Agenda and minutes

Governance and Audit Committee
Thursday, 29th June, 2017 1.00 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 21 March 2017 pdf icon PDF 128 KB

                                                                                                                      (Enclosure)

    Minutes:

    The minutes of the meeting held on 21 March 2017 were proposed, seconded and agreed as a correct record.

5.

Internal Audit: Annual Report and Opinion 2016/17 pdf icon PDF 379 KB

    Report of RSM.                                                                                      (Enclosure)

    Minutes:

    The Head of Internal Audit from RSM presented the Annual Report and Opinion for 2016/17. Under the Public Sector Internal Audit Standards, the Head of Internal Audit was required to provide an annual opinion on the overall adequacy and effectiveness of the Council’s risk management, control and governance processes. The opinion, which was detailed within the RSM report found that the Council had an adequate and effective framework for risk management, governance and internal control. The opinion was based on the assurances given to audits that were undertaken during the year and the implementation of management actions, where it was considered that reasonable progress had been made.

     

    The report also confirmed that RSM had no conflicts of interest and explained RSM’s conformance to Internal Auditing Standards. Members were advised that during the year the firm had been the subject of an external quality assessment, the results of which had been positive.

     

    The report also included a summary of all the audit opinions from the work that had been completed during 2016/17. With the exception of the Allocations and Lettings report, all other internal audit reports had been presented to the Committee during the year. One low risk recommendation had been raised during the Allocations and Lettings report, which had recently been finalised, so it had not been considered necessary to present it to the Committee separately.

     

    The Committee was advised that the opinion given by internal audit was the best opinion possible, noting that all reports completed during the year received a positive assurance with a majority receiving substantial assurance.

     

    Members asked for clarification on the status of the outstanding medium priority management action in relation to the scheduled three year inspection of properties within tenancy management. This action had been delayed to allow the introduction of a new staffing structure. A revised implementation date of 31 March 2017 had been agreed; officers present confirmed it was their understanding that the action had now been implemented and that the recommendation would be picked up as part of the next internal audit follow-up report.

     

    The Committee noted the contents of the report.

6.

Financial Outturn 2016/17 pdf icon PDF 153 KB

    Report number CFM418 of the Cabinet Member for Finance.     (Enclosure)

    Additional documents:

    Minutes:

    Decision:

     

    That the Governance and Audit Committee

     

    1.    Approves the Revenue and Capital Outturn report and associated appendices for 2016/17

    2.    Approves the set-asides and reserve movements as detailed in report number CFM418

    3.    Approves the Capital slippages from the 2016/17 Capital Programme as detailed in report number CFM418

     

    Report number CFM418 of the Cabinet Member for Finance detailed the Council’s Revenue and Capital outturn for 2016/17 for both the General Fund and Housing Revenue Account (HRA). It provided commentary on the outturn position for both accounts and the reserves statement. The committee was also asked to consider proposed set-asides and slippages in the 2016/17 Capital Programme.

     

    The report also highlighted and gave commentary on key variances against budgeted levels, which included unexpected costs and income, and savings and efficiencies achieved.

     

    Several issues related to Council’s reserves were specifically highlighted for members:

     

    ·         A £52k bequest made in respect of Stamford Arts Centre

    ·         A top-up of £100k to the Insurance Fund in light of recent insurance activity

    ·         A movement in the local priorities reserves where the residual balance had been taken at the outturn position and replenished to support the Big Clean project

    ·         The triennial review of pensions planned for 2017/18 could affect the position of that reserve

    ·         An in-year increase to the Useable Capital Receipts Reserve was the result of sales of vehicles and property assets

    ·         Should the council wish to repay the £25m maturity loan in 2020, sufficient funds were available in the HRA reserve

     

    The set-asides were shown in table 3 of the report; these had been created in the first instance to fund projects in 2015/16 and carried forward to 2016/17 to complete activity. The report proposed transferring the balance of £20k in the People and Organisational Development set-aside into a specific reserve for 2017/18 to facilitate delivery of the learning and development programme for officers and members.

     

    Table 4 gave an overview of activity in relation to the Housing Revenue Account. Members’ attention was drawn to the positive position achieved in respect of rent collection and recovery. The Committee also noted that the revenue account had experienced a gain of approximately £48k as a result of the revaluation of the Council’s housing stock; this was an accounting entry and reflected changes within the wider property market.

     

    The report showed an underspend against the Capital Programmes for both the General Fund and the HRA. Members noted that at the present all capital projects were internally funded, meaning any slippage did not negatively impact on the Council’s financial position as it would have done if the projects were funded through borrowing. Within the General Fund the majority of the underspend related to slippage in the St. Peter’s Hill and the implementation of the commercial investment strategy. The priorities for the Council remained unchanged and both allocations had been included in the 2017/18 Capital Programmes.

     

    Committee members asked questions around the underspend on the HRA Capital Programme. Specific reference was made to the housing improvement programme which had seen  ...  view the full minutes text for item 6.

7.

Draft Statement of Accounts 2016/17 pdf icon PDF 110 KB

    Report number CFM422 of the Cabinet Member for Finance.     (Enclosure)

    Additional documents:

    Minutes:

    The draft Statement of Accounts for 2016/17 (appended to report number CFM422), which was introduced by the Corporate Finance Manager. Members were advised that while it was not necessary to bring the draft accounts to Committee it was considered good practice, giving members the opportunity to make comments before being presented with the final version. The final accounts would be presented at the Committee’s meeting in September 2017 for sign-off.

     

    Officers explained that from the 2017/18 accounts, there would be a requirement to complete draft accounts by 31 May 2018. To test the responsiveness of the Council in relation to this change, 31 May was used as the target date for completion of the draft 2016/17 accounts. 2018/19 would then see the deadline for the sign-off for final accounts being brought forward. Members noted that the draft 2016/17 accounts had been signed-off by the Section 151 Officer on 31 May 2017.

     

    The Committee was advised that there had been a number of changes to the statements from the previous year. The first change related to the Annual Governance Statement, which now referred to 7 principles. The second was the introduction a new statement: Expenditure and Funding Analysis. Officers explained that while, for the most part, the figures in the Statement of Accounts would reflect those in the outturn, some accounting adjustments had been made which meant that they would not fully align.

     

    Members asked for clarification regarding the Council’s political structure, which was referred to in the narrative statement. Officers stated that it had been written to reflect the structure that had been in place when the draft accounts were signed on 31 May 2017 however, members felt that as the document related to the previous financial year, the foreword should reflect the political arrangements that were in place at that time.

     

    Action Point

     

    ·         Clarify with KPMG whether the description of the Council’s political arrangements should reflect the date the draft was signed or the financial year to which they related

     

    A suggestion was made that the document should include some reference to any spend related to the devolution agenda. Officers stated that any reference to expenditure incurred during the financial year should be referenced in the outturn report rather than the narrative report, which was primarily intended to provide the reader with a high-level overview of the Council’s financial activities.

     

    The committee praised the collection rate for non-domestic rates that had been achieved. At 98.7% the rate was within the upper quartile nationally.

     

    Discussion ensued on whether there was a minimum level of reserves that had to be maintained. Councillors were advised that local authorities must retain a working balance but the actual level of reserves was for each authority to determine.

     

    Clarification was sought on section 22 of the balance sheet, which related to debtors. It was noted that the balance sheet showed the level of debtors at a particular date (i.e. 31 March 2017) and as such there would inevitably be fluctuations between comparable years.

     

    An addendum  ...  view the full minutes text for item 7.

8.

Risk Management, including Corporate Risk Register Update and Business Continuity Annual Report 2016/17 pdf icon PDF 97 KB

    Report number CFM419 of the Cabinet Member for Finance.     (Enclosure)

    Additional documents:

    Minutes:

    Decision:

     

    That the Committee approves the risk management annual report for 2016/17

     

    Report number CFM419 of the Cabinet Member for Finance was the Risk Management Annual Report for 2016/17, including the corporate risk register and the business continuity annual report covering the same period. The corporate risk register gave a strategic overview of risks that affected the Council, while risks that were more operational were recorded on a business risk register that was maintained by officers. One intention of the annual report was to ensure that members had knowledge of the risks faced by the authority and were confident in the action being taken to mitigate them.

     

    Given recent cyber attacks in other public sector organisations, new emphasis had been placed on this area. This risk was also reflected in the Council’s business continuity and disaster recovery arrangements. During 2016/17 considerable work had been undertaken on IT business continuity as it was key for continuous service delivery regardless of the scenario. To assist recovery times, the Council has increased its capacity to speed up recovery by putting a recovery framework in place at an alternative site. A key feature of this was improvements to the telephony system; receiving calls through an internet connection made it easier to switch to an alternative location. Members were advised that the project was in the final stage of implementation. The improvements relating to the corporate infrastructure would need to be fully integrated within individual services’ plans. One member asked whether it would be possible for the town councils to piggy-back the back-up infrastructure.

     

     

    One member highlighted that the greatest risk identified related to the recruitment and retention of staff and developing key skills and professions to deliver the Council’s transformational priorities. The organisation had recognised that as it moved through its transformation journey, the workforce needed to adapt to meet new challenges and that it provided an offer that was appealing to the job market.

     

    Members asked about the plans that were in place for any major disasters, particularly those where a significant number of people might need temporary accommodation or re-housing, and how those scenarios were rehearsed. The Committee was advised that the response to any disaster or potential disaster in Lincolnshire focused on the way in which all authorities worked together. There were shared officers between Lincolnshire County Council and each of the district councils which helped to co-ordinate efforts. All the authorities came together with the emergency services as the Lincolnshire Resilience Forum. The Forum ran exercises each year to test responses; previous scenarios have included coastal based events like flooding or a significant oil spill, and a train crash on the East Coast Mainline.

     

    Members were given a recent example of how authorities mobilised when there was the threat of flooding events on the east coast in 2016. When an accommodation centre was made available in South Kesteven. Discussion also ensued about arrangements that were put in place following fires at recycling plants in the district and surrounding areas.  ...  view the full minutes text for item 8.

9.

Health & Safety Annual Report 2016/17 pdf icon PDF 79 KB

    Report number ENV662 of the Cabinet Member for Environment.    (Enclosure)

    Additional documents:

    Minutes:

    The Corporate Health and Safety Report 2016/17 attached to report number ENV662 was presented to the Committee. The report summarised the progress made during the year and identified key areas of focus to maintain and improve health and safety performance. Members were also introduced to the Corporate Health and Safety Officer who had started working for the Council in September 2016.

     

    The corporate approach to health and safety was that it was the responsibility of all members of staff, regardless of their level within the organisation. The highest risk areas for accidents were street care services and the repairs service. The statistical information included in the report showed a downward trend. A caveat was given that planned work during 2017/18 would concentrate on increasing accident reporting, which could lead to the figures increasing 2017/18.

     

    Any reported accident that occurred was followed up and the corporate health and safety team worked with business managers to put actions in place to prevent accidents recurring. Performance was also monitored through management team meetings so that the area was recognised as an ongoing priority.

     

    Health and safety work planned for 2017/18 included risk management and consultation, and the management of the Council’s own premises including places of work and council-owned accommodation. A cultural assessment had been carried out with the street care services team to assess how people related to the Council’s approach to health and safety, which identified that it needed to be inclusive.

     

    Information that gave a breakdown of reported accidents at the leisure centres was circulated before the meeting. Accident information from those sites was supplied by 1Life each month as part of the contract monitoring arrangements. Each health and safety report they submitted included narrative explaining the context for those accidents that had occurred.

     

    Members clarified that a record was kept of working days lost as a result of accidents and asked about compensation claims made against the Council by members of staff. The committee was advised that the level of claims was low and members wondered whether this and the low accident rate indicated that underreporting was not such an issue as suspected or if the level of compensation pay-outs might be a disincentive to reporting.

     

    Committee members were also interested in incidents that happened in the Council’s parks and how they were reported. The Council relied on the contractor completing an accident form, however it was acknowledged that sometimes an accident would occur outside the hours a contractor was on site.

     

    Members noted the content of the report, acknowledging the improvements made to performance in respect of health and safety.

10.

Close of meeting