Agenda and minutes

Governance and Audit Committee
Thursday, 28th July, 2016 2.00 pm

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

Contact: Jo Toomey 

No. Item




Disclosure of interests


Minutes of the meeting held on 30 June 2016 pdf icon PDF 152 KB



    The minutes of the meeting held on 30 June 2016 were proposed, seconded and agreed as a correct record.


Updates from previous meeting


    At the Committee’s meeting on 30 June 2016, members received an Internal Audit follow-up report. The report gave details of a number of outstanding Internal Audit recommendations with an implementation date of 30 June 2016 so a progress update was requested for the next Committee meeting.


    Section 106 Agreements


    Members were assured that a log of notifications was maintained and receipts were monitored meaning the recommendation had now been fully implemented.


    Building Control


    Reconciliation between the Finance System for both the South Kesteven and Rushcliffe parts of the building control partnership had been completed. Reconciliation of information from Newark and Sherwood was still underway; this was taking longer because a different system was in use.


Health and Safety Annual Report 2015/16 pdf icon PDF 66 KB

    Report number ENV642 of the Business Manager, Street Care Services.   (Enclosure)

    Additional documents:


    The Business Manager, Street Care Services presented report number ENV642, which provided an overview of health and safety management performance within South Kesteven District Council in 2015/16. The annual report summarised progress made and identified key areas of focus to ensure the Council maintained and improved health and safety management performance. Members’ attention was drawn to a reduction in the rate of accidents and incidents during the year.


    Members queried which of the Council’s areas of business carried the greatest health and safety-related risks, they were: waste collection, street cleansing and direct works. This was a result of the waste collection and street cleansing team working on the public highway and the equipment used by staff members in all three high risk areas. To mitigate the risk to staff and members of the public, high levels of health and safety compliance were a primary focus of induction. Safe systems of work were also used. Practical measures including beacons on vehicles and high-visibility clothing were also useful.


    Discussion moved to the district’s leisure centres, with questions being raised about the checks that were in place to ensure that the contractor’s health and safety policies were robust and being implemented. Members also asked about the level of liability that would sit with the Council in the event of an accident at a leisure centre. Officers advised that the contractor was responsible for the health and safety of customers in the leisure centres. They had safe systems of work, which were monitored regularly by officers from the Leisure and Amenities Team; this included water monitoring activity. It was brought to members’ attention that while accident rates in leisure centres had increased, the throughput of customers had also risen. Activity was also subject to periodic audit. Health and safety activity fell within the remit of the Executive Member, Environment, who stated that he had no doubts in the competence of measures that were in place. Officers also reassured members that if there was any concern arising from monitoring, then remedial action would be taken.


    Members asked questions about the practices in place to protect team members who are exposed to noise and vibration. Members were reassured that work had been undertaken with workshop personnel and direct works. Measurements had been taken of the amount of time spent using hand-tools with measures in place to ensure that the recommended working time was not exceeded. Noise had also been logged on waste vehicles and as a result walk behind operatives had been supplied with ear protection. The Committee noted that while the level of noise made by the vehicles was below the level at which ear protection must be supplied, it was within the limit at which it should be offered. The ear defenders that were supplied took out high level noise while allowing ambient noise to permeate; this meant that users could still hear their colleagues and traffic.


    Committee members identified that health and safety audits in relation to gas servicing and asbestos were planned;  ...  view the full minutes text for item 15.


Treasury Management Annual Report 2015-16 pdf icon PDF 166 KB

    Report number CFM379 of the Corporate Finance Manager.      (Enclosure)




    That the Committee approves the contents of the annual report on Treasury Management Activity for 2015/16.


    Report number CFM379 was presented by the Financial Accountant Team Leader and primarily concentrated on the Council’s borrowing and investment portfolios as at 31 March 2016. As the expected base rate increase had not occurred during 2015/16 returns therefore stayed low. Markets had also been uncertain pending the outcome of the Referendum on the UK’s membership of the European Union. Appendix 1 to the report showed the prudential and treasury indicators for the year, which had all been met.


    The net treasury position at the end of 2015/16 was £61.270m, which comprised £109.765m of debt against £48.495m of investments. Appendix 1 of the report also showed the authorised limits to the total long-term borrowing and the operational boundary. Changes to those limits would come before the Committee during the year or full Council as part of budget-setting if they were required


    Committee members asked about contingencies that were in place given recent indications that the base rate would reach a negative position. The situation was kept under review with Capita, the Council’s treasury advisors; more detail would be provided by them as the situation developed. In the interim the Council was looking at diversifying its portfolio where possible and making shorter-term investments than when there was market certainty.


    One member asked about the structure of the Council’s debts and whether consideration was given to the re-structuring of those debts. Two smaller areas of debt had been considered but based on the date the loans were due, restructure was not cost-effective. The debt associated with the Housing Revenue Account had been structured based on treasury advice at the time of self financing.


    Members also asked questions about whether councils were permitted to lend to one another; it was possible to engage in this however rates or return were lower than those offered by banks or other funds but this was assessed when considering any investment opportunity..


    It was noted that the treasury performance of South Kesteven District Council was favourable when compared with other local authorities in the benchmarking group.


    It was proposed, seconded and agreed that the contents of the annual report on Treasury Management Activity for 2015/16 be approved.


Annual Governance Statement pdf icon PDF 79 KB

    Report number CFM380 of the Corporate Finance Manager.      (Enclosure)

    Additional documents:


    The Corporate Finance Manager introduced report number CFM380 on the Annual Governance Statement (AGS) 2015/16. Members of the Committee were asked to review its contents and provide feedback to ensure it accurately reflected the last financial year. The final version of the AGS would be presented to the Committee for approval at its meeting on 23 September 2016 with the final Statement of Accounts. The draft document was compiled in accordance with the necessary regulations. Members were advised that the format of the AGS was being reviewed to reflect a pending review of corporate governance arrangements.


    The Governance and Risk Officer highlighted the key sections of the document:


    ·         A summary of consultation and communication work

    ·         Quality of service for users

    ·         Corporate governance

    ·         The role of the Chief Financial Officer

    ·         The role of the Governance and Audit Committee

    ·         Risk management

    ·         Managing the risk of fraud


    Reference was made to Internal Audit comments that indicated that the Council’s framework for risk management, governance and internal control arrangements was adequate and effective. Members questioned whether the Council should be aiming for a better assessment and what the likely timescale would be for that enhancement. Officers advised that the form of wording was standard; no reports were ‘red’ and the direction of travel was positive. It was suggested that there might be a reluctance to give an opinion that exceeded ‘adequate’ because Internal Audit had made recommendations in a number of audits to improve systems and bolster the control framework.


    Discussion turned to the Internal Audit provider, which had delivered this service for the Council for a number of years and had recently been awarded a further contract. Members wanted assurance that there were checks in place to confirm the quality and reliability of the work of Internal Audit. The company would have to be accredited against the Internal Audit Standards; while this work may rely on a sample of audits carried out on South Kesteven District Council for evidence the assessment would not specifically be based on their work with the Council. Members also clarified that despite the length of time the company had provided the Internal Audit service for the Council, there had been a healthy turnover of staff.


    Specific questions were put which related to the content of the report. Members asked why the policy development groups were not included in the review of effectiveness of the Council’s governance framework and the use of social media by the communications team and opportunities it might present to support those people for whom English was not their first language.


    The contents of the report were noted.


Draft Statement of Accounts 2015/16 pdf icon PDF 87 KB

    Report number CFM376 of the Corporate Finance Manager.      (Enclosure)

    Additional documents:


    In presenting the draft Statement of Accounts, appended to report number CFM376, the Financial Accountant Team Leader stated that members were asked to consider the contents to ensure the draft was a true and fair representation of the accounts for 2015/16.


    Members queried the variance in the report related to the provision for bad debts in the HRA. A large provision had been budgeted because of the potential impact of universal credit. The anticipated levels of bad debt had not, as yet, come to fruition, which was why the actual was significantly lower than the budgeted figure.


    Comments were then made in relation to HRA capital expenditure and the slippages against projects. Disappointment was expressed about the level of slippages; members were then advised that there were a number of contributory factors which meant that the full project had not been deliverable in-year, including weather, access to properties and better value achieved through the tendering process than anticipated. Members of the committee agreed to keep a watching brief on slippages in relation to the HRA Capital Programme.


    The Audit Manager from KPMG was asked to give a brief summary of progress made to date on the 2015/16 audit of accounts. The audit was in progress, having started two weeks prior to the meeting of the Committee. The schedule of working papers had been agreed. At this stage of the audit there were no issues to bring to the attention of the Committee (where there was any uncertainty or material misstatement). In The final opinion on the audit would be presented to the Governance and Audit Committee at its meeting on 23 September 2016. In response to a question from members, the Audit Manager confirmed that the working papers supplied so far had been delivered on time, were understandable and provided the requested information.


    The Committee noted the draft Statement of Accounts 2015/16.


External Audit Procurement Arrangements pdf icon PDF 71 KB

    Report number CFM372 of the Corporate Finance Manager.      (Enclosure)


    The Corporate Finance Manager gave members a brief overview of changes to the arrangements for appointing External Auditors following the closure of the Audit Commission and the end of transitional arrangements at the conclusion of the 2017/18 audits.


    There were three options for the Council to consider, prior to making an appointment by 31 December 2017:


    1.    To make a standalone appointment (in this instance a new independent auditor panel established by the Council would be responsible for selecting the auditor)


    2.    A joint audit panel or local joint procurement arrangements


    3.    Opt-in to a selector-led body


    It was anticipated that the most straight-forward and cost-effective solution would be opting-in to a selector-led body. Members were advised that the Council had been asked to submit a non-binding expression of interest in this option, which officers had done on members’ behalf. This ensured that the council would be kept up-to-date with any developments.


    Members had asked where responsibility for making the appointment would sit. They were advised that it would rest with the Governance and Audit Committee as the Statement of Accounts constituted a significant part of the Committee’s work.


    It was hoped that updated information would be brought to the Committee’s meeting in December 2016 to determine its preferred option.


    The contents of the report were noted.


Any other business, which the chairman, by reasons of special circumstances, decides is urgent.


Close of meeting