Agenda and minutes

Please note this meeting may be filmed or recorded by the Council for live or subsequent broadcast via the Council’s internet site or by anyone attending the meeting using any communication method.  Although we ask members of the public recording, filming or reporting on the meeting not to include the public seating areas, members of the public attending the meeting should be aware that we cannot guarantee that they will not be filmed or recorded by others attending the meeting.  Members of the public participating in the meeting (e.g. making deputations, asking questions, making oral protests) should be aware that they are likely to be filmed, recorded or reported on.  By entering the meeting room and using the public seating area, you are consenting to being filmed and to the possible use of those images and sound recordings.

The Chair of the meeting has the discretion to terminate or suspend filming or recording, if in his or her opinion continuation of the filming, recording or reporting would disrupt or prejudice the proceedings, infringe the rights of any individual, or may lead to the breach of a legal obligation by the Council.

The Chair referred Members present to agenda item 1 in respect of filming at this meeting and Members noted the information contained therein.

There were no apologies for absence.

The Chair will consider the admission of any late items of urgent business. (late items will be considered under the agenda items where they appear.  New items will be dealt with at item 11).

There were no new items of urgent business.

The Committee noted that agenda item 8, Statement of Accounts 2015/16 and audit findings report (ISA 260) had been circulated late due to final work being undertaken on the accounts. The report could not wait until the next meeting, as it is a statutory requirement for the audited Statement of Accounts to be approved by 30^th September.

There were no declarations of interest.

There were no such items.

To consider and agree the minutes of the meeting held on 28 June 2016.

RESOLVED

That the minutes of the meeting held on 28 June 2016 be approved as a correct record and signed by the Chair.

Report of the Chief Operating Officer to update the Committee on the Council’s treasury management activities and performance in the three months to 30^th June 2016 in accordance with the CIPFA Treasury Management Code of Practice.

The Committee considered the Treasury Management update report, presented by Oladapo Shonola, Head of Treasury and Pensions. The Head of Treasury and Pensions also delivered an introductory presentation on treasury management issues, covering the definition of treasury management, borrowing, investments, roles and responsibilities and highlighting the key aspects of the update report. In respect of the report circulated, the Head of Treasury and Pensions advised that the current projection for interest payable for 2016-17, set out at paragraph 14.3 of the report, should read £14.1m.

The Committee asked about the current projected deficit, and how this was going to be funded. The Chief Operating Officer confirmed that the current projected overspend was £27m and that there were a number of measures being implemented across the organisation, including spending controls, increasing income opportunities and transformation programmes, in order to reduce the deficit. In response to a further question from the Committee regarding what would happen if it was not possible to close the budget deficit, Anna D’Alessandro, Interim Deputy Section 151 Officer, advised that the Council had no option but to set a balanced budget; in the event that the measures stated above did not achieve the full savings required, it was noted that there were some reserves available for the Council to use, but this would be purely on a one-off basis. In addition to the work on addressing the current projected deficit, the Committee was advised that long-term work was being undertaken to ensure that the Council was not in the same position in future years. It was noted that the budget position was a separate issue from the matters covered by the treasury management report under discussion, which related to the Council’s cash holdings.

The Committee asked how capital expenditure could be funded without increasing the Council’s current borrowing, in response to which it was reported that internal borrowing and cash would be used to fund the majority of the capital programme, with only around £20m of new borrowing required. It was agreed that details of the capital programme would be provided in the next update report to the Committee.

In response to a question from the Committee about prudential indicator numbers 9 and 12, the Head of Treasury and Pensions advised that number 9, maturity structure of borrowing, set the upper and lower limits for different maturity periods within the debt portfolio, while number 12 was the same maturity structure adjusted for Lender option borrower option (LOBO) loans. The Committee asked about the possibility of exiting loans taken at previous higher rates of interest in order to benefit from current rates, and the Chief Operating Officer advised that the level of penalties that would be incurred would cancel out any benefit to the Council in doing so. It was noted, however, that the Council were monitoring the situation constantly in order to identify any opportunities to minimise borrowing costs. In response to concerns from the Committee regarding the LOBOs previously entered into, it was noted that  ...  view the full minutes text for item 93.

Report of the Chief Operating Officer to present the Statement of Accounts for 2015/16 following the completion of the external audit and also to consider the statutory Annual Report to those charged with Governance from BDO LLP, which reports on their annual audit of the Council’s statutory accounts, value for money and other relevant information.

TO FOLLOW

Cllrs Engert and Rice left the meeting at this point in proceedings.

The Committee considered the report on the Statement of Accounts for 2015/16 following the completion of the external audit; Hussein Alanezi, Interim Chief Accountant, gave an introductory presentation on understanding the statement of accounts, covering the purpose of the statement of accounts, how they were presented and what they meant, along with an explanation of the Committee’s role as ‘those charged with governance’ in relation to the accounts. It was noted that from next year the deadline for the publication of the Council’s accounts would be brought forward by a month to 31^st May, and the deadline for the completion of the audit would be brought forward by two months to 31^st July.

Under contingent liabilities, on page 100 of the statement of the accounts, the Committee noted the issue listed in respect of Thames Water. Tracie Evans, Chief Operating Officer, and Raymond Prince, Assistant Head of Legal Services, advised that this was an issue affecting a number of local authorities, and that the Local Government Association (LGA) was in the process of collating a response on behalf of its members. In response to a question from the Committee regarding the probable timescales for the appeal being heard, it was agreed that the Assistant Head of Legal Services would circulate this information.

Action: Assistant Head of Legal Services.

Leigh Lloyd-Thomas and Andrew Barnes, representing the Council’s external auditors BDO, gave an overview of their audit report, and highlighted the key findings for the Committee as set out under the ‘key audit and accounting matters’ section of their report. In response to a question from the Committee regarding the findings around funds held on behalf of others, it was confirmed that these amounts were recorded in the accounts, but the issues raised were in relation to a lack of supporting documentation to evidence the reason for the amounts held in some instances.

Mr Lloyd-Thomas indicated that the auditors had not identified any material misstatement in the statement of accounts, and that they would be concluding that these were a true and fair statement. The auditors noted that the Council had a challenging funding gap, but were satisfied that plans were in place to address this. In light of the projected position as at quarter 1, the auditors did emphasise that it was essential for the spending controls being implemented to start to have an impact as quickly as possible.

Anna D’Alessandro, Interim Deputy Section 151 Officer, drew the Committee’s attention to the management responses to the auditors’ recommendations as set out in appendix three to the audit report, and advised that the Corporate Committee would receive an update on progress in implementing the actions at its next meeting. The Council had accepted all of the recommendations made by the auditors, and had developed an action plan to address these. While none of the issues identified had a material impact on the statement of accounts, it was  ...  view the full minutes text for item 94.

Report of the Assistant Director, Corporate Governance, detailing the work undertaken by the Internal Audit and Counter Fraud Teams in the quarter ending 30 June 2016 and focusing on progress on internal audit coverage relative to the approved internal audit plan, including the number of audit reports issued and finalised – work undertaken by the external provider (Mazars).

The Committee considered the internal audit progress report for Quarter 1 2016/17, presented by the Head of Audit and Risk Management. The report set out performance figures for the completion of planned internal audit work, details of those internal audit reports completed within the quarter where a conclusion of limited assurance had been provided, and progress on the implementation of follow up actions from previous audits. In relation to the outstanding priority 1 recommendations from the 2014/15 audit of Pendarren Outdoor Education Centre as set out in the report, the Head of Audit and Risk Management updated the Committee that further information had been received from the centre manager since the report was published and evidence provided confirmed that one of the Priority 1 recommendations was now fully implemented, and that progress was taking place to implement the remaining 5 recommendations. The Committee was also advised that since the issuing of the report, all of the outstanding recommendations relating to the Fostering and Adoption service had now been implemented.

In response to concerns raised by the Committee that staff undertaking the audit of Pendarren had made enquiries at the wrong staffing level, had not understood the circumstances in which the centre was operating and had not taken into consideration the limited resources and support it had available, the Head of Audit and Risk Management advised that the internal audit staff who had undertaken their work at Pendarren, had spoken to the centre manager and that he had accepted the audit findings and agreed all of the recommendations arising from the report. The Head of Audit and Risk Management confirmed that the findings and recommendations in the original report were also discussed and agreed with the Head of Finance and the Interim Assistant Director for Schools and Learning in post at that time. The Head of Audit and Risk Management and Chief Operating Officer advised that the audit report and follow up report were both a finding of fact, and highlighted areas of non-compliance with financial procedures for the control of risk, for which there may be a number of reasons, including the need for greater support from the Council. It was confirmed that it was intended as a document to support the management of the centre in making improvements to the procedures that were required to be in place and was not intended to allocate blame. The Committee noted that the centre’s accounts indicated that they had successfully implemented savings in order to reduce operating costs, and that the centre was considered a positive asset by the previous external auditors.

The Committee also expressed concern that the findings of the audit report could be used to influence upcoming decisions on the future of the centre, when it was felt that there may be a number of reasons behind the audit findings which should be considered, including the limited resources available to the centre management; in particular, Members were concerned that there was a risk that the findings could be  ...  view the full minutes text for item 95.

Report of the Assistant Director, Corporate Governance, detailing the work undertaken by the Counter Fraud Team in the quarter ending 30 June 2016 and focusing on:

·         Details of pro-active and reactive investigative work undertaken relating to fraud and/or irregularities – work undertaken by the in-house counter Fraud Team; and

·         An update on the recommendations contained in the fighting Fraud and Corruption Locally Strategy 2016-19.

The Committee considered the Counter Fraud Update report, presented by Anne Woods, Head of Audit and Risk Management, and noted that counter fraud work would now be reported separately from the quarterly internal audit report. The report set out the work undertaken by the Counter Fraud Team in the quarter ending 30^th June 2016, including details of proactive and reactive investigative work relating to fraud and/or irregularities and an update on the recommendations contained in the Fighting Fraud and Corruption Locally Strategy 2016-19.

In response to a question from the Committee, the Head of Audit and Risk Management confirmed that in some cases individuals would be aware that they were the subject of a fraud investigation, but not in all cases. It was confirmed that no action was taken where an individual had been investigated but no evidence of fraud had been found.

The Committee asked about contract fraud, and what work was being undertaken to address this. The Head of Audit and Risk Management advised that a number of days within the internal audit plan were dedicated to procurement processes and included looking at a sample of contracts across the organisation, including monitoring and payment arrangements. In addition to this, in 2016/17 a proactive piece of work was being undertaken by the counter fraud team looking at contracts, and a report on this would be presented to the Committee at one of its next meetings. In response to a question regarding cheque fraud, it was reported that this was now at a very low level due to low use of cheques and that the impacts of any such fraud were covered by the banks. Anything relating to this would be picked up as part of the Council’s routine accounting work and by the external auditors.

In respect of appendix A to the report, covering in-house fraud work, the Committee asked about the length of time between a case being proven against an individual and a disciplinary hearing being held. The Head of Audit and Risk Management advised that internal audit had a target of completing an investigation within 8 weeks of it being initiated, but that after that point they did not have control of when disciplinary hearings were undertaken by the relevant service. It was noted that in some cases the timing of the disciplinary hearing was affected by the availability of all the parties involved.

RESOLVED

That the Committee note the counter fraud work completed in the quarter and the responses to the recommendations contained within the Fighting Fraud and Corruption Locally Strategy. 

There were no new items of urgent business.

29 November 2016, 7pm

29 November 2016, 7pm.

The meeting closed at 9.50pm.