budgetary proposals earlier in their development (in the autumn).  He also drew attention to the comment that CBC also needed to consider this issue as its own current budget timetable was tight and Scrutiny only had a relatively short period to consider proposals.  The Director of Resources explained that it was not suggested that a full draft budget would be submitted for consideration but 5-6 items would be highlighted for Scrutiny to consider at an earlier stage (i.e. October-December).

·         The Director of Resources commented that two KPMG ISA 260 reports stating an adverse opinion on value for money matters were reported to NCC’s Audit Committee without comment and Members were ignored when seeking information.  However, the Director also commented that he was unsure how far KPMG had sought to emphasise the financial situation at NCC and he stressed that external auditors needed to adopt a more rigorous approach in the future.

·         The extent of CBC’s involvement with LGSS, being limited to legal services, was noted.  It was also noted that the Director of Resources role was as a non-executive director who sat on the Board.

·         The former Deputy Director of Legal Services and Monitoring Officer at CBC, had resigned and an executive director was being recruited.  An interim internal appointment had been made.

·         The Director of Resources referred to the level of debt owed to the LGSS Law by NCC and that Council’s control mechanism.  He explained how there would be no lasting impact on cash flow.  With regard to reputation he commented that further mergers could be difficult.

·         The Director of Resources referred to the Best Value Inspection report which stated that it was difficult to see what additional saving had arisen at NCC as a result of the structural grouping and what would have occurred by normal management action.  Further, much of the reported saving was routine service reductions.  At CBC LGSS Law had initially delivered savings but in 2017/18 the outcome had been mixed.  CBC was currently experiencing a large overspend on legal services.  The volume of work had increased partly as the result of directing work through LGSS, rather than other third parties as would have occurred in the past so there were no hidden charges, but mainly because of an increase in the volume of cases from Children’s  ...  view the full minutes text for item 65.

To consider the Audit Committee’s work programme.

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

Given the lengthy period between the next meeting of the Committee on 30 July 2018 and the following meeting on 19 November 2018 the Chairman assured Members that should any issues arise during that period then they would be brought to the Committee’s attention.

RESOLVED

that the proposed Audit Committee work programme, as set out at Appendix A to the report of the Committee Services Officer, be approved subject to including the following item:

·         30 July 2018 – Update on the operation of LGSS Law Ltd within Central Bedfordshire Council.