Agenda and minutes

An apology for absence was received from Councillor Salman Akbar.

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.

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 by 12 noon on the day of the meeting.  A maximum of 15 minutes will be allocated to public speaking.

There were no public speakers registered on this occasion.

The Section 24 Report was presented by the Engagement Lead, Grant Thornton. It was explained that, as auditors, Grant Thornton had powers under the Local Audit and Accountability Act 2014 to make, if necessary, statutory recommendations under Section 24 of the Act. The Committee was informed that following discussions with colleagues it was the judgment of Grant Thornton that the issues outlined within the report warranted the issuing of statutory recommendations under the Act.

The background to the statutory recommendation was outlined and it was reported that a new financial ledger system had been implemented in February 2021. However, there had been significant challenges in respect of the cash receipting module in the new system.

Members were reassured that Officers had been working with the suppliers of the Enterprise Resources Planning (ERP) system, Tech1, and that the cash receipting module issues had been resolved and this module was now live. However, despite the progress that had been made in the cash receipting module the delays experienced had impacted on the delivery of the publication of the 2020/21 Accounts, which were due by the end of July 2022. The Council had also fallen behind in the finalisation of the 2021/22 in year monitoring and other Government returns, such as Revenue Outturn and Capital Outturn.

It was highlighted that the Council had recognised these issues and in Q1 of 2022/23, planning had begun for the 2020/21 financial audit, which was when the issues highlighted above had come to the attention of the auditors. The Engagement Lead reported that Grant Thornton took a consistent approach to issuing Section 24 notices across public bodies it audited with those local bodies which had not submitted their 2020/21 Accounts being issued with Section 24 notice. The Engagement Lead added that although resolution to the issues with cash receipting had now been reported, and assurances provided about reconciliation of information from the old to the new ledger system, Grant Thornton could not give their opinion until the audit of the 2020/21 Accounts had been investigated and concluded.

The Interim Director of Finance addressed the Committee and explained that issues with cash receipting module had been reported to Members on a number of previous occasions and that these issues had now been resolved. The Committee were informed that there had been a severe loss of Council staff, resulting in only four members of the finance team remaining at one point in financial year 2020/21. Following two recruitment drives during 2021/22, the Finance team were now almost up to full capacity again. It was also noted that the closure of 2021/22 Accounts for Rubicon, completed earlier in the financial year, provided useful learning points for the work on the Redditch Council financial statements which should mean that once work on the 2020/21 Accounts was finished, the 2021/22 Accounts should be finalised a lot more quickly.

Following the presentation, a number of questions were asked by Members which included the following:

·       When was the Section 24 notice issued? –  ...  view the full minutes text for item 31.

The Engagement Lead for Grant Thornton presented the Interim Auditor’s Annual Report 2020-21 on behalf of Grant Thornton and in doing so highlighted the following for Members’ attention.

·     This report was interim and would not be issued in final until an audit opinion could be issued on the 2020/21 financial statements.

·     It was the first time that Committee Members had considered this report in this format. The National Audit Office, who set the code of practice that auditors followed, had updated the format of these types of reports in 2021, specifically highlighting Value for Money arrangements. This new code removed the necessity of provision of an audit opinion and required a commentary on three key areas: financial sustainability, governance, and improving economy, efficiency and effectiveness. This resulted in a more lengthy report than had been considered by the Committee in previous years.

·     The report covered arrangements that were in place in the period up to 31^st March 2021. Members were reminded that this was a backward look at the three key areas, as highlighted above, and that some of the recommendations contained within the report had been discussed earlier in the meeting and actions had already been taken against these recommendations.

·     There were 6 key recommendations, which highlighted the areas where significant weakness in arrangements had been identified, and 13 improvement recommendations contained within the report. The 6 key recommendations were in respect of the following:

1.      The Medium Term Financial Plan – this recommendation outlined that the Council continued to be reliant on the use of general fund reserves and needed to take action through saving and income generation schemes to ensure financial sustainability in the longer term. This was pertinent given the uncertainty around level of central government support.

2.      Provision of key reports and documents to Members – This recommendation noted that neither the Capital Strategy nor the Treasury Management Strategy were reported to the Executive Committee or the Council in 2020/21 financial year, which was a requirement under the various CIPFA Codes of Practice. It was highlighted by auditors, however, that these key documents had been presented to Members for the 2022/23 financial year.

3.      Improved management of key projects – this recommendation was discussed as part of the previous item in respect of the implementation of the ERP system.

4.      Effective governance arrangements in respect of performance monitoring – This recommendation dealt with the reinstatement of Performance Monitoring. Members were informed that there had been no formal performance reporting to Members throughout the 2020/2021 financial year. It was noted that Members had been able to access the Performance Dashboard but that the information included was not publicly available. The auditors highlighted that finance and performance monitoring had been reinstated from September 2022 with the Q1 2022/23 Finance and Performance Monitoring Report presented to Members in September and the Q2 2022/23 Finance and Performance Monitoring Report due to be presented to the Executive Committee in November.

5.      Risk Management and Risk Reporting – This recommendation  ...  view the full minutes text for item 32.

As discussed earlier in the meeting, the Interim Director of Finance informed Members there would be an additional meeting of the Committee arranged in mid-December 2022 in order to sign off the draft Statement of Accounts for 2020/21.

It was suggested by Councillor Baker-Price that the Audit, Governance and Standards Committee should meet bi-monthly until April 2023, as Officers were aiming to have the Audited Statement of Accounts for 2021/22 by the end of this financial year (2022/23).

RESOLVED that

1)    An extra meeting be scheduled for the second week of December 2022, and;

2)    the Audit, Standards and Governance Committee meetings take place bi-monthly for the remainder of the municipal year 2022/23.