Agenda and minutes

Apologies for absence were received from Councillor Spilsbury. Councillor Harvey attended the meeting as Councillor’s Spilsbury named substitute.

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.

There were no declarations of interest.

The minutes of the meeting of the Audit. Governance and Standards Committee held on 23^rd March 2023 will be considered at this meeting.

The minutes of the Audit, Governance and Standards Committee meeting held on 23^rd March 2023 were submitted for Members’ consideration.

RESOLVED that

the minutes of the meeting of the Audit, Governance and Standards Committee held on 23^rd March 2023 be approved as a true and correct record and signed by the Chair.

Members of the public have an opportunity to speak at meetings of the Audit, Governance and Standards Committee. In order to do so members of the public must register to speak by 12 noon on 29^th May 2023. A maximum of 15 minutes will be allocated to public speaking.

There were no registered public speakers on this occasion.

The Head of Legal, Democratic and Property Services presented the Monitoring Officer’s report and highlighted that another four Borough Council complaints all relating to the same incident had been received. Whilst the complaints had been managed locally, they were again related to the Members’ use of social media. In response, training for new Members had been reinforced and additional more targeted training was to be delivered throughout the municipal year, including a bespoke training with member of the police force.

Members were updated on the position regarding an Independent Person for the Council the purposes of section 27 (7)(a) of the Localism Act 2011. It was noted that the Independent Person assisted and supported the Monitoring Officer in the complaint investigation process. The term of the existing Independent Person for Bromsgrove District Council, Mr Mel Nock (who also served the Redditch Borough Council and Feckenham Parish Council as and when required), had come to an end.

The options under consideration by the Monitoring Officer were either carrying out a local recruitment process or arranging for the Council to join the existing retained pool of Independent Persons that was set up by six other authorities in Worcestershire working together in 2012. Options were being considered moving forward but it was proposed that the Council retain the independent services of Mr Nock to support the Monitoring Officer in the management of Member to Member complaints. A report on the option appraisal with regards to the Independent Person would be submitted to a future meeting of the Committee. In the interim it was noted that Mr Nock agreed to continue in the formal Independent Person role on a temporary basis to cover the transition period.

Members also received an update on Member training and it was reported that following the local elections in May 2023, a comprehensive Member

training programme had been arranged for both new and returning Members.

It was underlined in response to a question that local complaints would always try to be resolved locally in the first instance. With regards to training it was reported that the view of the Group Leaders and the Monitoring Officer was that Member training should be hybrid where necessary, with both in person and remote attendance options, to make it convenient for Members to fit training attendance around their work commitments.

RESOLVED that

the Monitoring Officer’s report be noted.

The General Dispensation Report was presented for Members’ consideration and it was explained that purpose of this report is to provide members with an opportunity to consider and agree a number of general dispensations for all

Councillors.

It was noted that as the first Committee meeting of the municipal year was taking place earlier in the year than normally, there was not enough time to discuss and consider with Members any individual dispensations they might wish to apply for. As a result a separate report on individual member dispensations would be brought to the next meeting of this Committee.

RESOLVED that:

1)    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;

2)    subject to the caveat set out in paragraph 3.6 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;

d) Council Rents; and,

e) Non-Domestic Rates – Discretionary Rate Relief Policy

and Guidance affecting properties within the Borough;

3)    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

4)    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 2024.

The Committee received the Annual Update Report on the Regulation of Investigatory Powers Act 2000 (RIPA). It was noted that the Council had not exercised its powers under RIPA since changes in legislation introduced in 2012.

RESOLVED that:

(1)  the Council’s RIPA Policy (version 8.2) be endorsed; and

(2)  the update on RIPA activity as described in this report be noted.  

To receive a verbal report from the Feckenham Parish Council Representative on the Parish Council’s Standards matters.

The Feckenham Parish Council Representative confirmed that he had no announcements or comments to make on this occasion.

The External Auditors from Grant Thornton presented a report on progress in delivering the external audit function for the Council and provided a wider audit sector update.

It was recapped that in October 2022 Redditch Borough Council was issued with statutory recommendations under Section 24 of the Local Audit and Accountability Act 2014 for non-delivery of the 2020-21 Statement of Accounts. This was reported to be caused primarily by issues with the cash receipting module of the Council’s current TechnologyOne ledger system and issues relating to data migration from the legacy financial ledger, eFinancials, to the Council’s current ledger.

Members were informed that the Council’s Section 151 Officer had not signed off the draft 2020-21 Statement of Accounts to date and thus financial statements for 2020-21 had not yet been submitted to the External Auditor.

The External Auditor reported that testing had been performed on the data migration event from the Council’s legacy to the new financial ledger system. The migration of 25 transactions was manually tested and it was confirmed that these transactions were migrated correctly. The External Auditor explained, however, that the number of transactions tested represented a negligible volume of total transactions processed in the data migration event and the External Auditor had been unable to gain sufficient on this basis of this testing that the whole data migration event was performed correctly.

Automated solutions for gaining assurance over the transferred data through testing back-ups taken from the eFinancials system were currently considered as this would provide a much broader coverage of data than could be tested manually. The Interim Director of Finance commented that enquiries had been made with the legacy financial ledger provider, eFinancials, about re-gaining access to transactional reports from that system. This would necessitate a contract extension.

It was reported that the Council’s subsidiary, Rubicon Leisure, had issued a disclaimer opinion for the company’s 2021-22 financial statements. The External Auditor needed to consider the impact of this on the audit of Council’s 2020-21 and subsequent financial statements. The Interim Director of Finance commented that the main reason behind the disclaimer opinion lied with the issues with the cash receipting module of the new financial ledger, with all receipts recorded under one entity instead of being directed to one of three separate entities (Redditch Council, Rubicon Leisure, Bromsgrove Council) depending on the transaction. This issue was unresolved throughout the 2021-22 financial year which impacted on the audit of Rubicon accounts.

The External Auditor reported on their Value for Money responsibilities and in doing so noted that an Interim Auditor’s Annual Report for the 2020-21 financial year was provided to the Committee in November 2022, and it was anticipated that a joint Interim Auditor’s Annual Report for financial years 2021-22 and 2022-23 would be issued later in the year. It was also noted that certification work on the Housing Benefit subsidy claim for 2021-22 was almost completed.

It was reported that there was a likelihood of external audit fee variation due to  ...  view the full minutes text for item 9.

The Interim Director of Finance presented the Risk Management Report and in doing so highlighted that this was now the fourth cycle of reviewing Corporate and Departmental Risks since the original baselining of risks in April 2022. It was also the fourth management report on risk presented to the Committee since the original baselining of risks.

It was reported that currently there were 12 Corporate Risks, including a risk related to the Cost of Living Crisis. Since last reporting, a new Corporate Risk had been included which related to the replacement process of the Councils existing Customer interface, which was also linked to significant budgetary savings in the 2025/26 financial year.

As of 22^nd March 2023, there were now 58 Departmental Risks of which 1 was a red risk related to Revenues - Performance Indicator data that was not deemed robust as it could not be system generated. It was reported that it was unlikely that the number of risks could be further reduced on the risk register as they were now mostly linked to compliance.

It was stressed that in the opinion of the internal auditor, from the follow up audit carried out earlier this year, the process applied for ‘moving’ risks from departmental to corporate and vice versa was logical. The Internal Audit risk level had improved to Moderate Assurance in this audit.

Following the report presentation, questions and comments were made by Members to which following responses were provided:

·       In relation to customer interface providing a one-stop portal to all Council services, it was reported that market testing of suppliers was currently taking place and a report would be submitted before the Executive Committee in the near future.

·       Members queried the amount of oversight that Audit, Governance and Standards Committee and the Council more widely had over capital projects such as those under the Towns Fund – for example the Town Hall refurbishment. In response, it was noted that details on capital projects were reported to the Executive quarterly through the financial and performance monitoring reports. The Committee also had the option to set up a Task Group to scrutinise the Towns Fund projects more closely. The Council was also selected as one of 5 per cent of local authorities where a ‘deep dive’ into Towns Fund projects would be undertaken by the Department for Levelling Up, Housing and Communities (DLUHC).

·       In relation to temporary accommodation (TA), it was noted that it was a high-pressure area and that an internal audit would soon be undertaken on this service.

RESOLVED

that the present list of Corporate and Departmental Risks be noted.

Members were informed that the Accounting Policies report before the Committee provided details of the financial governance framework under which the Council operated and the legislative reporting requirements for reporting to central government in respect of financial compliance.

It was reported that the key risk to the Council’s financial compliance remained the closure of the 2020-21 financial statements. A number of key legislative returns, including the Revenue and Capital Outturn forms for 2022-21 and 2021-22 had not yet been submitted to the Government as these were dependent on the Council’s closure of accounts for 2020-21. Although the Government now allowed these returns to be completed based on estimates, the level of uncertainty due to the issues with the cash receipting module of the Council’s ledger system meant that returns could not be submitted until the External Auditors had signed off the Council’s take on balances and the organisation provided the draft accounts to Audit for each Council (Redditch and Bromsgrove).

It was reported with respect to submission of financial statements for 2020-21 that more detailed testing of the data take on balances and associated processes had to be undertaken before submission of the Accounts could be made to the External Auditors.

It was noted that at the last meeting of the previous municipal year it was agreed by the Committee for updates on Financial Compliance to become a standard item at Audit, Governance and Standards Committee meetings to facilitate Members’ assurance around Council’s financial governance arrangements.

RESOLVED that

1)    the Accounting Policies being used their Source and associated Governance Arrangements be noted;

2)    this report to come to each Audit, Governance and Standards Committee meeting to alert Members to possible no compliance issues;

3)    that progress on the 2020/21 Audit process be noted.

The Head of Internal Audit Shared Service for Worcestershire Internal Audit Shared Service (WIASS) presented the 2022/23 Internal Audit Annual Report and Audit Opinion and in doing so noted that the Annual Report was an amalgamation of all Internal Audit Progress Report that the Committee received over the 2022/23 municipal year.

It was reported that the internal audit outcomes from reviews were shared on an ongoing basis with the External Auditors to assist them in gaining assurance around the Council’s processes. Audit follow-ups in areas of key risk or where insufficient assurance had been gained previously showed an overall positive trend with management and service areas concerned implementing any follow-up recommendations in a timely manner. There had been no exceptions that needed to be reported to the Committee during 2022/23.

In 2022/23, 2 out of 19 internal audits had resulted in limited assurance, which concerned Debtors and Main Ledger due to the cash receipting system. Since the Committee report had been finalised, 4 other areas had been finalised.

The Annual Audit Opinion was provided at Appendix 2 to the main report and this provided the opinion of the Head of Internal Audit on the Council’s governance, risk management and audit function.

Appendix 3 was the Internal Audit Charter of WIASS, which would be updated throughout the current municipal year, mainly around categorisation of assurance.

Following the report presentation, Members asked about the GIS gazette and it was explained that this was a system used in planning that plotted property and related geographical data. The audit of this was necessary as the system was undergoing changes.

A further question was asked about staff retention and what steps the Council was taking to be the ‘employer of choice’. Officers explained that the market, especially in respect of council finance staff, was highly competitive. However, the Council was proactive in this matter, for example with the Council recently having published its new agile working policy.

RESOLVED

that the 2022/23 Internal Audit Annual Report and Audit Opinion be noted.

The Head of Internal Audit Shared Service for Worcestershire Internal Audit Shared Service (WIASS) presented the draft Internal Audit Plan for 2023/24. It was highlighted that it was a risk based plan that was built around allocation of internal audit days. 359 audit days had been allocated and this had been deemed sufficient to provide management, external audit and those charged with governance with the assurances and coverage required over the system of internal control, annual governance statement and statement of accounts.

It was highlighted that although the audit areas would have an allocation of audit days, all or part of the budgeted days will be used on a flexible basis depending on the risk exposure. Thus the number of audit days planned was an indicative number of days dependent on contingencies and the full number of allocated days did not have to be spent. The Council only incurred the cost for the number of actual days that the internal audit function was delivered.

A question was raised with regards to the Council procedures for evaluating procurement quality versus cost. Officers undertook to contact the relevant staff and provide Members with a response in due course.

It was proposed by Councillor Marshall, seconded by Councillor Akbar, that an internal audit of Mayor’s Office finances be added to the Internal Audit Plan for 2023/24. Members present agreed with this proposal. Officers responded that an internal audit of this area would be added to the Internal Audit Plan, and will be undertaken and reported on in due course.

RESOLVED

that the 2023/24 Internal Audit Plan be approved subject to the addition in the pre-amble above.

Councillors Ian Woodall and Emma Marshall were nominated to the position of Risk Champion for the 2023-24 municipal year.

The respective nominations were put to the vote in turn and it was

RESOLVED that

Councillor Emma Marshall be appointed as the Council’s Risk Champion in the 2023-24 municipal year.

The contents of the Audit, Governance and Standards Committee’s Work Programme for the 2023-24 municipal year were considered.

RESOLVED that

the contents of the Committee’s Work Programme be noted.