Agenda and minutes

Governance and Audit Committee
Thursday, 1st December, 2016 2.00 pm

Venue: Witham Room - Council Offices, St. Peter's Hill, Grantham. NG31 6PZ

Contact: Jo Toomey 

No. Item




Disclosure of interests


Minutes of the meeting held on 23 September 2016 pdf icon PDF 166 KB



    The minutes of the meeting held on 23 September 2016 were proposed, seconded and agreed as a correct record.


Updates from previous meeting


    Councillor Lee entered the meeting at 14:09.


    At the Committee’s meeting on 23 September 2016, the Internal Audit follow-up report made reference to recommendations raised in relation to health and safety – asbestos. Members had requested that the Business Manager, Property and Development provide a written update and that Internal Audit follow up the outstanding actions as part of their next follow-up report (to be presented under agenda item 7b, minute 41b). The written update explained arrangements for undertaking asbestos surveys where property improvements or refurbishment were due to take place. As certificates only related to the area affected by the works, it was possible that one property could be subject to a number of inspections each year. Tests were run on all products containing asbestos to determine the level of risk prior to removal. Certification was not required where removal work was low risk and consequently unlicensed. Members were also reassured that where a Statement of Cleanliness, Certificate of Reoccupation and/or a Consignment note was required to provide assurance that the area was safe for reoccupation, these were tracked and kept on file.


    During discussion on the Statement of Accounts at the Committee’s meeting on 23 September 2016, members had asked whether any of the leases where the Council was an interested party had break clauses that could impact on valuations. Officers confirmed that there were none and therefore there was no impact.


    Members asked for an update on the ‘Delivering Good Governance’ project. Officers advised that changes were being made to the Council’s Code of Corporate Governance to bring it into line with the ‘Delivering Good Governance’ framework. Given the extent of the work, the revised Code would be presented to the Committee at its meeting in March 2017; the final Code needed to be adopted by 1 April 2017.


Annual Audit Letter pdf icon PDF 179 KB



    John Cornett from KPMG presented the Annual Audit Letter 2015/16 which summarised the outcome of audit work completed. KPMG issued an unqualified opinion on the authority’s financial statements on 29 September 2016 and an unqualified conclusion on the Council’s arrangements to secure value for money. The report included key messages relating to the value for money conclusion. Mr Cornett reported that the certification of grants and returns was now complete and would be reported at the Committee’s next meeting.


    Members’ attention was also drawn to appendix 2 of the letter, which provided detail on the audit fee. The final fee of £47,273 was in line with the planned fee. An additional £3,000 was charged for additional audit-related services relating to the 2014/15 Pooling of Housing Capital Receipts Return, which was outside the Public Sector Audit Appointment’s certification regime. In response to questions raised about the additional work carried out by KPMG, Members were advised that this was an annual requirement and that there was significant crossover with the work undertaken by KPMG on the Council’s accounts; this additional work had also been provided by KPMG on previous occasions.


    Officers were complimented on the work that they had done to put the Council in the position to receive such a positive report.


    The Committee noted the Annual Audit Letter 2015/16.


Internal Audit Progress Report pdf icon PDF 62 KB


Internal Audit Progress Report pdf icon PDF 2 MB



    Kelly Waddoups, Assistant Manager from RSM presented the Internal Audit Progress Report. She informed members that Internal Audit was on schedule to complete its annual audit plan and report its findings by the end of the year. 50% of the audits within the 2015/16 plan had been completed, 1 audit was ongoing and the remainder were scheduled for early 2017.


    Since the last progress report had been presented to Committee, four audits had been completed:


    ·         Environmental Health – Pollution Control (substantial assurance with 1 medium risk action agreed)

    ·         Council Tax Support Scheme (substantial assurance with 1 low risk action agreed)

    ·         Financial Regulations (substantial assurance with 1 medium and 1 low risk actions agreed)

    ·         IT Network Resilience and Recovery (reasonable assurance with 3 medium and 1 low risk actions agreed)


    Members were given a summary of the medium risk actions, full details of which were included in RSM’s report.


    The Committee was given the opportunity to ask questions about Internal Audit’s findings.


    Environmental Health – Pollution Control


    The medium risk action related to the Corporate Enforcement Policy and the requirement within the policy for its annual review. There was no evidence that reviews had taken place and no corporate owner was identified who would lead the review. Since the audit, it had been agreed that ownership of the policy sat with Legal and Democratic Services and members were reassured that the review was on target to be completed ahead of schedule. Members of the Committee asked to be advised when the review had been completed.


    Financial Regulations


    The audit in relation to Financial Regulations was undertaken following their review in April 2016. The actions related to ensuring all members of staff are aware of, and understood, the regulations. Historically corporate policies like the Financial Regulations would have been shared via NET Consent, which required officers to read policies and confirm that they understand them. At the time the Financial Regulations were reviewed, Net Consent was not available.


    Members were reassured that the risk was a theoretical risk, as safeguards were built into the Council’s leger system placing restrictions on officers according to their role. Net Consent had also been re-introduced, which meant that the wider officer cohort had knowledge and understanding of the Regulations.


    IT Network Resilience and Recovery


    The audit had identified an action in relation to the Council’s Backup Policy. The Business Manager, IT and Transformation informed members that the policy had now been reviewed and updated. This included the backup schedule itself which now included details for all of the systems supported. This meant that the action was on schedule to be completed by the agreed date. Backups were verified, with checks across media and were maintained in line with best industry practice. The Business Manager added that any tape showing signs wear and/or error was refreshed and replaced.


    Given the Council’s reliance on IT systems, one member expressed concern that policies had not been reviewed and it might not be possible to restore the system from  ...  view the full minutes text for item 41a


Internal Audit Follow-Up Report pdf icon PDF 339 KB



    The Assistant Manager from RSM presented the second Internal Audit Follow Up report of the year, which reviewed actions arising from four Internal Audit reports and reported that the Council had made reasonable progress.


    Gas servicing


    One of the outstanding actions in relation to this audit had been implemented while the implementation of the second was ongoing.


    Health and Safety – Asbestos


    At the request of the Committee, Internal Audit followed up all of the recommendations raised during the Health and Safety – Asbestos Audit. Three of the actions had been implemented, while the final action was not yet due. The outstanding action would be included in the third follow-up report.


    Taxi Licensing


    The one outstanding action had been implemented.


    Follow-up 1


    Of the four outstanding actions, one had been implemented (Section 106), two were in progress (building control and aids and adaptations) and one had not been implemented (tenancy management review).


    The issue relating to reconciliations between the finance system and building control system had been re-raised; reconciliation was taking place but there was no evidence of who had completed it.


    The action arising from the Aids and Adaptations Audit required agreement of the Aids and Adaptations Policy by full Council and then distribution to relevant members of staff. Members were concerned that the policy update had been delayed by the long-term absence of a key member of staff and did not feel that this was sufficient justification for the slippage in the implementation date.


    The recommendation relating to tenancy management required three-yearly inspection cycles of property inspections. Implementation of this recommendation had been delayed by a review of the team’s staffing structure. The target completion date had been moved to 31 March 2017 to allow the implementation of the new staffing structure.


    Members engaged in general discussion about those actions that had not been implemented by the deadlines that were originally agreed. Any implementation deadlines that were not met would affect the audit opinion around risk management and the Council’s governance framework. The Council’s performance management system, Covalent, was now being used as a tool to assist in the timely implementation of actions. All managers had access to the system and their actions with implementation dates appeared on their dashboard and the dashboard of their line manager, with alerts when nearing the due date. Going forwards, this could be used to identify any areas within the organisation where implementation deadlines were consistently not being met and highlight the need for management intervention.


    Members noted both of the Internal Audit reports.


Corporate Risk Register Update pdf icon PDF 57 KB

    Report number CFM401 of the Corporate Finance Manager.      (Enclosure)

    Additional documents:




    To approve the updated Corporate Risk Register as attached at appendix A of report number CFM401.


    The Corporate Risk Register, which formed a key part of the Council’s governance framework was presented to the Governance and Audit Committee every 6 months. The register was last presented to the Committee on 30 June 2016 when it had been updated with more strategic and longer-term risks. The existing controls were incorporated and the gross risk score identified with additional actions outlined. This update report summarised progress in delivering those actions and the anticipated timeline for their completion.


    Members were interested in the potential risks around the contract database. Officers explained that the existing system required manual data entry by a number of officers when a contract had been awarded. A new contract database had been procured for use across Lincolnshire which would automatically pull through contractors’ details. The new database was due to be in place by January/February 2017.


    Further discussion ensued around the timeline for the Council’s Corporate Governance Framework and its relationship with the Annual Governance Statement.


    Members turned their attention to political oversight of the award of contracts. There was discussion about the roles of Executive Members and the extent of officers’ authority and accountability. Views varied from allowing officers to work within their delegated authority, requiring oversight of tender opening by the appropriate executive member and ensuring that the whole Council was aware of contracts.


    The contents of the report were noted and it was proposed, seconded and agreed that it be approved.


Treasury Mid-Year Review pdf icon PDF 146 KB

    Report number CFM398 of the Corporate Finance Manager.      (Enclosure)


    Report number CFM398, which was presented by the Corporate Finance Manager, gave an overview of the treasury management position from the beginning of April to the end of September 2017. The report summarised the Council’s treasury management activity and progress against key prudential indicators.


    No additional long-term borrowing was undertaken during the reporting period covered and none was anticipated for the remainder of the year. A majority of the Council’s investments were short-term in line with advice from Capita, the Council’s treasury advisors.


    The average size of the investment portfolio during the first half of 2016/17 was £62.2m, £11.1m more than the same period in the previous year because of the timing of precept payments and cash outflows.


    The first of two five-year investments placed with Lloyds bank as part of the Local Authority Mortgage Scheme (LAMS) was due to mature in July 2017. This would be available for reinvestment but members were advised that the rates would not be as attractive as those achieved through the LAMS deposit. The funding, together with a second deposit of £1m had served its purpose by increasing the number of new first-time mortgages and providing a return at a competitive rate.


    Authorised limits for external debt were aligned to the Housing Revenue Account (HRA). There were also a number Public Works Loan Board loans. During the period covered by the report the level of borrowing exceeded the operational boundary for external debt; this was attributed to the timing of the principle payment against the HRA loan. The level of borrowing would be within the operational limit by the end of 2016/17.


    In response to a question, members were advised that they would be able to see a full list of the institutions where the Council held investments. Members were reassured that investments were spread across a range of institutions and banking family groups.


    Members were also interested in whether refinancing of the PWLB loans that were due had been considered. The Council’s smaller legacy debts were reviewed on a regular basis with Capita however calculations always indicated that it was most economically effective to let them run their course.


    The Committee noted the report.


Close of meeting