Agenda and minutes

Audit, Governance & Standards
Monday, 29th July, 2019 7.00 pm

Venue: Committee Room 2 Town Hall. View directions

Contact: Jess Bayley  Tel: 01527 64252 Ext 3268

Items
No. Item

1.

Apologies and named Substitutes

Minutes:

An apology for absence was received on behalf of Councillor David Thain.

2.

Declarations of Interest

To invite Councillors to declare any Disclosable Pecuniary Interests and/or Other Disclosable Interests they may have in items on the agenda, and to confirm the nature of those interests.

 

Minutes:

There were no declarations of interest.

3.

Minutes pdf icon PDF 118 KB

Minutes:

RESOLVED that

 

the minutes of the meeting of the Audit, Governance and Standards Committee held on Thursday 25th April 2019 be approved as a true and correct record and signed by the Chair.

4.

Public Speaking

To invite members of the public who have registered in advance of the meeting to speak at the Committee.

Minutes:

The Committee was advised that no members of the public had registered to speak on this occasion.

5.

Monitoring Officer's Report - Standards Regime pdf icon PDF 73 KB

Minutes:

The Executive Director of Finance and Corporate Resources presented the Monitoring Officer’s report for Members’ consideration.

 

Members were advised that the Monitoring Officers in Worcestershire had reviewed the findings in the recent review that had been undertaken of standards in public life, also known as the Nolan report.  The proposals arising from this review would be reported for Members’ consideration at the following meeting of the Committee.

 

There was one complaint that the Monitoring Officer was in the process of reviewing.  The outcomes of this investigation would be reported at the following meeting of the Committee.

 

A significant amount of training had been provided to Members since the previous meeting of the Committee as part of the new member induction programme.  Members praised all those involved in organising and delivering Members’ training in 2019 and noted that turnout at training sessions had been much higher than in previous years.

 

Officers were continuing to work on reducing the amount of paperwork that was generated for Committee meetings.  The Committee agreed that all Members should be notified that they needed to opt in to becoming paperless for Committee meetings.

 

RESOLVED that

 

the report be noted.

6.

General Dispensation Report pdf icon PDF 74 KB

Minutes:

The Executive Director of Finance and Corporate Resources presented a report which detailed proposals in respect of granting Members both Individual Member Dispensations and general dispensations to participate in Committee meetings when discussing items in which they might have a pecuniary interest.  Dispensations could be granted by the Committee in specific circumstances, as set out in Section 33 of the Localism Act 2011.

 

General dispensations were generally requested for all Members to enable them to debate and vote on important issues that they all had a pecuniary interest in, such as Council Tax. 

 

Individual Member Dispensations had been requested by Councillors David Thain and Jenny Wheeler.  Due to their role as non-voting Directors on the Redditch Town Centre Partnership they had requested an independent Member Dispensation to enable them to take part in the debate and vote in relation to any items involving the regeneration of Redditch town centre.  Officers confirmed that the role of Members on the town centre partnership differed from the Members’ role on the Rubicon Leisure Shareholders’ Committee as the latter were not appointed as directors.

 

RESOLVED that

 

1)        any new Individual Member Dispensations (IMDs) requested by Members up to the point of the meeting, and as advised by the Monitoring Officer at the meeting, be granted under section 33 (2) of the Localism Act 2011, to allow those Member(s) to participate in and vote at Council and Committee meetings in the individual circumstances detailed;

 

2)        the previously granted general dispensation in relation to allowing Members to address Council and Committees in circumstances where a member of the public may elect to speak be re-granted under section 33 (2) of the Localism Act 2011, to allow Members to participate in and vote at Council and Committee meetings when considering these matters;

 

3)        subject to the caveat set out in paragraph 3.10 of this report in relation to setting the Council’s Budget, the Audit, Governance and Standards Committee grants dispensations under Section 33 (2) of the Localism Act 2011 to allow all Members to participate in and vote at Council and Committee meetings when considering the setting of:

 

a)        the Budget;

b)        Council Tax;

c)        Members' Allowances; and

d)        Council Rents;

e)        Non-Domestic Rates – Discretionary Rate Relief Policy and Guidance affecting properties within the Borough;

 

4)        it be noted that all dispensations granted by the Committee take effect on receipt of a written request from Members for such a dispensation and where Members may have a Disclosable Pecuniary Interest in the matter under consideration, which would otherwise preclude such participation and voting; and

 

5)        it be noted that any new or re-granted dispensations will remain valid until the first meeting of the Audit, Governance and Standards Committee following the next Borough Council Elections in 2020.        

7.

Regulation of Investigatory Powers Act 2000 (RIPA) Report pdf icon PDF 69 KB

Additional documents:

Minutes:

The Executive Director of Finance and Corporate Resources presented a report in respect of the Regulation of Investigatory Powers Act (RIPA).  Members were advised that the Council could undertake covert surveillance in certain circumstances.  In 2012 the criteria for using the RIPA powers had tightened, with Councils required to demonstrate that the use of covert surveillance was proportionate and for this to be approved by a senior magistrate.  The Council had not utilised RIPA powers in the period since 2012 but the authority was still required to have a RIPA policy.  However, a desktop review of the Council’s RIPA policy had been undertaken and it had been found that training needed to be provided to those Officers who were likely to use the powers and that the Council should be reviewing the RIPA policy on an annual basis.

 

Members were advised that Officers employed by Worcestershire Regulatory Services (WRS) were most likely to need to use the powers provided in the RIPA policy.  As WRS was a shared service it applied the RIPA policy that was relevant to the particular local authority that it was serving.

 

The potential for RIPA powers to be used to tackle the issues of fly tipping and housing benefit fraud respectively was briefly discussed by the Committee.  Officers explained that the Department for Work and Pensions (DWP) would identify any problems in respect of housing benefit fraud, particularly as many benefit claimants were now in receipt of Universal Credit.

 

The Committee questioned whether the Council had undertaken any assessments of the potential to use RIPA powers since 2012.  The Executive Director of Finance and Corporate Resources explained that she was the lead senior officer responsible for RIPA and she was not aware of any such assessments having taken place.  Furthermore, no examples of other district Councils using these powers could be provided for Members’ consideration.

 

Members were asked to note that the Council did use cameras to record the surrounding environment.  However, this was undertaken on an overt basis as signs were displayed warning people that cameras were filming in the area.

 

The debate concluded with a discussion about the training that would be delivered to relevant Officers in respect of using the RIPA powers.  Officers explained that it was likely that this training would be delivered on a face-to-face basis.

 

RESOLVED that

 

1)        the Council’s RIPA Policy as reviewed, be endorsed; and

 

2)        the update on RIPA activity be noted.

8.

External Audit - Audit Findings Report 2018/19 - To follow pdf icon PDF 65 KB

Additional documents:

Minutes:

The Engagement Lead and Manager from the external auditors, Grant Thornton, presented the Audit Findings report 2018/19.  During the presentation of this report the following matters were highlighted for Members’ consideration:

 

·                The external auditors were responsible for reaching an opinion on the Council’s statement of accounts, for issuing a value for money audit and for identifying any areas of concern. 

·                The external auditors had concluded that a statutory recommendation, under Section 24 of the Local Audit and Accountability Act 2014, needed to be issued to the Council.

·                This was an unusual step to take but the external auditors had issued the Section 24 notice due to concerns about the financial sustainability of the Council’s general fund and Housing Revenue Account (HRA).

·                Specifically the external auditors were concerned that the remaining balances in the general fund and the HRA were not sufficient for the Council to continue to use them to balance the budget and therefore a significant amount of savings would need to be achieved by the Council in 2019/20.

·                Through issuing the Section 24 the external auditors were encouraging the Council to take urgent action before it became too late for the Council to balance its budget in future years.

·                In issuing the Section 24 notice Grant Thornton was not seeking to criticise Officers.  Members were advised that the Council’s Section 151 Officer and the Financial Services team had acted professionally and provided good advice to Members.

·                Unfortunately, Grant Thornton had identified that there was a problem in terms of elected Members’ reluctance to take big decisions as well as short-term planning by elected Members when setting the Council’s budget.

·                As part of the Section 24 notice Grant Thornton was required to make recommendations in respect of managing its budget moving forward. 

·                The Council was required at a public meeting of the Audit, Governance and Standards Committee, to confirm whether the Council accepted those recommendations and, if so, how the local authority intended to respond. 

·                As many Members and Officers would be on leave in August it was suggested that a response should be received by the end of September 2019.

·                The external auditors were proposing three recommendations which officers were suggesting should be accepted by Members.

·                The recommendations focused on the need to balance the Council’s budget in 2019/20 without using funding from balances, the need to develop a savings plan that would ensure the budget balanced in 2020/21 and the need to develop a realistic financial plan for 2021/22.

·                A key reason for the external auditor’s decision to issue the Section 24 was the fact that the Council’s balances had been reducing at a significant rate.  This was not sustainable in the long-term and if repeated in 2019/20 would cause balances to fall below the level recommended by the Section 151 Officer.

·                The process in respect of the Council’s financial statements had also been challenging, with the external auditors having to work significant overtime in order to meet deadlines and there would be an additional financial cost  ...  view the full minutes text for item 8.

9.

Grant Thornton (external audit ) Audit Fee Letter 2019/20 - To follow pdf icon PDF 61 KB

Additional documents:

Minutes:

The Engagement Lead for Grant Thornton presented the Audit Fee Letter for 2019/20.  The Committee was advised that the external auditors were required to issue an audit fee letter every year.  The Council’s fee was set by the external auditor’s regulators.  The fee would cover the costs of auditing the Council’s accounts but not the costs of auditing Rubicon Leisure.

 

The fee had not increased since 2018/19.  That had been the first year of the Council’s existing contract with Grant Thornton and it was likely that the fee would remain at the same level, under the terms of the contract, in 2020/21.

 

RESOLVED that

 

the fee be agreed.

10.

Audited Statement of Accounts 2018/19 - To follow pdf icon PDF 61 KB

Additional documents:

Minutes:

The Financial Services Manager presented the Council’s audited statement of accounts for 2018/19.  A lot of the detail had already been outlined for Members’ consideration during a briefing session.  There remained some issues with Property, Plant and Equipment (PPE) but it was anticipated that this would be resolved by 31st July.  A minor typographical error had been identified in the accounts since their publication and an updated page from the accounts was circulated for Members’ consideration at the meeting (Appendix 1). 

 

There were a small number of areas that would need to be resolved after the Committee meeting and by Wednesday evening, though it was not anticipated that this would lead to any material differences.  Should any material changes occur the external auditors would discuss these with the Section 151 Officer and Members could agree to delegate power for her to sign off on these and any other changes to the accounts after the Committee meeting.  Any amendments that changed the final figure in the accounts would be reported back to Members at the following meeting of the Audit, Governance and Standards Committee.

 

RESOLVED that

 

1)        the Statement of Accounts 2018/19 be approved; and

 

2)        the Committee delegate any final changes on the Statement of Accounts to the Executive Director of Finance and Corporate Resources following consultation with the Chair of the Audit, Governance and Standards Committee and Grant Thornton.

11.

External Assessment Update Report pdf icon PDF 138 KB

Minutes:

The Head of the Worcestershire Internal Audit Shared Service presented an update in respect of the external assessment that had been undertaken of the Internal Audit Shared Service in Worcestershire.  An action plan had been developed to ensure that the Internal Audit Service could respond to the eternal assessor’s recommendations and Members were advised that all of these actions had now been completed.  A further external assessment would be undertaken in two and-a-half years’ time and the service would respond to any recommendations that were made at that date.

 

There were no direct financial implications to the Council arising from work on the external assessment.  There were contingency days built into the Internal Audit Plan that could be used for this purpose at no additional cost to the Council.  In fact Members were advised that there had been an underspend on the Internal Audit Service for each year of the shared service and the savings arising from this had been redistributed amongst partner organisations, including Redditch Borough Council.

 

RESOLVED that

 

the external assessment update report and implementation progress be noted.

12.

Internal Audit - Annual Report 2018/19 pdf icon PDF 370 KB

Minutes:

The Head of the Worcestershire Internal Audit Shared Service presented the Worcestershire Internal Audit Annual Report for 2018/19.  During the presentation of the report the following points were highlighted for Members’ consideration:

 

·                The report incorporated a combination of all of the update reports that had been provided to the Committee during the 2018/19 municipal year.

·                Any risks identified during internal audits were raised for the attention of the Executive Director of Finance and Corporate Resources.

·                There was a slight difference between the number of planned audit days and the number that had actually been undertaken, due to the Internal Audit team reviewing the core financial systems on a rolling basis over quarter 1 to 3 and due to the nature of the reviews requiring some additional resource.

·                There had been an increase in the number of high priority recommendations that had been issued by the Internal Audit team.  However, the majority of findings had been moderate.

·                There had also been an increase in the number of limited assurance levels that had been identified.  A lot of action was being taken by Officers to address this.

·                Any exceptions of concern were reported to the Audit, Governance and Standards Committee. In the previous year an exception had been reported in relation to Disabled Facilities Grants (DFGs) and the Internal Audit team had therefore monitored this area closely during the year.

·                Housing Services also continued to be closely monitored, following the identification of a number of issues within the department a few years previously.

·                The Internal Audit team undertook a self-assessment at the end of each year to identify areas that could be improved.  The Head of the Worcestershire Internal Audit Shared Service had identified five areas for improvement and these would be addressed by December 2019.

 

Following the presentation of the report Members discussed a number of areas in detail:

 

·                The questionnaires that were issued to fourth-tier managers and the issue with resources that had been raised in their responses.  This had been raised as an area of concern by some officers.  However, this did not necessarily mean that lack of resources was a significant risk.

·                The possibility that sufficient staff numbers were in place but that they were not structured appropriately.  For example Members were advised that the DWP had found the Council had sufficient staff in the Benefits team but too few managers so new managers had been employed and there were now three team leaders for the service.

·                The potential implications of audits where limited assurance was identified.  Members were informed that any internal audits that identified limited assurance were considered by the whole of the Corporate Management Team (CMT) and not just by individual Heads of Service.

·                The limited assurance in respect of Benefits Services and the implications for vulnerable residents.  The Committee was informed that the Council’s approach to delivering this service had changed and significant improvements had been made.

·                The potential impact that financial cuts as well as savings could have on service delivery and the  ...  view the full minutes text for item 12.

13.

Internal Audit Plan 2019-20 pdf icon PDF 106 KB

Minutes:

The Head of the Worcestershire Internal Audit Shared Service presented the Internal Audit Plan for 2019/20 for Members’ approval.  The draft content of the plan had been considered by Members at the previous meeting of the Audit, Governance and Standards Committee.  No material changes had been made since that meeting of the Committee.  The number of days for the Internal Audit team’s work remained at 400.  This was a risk based plan and any changes mid-year would be discussed further with the Executive Director of Finance and Corporate Resources.

 

RESOLVED that

 

1)        the 2019/20 Audit Plan be approved; and

 

2)        the Key Performance Indicators be approved.

14.

Financial Savings Monitoring Report pdf icon PDF 54 KB

Additional documents:

Minutes:

The Executive Director of Finance and Corporate Resources presented the Financial Savings Monitoring Report for Members’ consideration.  The Committee was informed that the majority of the savings that had been incorporated into the Medium Term Financial Plan for 2018/19 had been delivered.  The exceptions to this were £4,000 in corporate savings and £50,000 in proposed savings on income from promotions.  In total £670,000 of savings had been delivered in the financial year.

 

Officers would start to report on delivery of savings in 2019/20 in the financial monitoring update report for the first quarter of the year. 

 

RESOLVED that

 

the final financial position for savings as presented in the report be noted.

15.

Corporate Governance and Risk Update To follow

Minutes:

The Executive Director of Finance and Corporate Resources confirmed that an update in respect of the Council’s corporate governance and risk arrangements would be provided as part of the action plan update to the Committee at the extra meeting that Members had requested to take place in September 2019.

16.

Audit, Governance and Standards' Work Programme 2019/20 pdf icon PDF 54 KB

Minutes:

The Senior Democratic Services Officer (Redditch) advised that the Committee’s work programme would be updated to include the additional meeting that Members had requested as well as any items that would be considered at that meeting.

 

Members noted that a number of reports had been published late for the meeting.  This did not represent good governance and made it difficult to prepare for the meeting.  Members requested that in future reports should be published in the main agenda pack for the meeting wherever possible.

Minutes Appendix 1 pdf icon PDF 1 MB