Agenda and minutes

Governance and Audit Committee
Thursday, 25th June, 2015 2.00 pm

Venue: Witham Room - South Kesteven House, St. Peter's Hill, Grantham. NG31 6PZ. View directions

Contact: Jo Toomey 

Items
No. Item

1.

Membership

2.

Apologies

3.

Disclosure of interests

4.

Minutes of the meeting held on 26 March 2015

    To consider the accuracy of the minutes of the meeting held on 26 March 2015.  (Enclosure)

    Minutes:

    The minutes of the meeting held on 26 March 2015 were proposed, seconded and agreed as a correct record subject to the addition of the Chairman’s thanks to all retiring members of the Committee.

5.

Updates from previous meeting

6.

Internal Audit Annual Report

    Internal Audit annual report for 2014/15.                                          (Enclosure)

    Minutes:

    Amjad, Client Manager from Baker Tilley presented the Internal Audit Annual Report 2014/15. The report summarised Internal Audit activity during the year and explained that sufficient work had been undertaken on which to base opinions on governance, risk management and the control framework.

     

    Committee members were advised that the overall audit opinions for 2014/15 were the same opinions as those given for 2013/14 (green opinions in respect of governance and risk management and an amber opinion in respect of the control framework).

     

    The Committee was reminded of an audit on corporate governance and the scheme of delegation that had been undertaken during the year, which had received a substantial assurance opinion.

     

    Members challenged the level of assurance given to arrangements in respect of the control framework. Mr Ali explained that based on the work that had been completed that audit felt that the amber opinion correctly reflected the opinions and levels of assurance of all other audits during the year together with the levels of acceptance and implementation of recommendations. Of the 24 reviews completed in 2014 including 3 follow-ups and 2 advisory reviews, 11 received substantial assurance, 7 received reasonable assurance and one received some assurance. Of all the recommendations made by internal audit, only one was not accepted by management.

     

    Committee members expressed some concern that the amber opinion was given as a result of the one recommendation that was not accepted by management. Mr Ali assured members that this was not the case and the opinion reflected the full range of opinions given to audits throughout the year. Some members felt that the assurance would have been a more fair reflection if it was displayed in the same format as the audits carried out throughout the year: red, amber-red, amber-green and green. They suggested that simply having an amber opinion did not provide a sufficient illustration of performance or direction of travel.

     

    The suggestion was made by one member of the Committee that, given the concerns expressed about the assurance level for the control framework, it might be appropriate for external audit to review the methodology used by internal audit. Officers explained the history behind the current internal audit contract and informed members that the relationship with internal audit was very good and provided value for money. It was further noted that there were aspects of work associated with external audit that was carried out by internal audit on their behalf. Members were informed that throughout the contract, the internal audit team had always delivered the complete plan within agreed dates and budgets. Mr Ali added that the relationship between internal and external audit was also good, using the housing benefit grant validation work as an example of work done by internal audit on external audit’s behalf.

     

    One member of the Committee sought to discuss in detail the audit of waste and recycling – inventory/stock. As this audit had been fully discussed at a previous meeting, the Chairman would not permit further discussion. Councillor Smith requested  ...  view the full minutes text for item 6.

7.

Internal Audit Follow Up Report

    Report number CFM326 by the Corporate Finance Manager.     (Enclosure)

    Minutes:

    The Corporate Finance Manager introduced report number CFM326 and handed over to Mr Ali from Baker Tilly who presented the Internal Audit Follow-up Report, which reviewed progress against the implementation of medium and high risk recommendations made by Internal Audit. The follow-up report gave an opinion that reasonable progress had been made. Of the 13 recommendations featured in the report, 9 (69%) had been implemented, 3 (23%) where implementation was ongoing and 1 (8%) that had not been implemented.

     

    The report highlighted specifically those medium and high recommendations that had not been implemented or when implantation was still ongoing. Specific discussion was undertaken on some of the audits where recommendations were still outstanding.

     

    Members were advised that the stock condition survey of Council properties, which internal audit recommended take place every five years, was scheduled to begin in September 2016.

     

    Discussion ensued on the Logotech and Flare asset registers and reconciliation between the two systems. Members were informed that the Council was embarking on the rationalisation of software and Logotech duplicated aspects of flare. Use of Logotech was being discontinued with data being transferred to Flare, which would negate the need for reconciliation. Members noted that the recommendation would be reviewed as part of the next follow-up report. Wider discussion ensued on the use of multiple systems doing the same job and members noted that while the systems were being reduced, some reconciliation would still be required as some systems could not integrate with the general ledger. It was noted that colleagues in planning required information to enable reconciliation in a different format and that they needed longer to complete the exercise. Members of the Committee requested an update on this should be brought to the next meeting.

     

    Action Point

     

    Invite a representative from the Development Management Team to the meeting in September to discuss the recommendation regarding the reconciliation of information between different software systems.

     

    One member of the Committee expressed concerns about those recommendations where the deadline for implementation had slipped. The Strategic Director responded, saying that he would expect that recommendations were implemented and that if non-implementation of specific recommendations continued, it would be appropriate to request the relevant officer attends a meeting of the Committee and answers its questions.

     

    It was proposed, seconded and agreed that the report be approved.

8.

Risk Management: Corporate Risk Register Update

    Report number CFM321 by the Corporate Finance Manager.     (Enclosure)

    Minutes:

    In presenting report number CFM322, the Corporate Finance Manager explained that the Corporate Risk Register was presented to the Committee twice a year. The senior management team took an holistic overview of the authority’s risk that could compromise its ability to deliver priorities taking cognisance of the environment in which it was operating. Business managers, executive managers and the senior management team were responsible for putting the register together and updating it on a regular basis ensuring that the risk score and residual risk score accurately reflected the mitigation measures that were in place. Regular benchmarking of the risk register was undertaken to provide assurance that the Register was reflective of the wider risks affecting the public sector.

     

    Members noted that all risks in the current register were amber based on an assessment of likelihood, impact and mitigations. Brought to members’ particular attention was a key change to the risk associated with ICT infrastructure. Some concern was expressed about the strategy that was being implemented as part of the ICT plan of migration. The Executive Manager, Commercial commented that the Council was embarking on an ambitious programme related to the flexible organisation but suggested that legacy systems in place were not considered fit for purpose in delivering such programmes. Members were advised that some programmes were in place to address concerns. Some legacy systems would also need upgrading to enable integration with new interfaces.

     

    Some comments were expressed about the planning of such programmes and the rollout of new ICT equipment for members and integration with existing exchange systems.

     

    Discussion ensued around the delivery model for ICT and whether there were plans to review this to ensure that the Council had access to individuals with skills in specialist software.

     

    Action Point

     

    Following the production of the new ICT Strategy, an item should be included on the agenda for the Committee’s meeting on 24 September 2015 to better understand the risks associated with the project and actions in place to mitigate them.

     

    During discussion reference was made to the rollout of the Council’s new website and the risks associated with that. Members were assured that rigorous testing was underway with both officers and Councillors.

     

    Members noted the report and updated risk register.

9.

Draft Outturn Report

    Report number CFM320 by the Corporate Finance Manager.     (Enclosure)

    Minutes:

    The Corporate Finance Manager presented report number CFM320 which gave details about the outturn position 2014/15 and highlighted key variances in both the General Fund and the Housing Revenue Account (both revenue and capital). Also included in the report were reserve movements where, in accordance with the budget framework and where the outturn position has led to proposed movements on reserves.

     

    The outturn for the General Fund (revenue) was £238k below budgeted levels. A number of set asides were put into place to allow funding to be carried forward into the 2015/16 financial year to allow completion of projects. The outturn for the General Fund Capital Programme showed a variance of £211k below budgeted levels.

     

    The main variance in relation to the General Fund Capital Programme related to the St Peter’s Hill cinema project. Due to the complex nature of the project there had been delays from the stated capital spend profile consequently funding in place for the project would be invested for longer periods and drawn down at the relevant time.

     

    The Housing Revenue Account, which was a ring-fenced account solely for the delivery of the landlord function, was based on simplistic income and expenditure and was required to meet its own costs. Income was raised through dwelling rents, some shops and garages. SKDC followed the social rent setting property prescribed by government (CPI plus 1%). It was reported that the performance for the collection rents had improved slightly during the 2014/15 financial year (98.93% against a target of 98.4%. Members were informed that there had been a number of write-offs and officers highlighted concerns about the impact of welfare reform on tenants’ ability to meeting costs. One key variance highlighted in association with the Housing Revenue Account related to repairs and maintenance; set asides had been proposed for outstanding schemes to enable completion of work in 2015/16. The variance for the HRA Capital Programme was £653k below budgeted levels.

     

    The report also provided details about balances and reserves – because of the underspend in the General Fund Capital Programme, a further contribution was made to the capital receipts reserve. The reserve was also benefitting from positive receipts resulting in the sale of residential accommodation within the Bourne Core area.

     

    Officers reported that the HRA (Capital) account was in the position where it could internally resources itself to fund the new build programme in the short term.

     

    The report also included a reference to the current arrangement whereby the employer contribution rate has been reduced 21.1% to 17% for a 3 year period with the difference being financed from the reserve.  This arrangement is having a short term positive impact on revenue budgets.

     

    Members of the Committee were also advised that the level of the working balances of both the General Fund and the Housing Revenue Account were in accordance with the Council’s current policy.

     

    15:31 to 15:45 – the meeting was adjourned. Councillor Webster did not return to the meeting following the recess.

     

    Members of the Committee were  ...  view the full minutes text for item 9.

10.

Risk Management and Business Continuity Annual Report

    Report number CFM322 by the Corporate Finance Manager.     (Enclosure)

    Minutes:

    The Governance and Risk Officer introduced report number CFM322 on the Risk Management Annual Report 2014/15 incorporating the business continuity annual report. In so doing the officer explained the requirement to have an annual report on risk management arrangements and activities undertaken during the year and added that the current strategy that was in place was under review. It was anticipated that the updated Risk Management Strategy would be presented to the Committee at its meeting in September 2015. Members were reminded of internal audit’s review of risk management arrangements, which received a substantial assurance opinion. The Committee also received an explanation of reporting procedures.

     

    The Executive Manager, Environment added a brief explanation of business continuity arrangements covered within the report. Specific reference was made to a desktop exercise to test the authority’s plans for premises relocation including ICT platform recovery in the event of a fire similar to that experienced in South Oxfordshire. He explained that plans to ensure business continuity were in place and being updated as a result of the exercise.

     

    In discussing the report, reference was made to arrangements for surveying within the district and it was suggested that following the appointment of new Grounds Maintenance Contractors Baker Tilly could be asked to conduct a review of arrangements.

     

    Recommendation:

     

    Baker Tilly should carry out an internal audit of arrangements put in place by Glendale to revisit the position on conducting a tree survey.

     

    One member queried the Cabinet’s risk appetite. The Portfolio Holder who was presented at the meeting stated that the Cabinet was prepared to take reasonable risks and considered risk a case-by-case basis.

     

    Decision:

     

    The Committee approved the risk management annual report 2014/15

11.

Leisure centres: accident statistics update

    The Executive Manager, Environment will give a presentation.  (Enclosure)

    Minutes:

    The Executive Manager, Environment gave a brief update on accident statistics in the Council’s leisure centres. He explained that he had no concerns about the level of incidents however an increase of slips, trips and falls had been experienced. Shifts were also seen in some figures following the recategorisation of incidents. The increase in incidents at Deepings Leisure Centre had been attributed to its use as a venue for roller derby events. Members were advised that feedback from Onelife, which managed the leisure centres, was positive.

     

    Members of the Committee asked for information with which to compare the statistics presented by the officer. They suggested figures from other leisure centres across the country, particularly those managed by OneLife, would provide useful context and help establish whether there were any patterns in incidents in South Kesteven. The also felt providing comparator information from different years would be beneficial to their considerations. Members also queried the plan to reduce the number of leisure centre accidents overall.

     

    Action Point

     

    That the Executive Manager, Environment brings a report to the September meeting of the Committee providing contextual information on accident rates and action plans to reduce the number of incidents.

12.

Timing of meetings

    Discussion around the timing of meetings.

    Minutes:

    The Chairman asked the Committee whether there was any feedback on the proposition referred from the full Council meeting on 21 May 20-15 in relation to the timing of meetings. The consensus of the majority of members was that daytime meetings were more convenient in relation to their other commitments and facilitating the efficiency of the Committee in conducting its business by enabling it to call officers into its meetings as appropriate. It was also noted that daytime meetings suited internal audit as a majority of their other clients held meetings in the evening. One member stated a preference for morning meetings, while a second suggested either morning or early evenings. Following discussion it was agreed that meetings of the Committee should continue to be held in the afternoon.

13.

Close of meeting