Agenda and minutes

Governance and Audit Committee - Wednesday, 20th September, 2017 1.00 pm

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

Contact: Jo Toomey 

No. Item



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    An apology for absence was received from Councillor Peter Stephens.


Disclosure of interests

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    Members are asked to disclose any interests in matters for consideration at the meeting.


    No interests were disclosed.


Minutes of the meeting held on 29 June 2017 pdf icon PDF 173 KB

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    The minutes of the meeting held on 29 June 2017 were proposed, seconded and agreed as a correct record subject to the following amendment that the Head of Internal Audit (Chris Williams) should be noted as being from RSM and not KPMG as written in the minutes.


Updates from previous meeting pdf icon PDF 100 KB

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    Ø  Update on the HRA Capital Programme Outturn (Report RIM0372)



    Update on the HRA Capital Programme Outturn underspends


    The Service Manager for Housing Development and Improvement referred to members’ request from the previous meeting for information on continued underspends against the HRA Capital Programme.  The report RIM0372 contained details on slippage and outlined the actions being taken to avoid further underspends due to slippage on the HRA Capital Programme.  


    The Committee was informed that when compiling the data the Council’s property database produced a programme based on forecasted component lifecycles and cyclical replacement assumptions.  These programmes would then be pre-inspected to validate the data outputs.


    Where pre-inspection components were found to be in a good state of repair the component would not be replaced and the lifecycle extended. By doing this a reduction in the annual cost of the programme and budget requirement was possible.


    Examples of components scheduled for replacement included uPVC doors and windows.  These were identified for replacement but often found to be sound when pre-inspected on site.  The budget for doors for 2016-17 was underspent as a result of this.


    Tenants were given advance notification of planned works together with an outline of the benefits of having the work done. This was to try and ensure the work was done so that the value of the asset could be maintained.  Unfortunately, some tenants refused to have the work done or failed to allow access or make contact to arrange this. Tenant refusals occurred throughout the financial year but in some cases immediately prior to the work being undertaken.  This limited options to bring in replacement properties.


    The external wall insulation (EWI) project carried out during 2016-17 had required a funding bid under the Eco funding programme but the decision on the funding award was delayed which had impacted on the budget spend for 2016–17.  This meant the start date was later than anticipated in the year and despite efforts to mitigate the situation a limited number of properties had been completed before the end of March 2017 resulting in an underspend.



    In respect of the budget allocation for Growth and Acquisitions, two former Right To Buy properties were purchased. Other properties were considered but not progressed due to their price or condition. No suitable housing sites were found on the market which had contributed to the significant underspend.  The spend on the programme was dependent on opportunities coming forward during the year.


    The Committee was informed that in addition to the monthly and quarterly budget review meetings undertaken by the property team a number of additional actions had been implemented to address capital underspends.


    With regards to property data and pre-inspections, progress was being made on the housing stock condition survey which would increase stock data accuracy.  Pre-inspections were still required and were being brought forward with the aim of reaching a position where programmes could be planned with more certainty in advance of budget setting.


    Cost Assumptions: The capacity of the database was being explored to use more specific rates that would  ...  view the full minutes text for item 14.


Internal Audit Progress Report pdf icon PDF 633 KB

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    The Internal Audit Progress Report had been circulated with the agenda and was presented by Chris Williams from RSM.  He provided a detailed summary of the work undertaken between 1 April 2017 and 20 September 2017.


    Section 1 referred to the internal audit plan 2017/18 which had been approved by the Governance and Audit Committee in March 2017.  It included a total of 20 planned reviews.  The report today summarised progress against that plan and the results of the work undertaken to date.  It was noted that 25% of the assignments had either been completed or were in progress.


    Three reports had been issued and were attached to the progress report.  These were the Asset Management Plan (HRA) with a finding of “Substantial Assurance” (2 medium and 1 low risk recommendations raised), Business Continuity with a finding of “Reasonable Assurance” (4 medium and 1 low risk recommendations raised) and the Follow up report with a finding of “Reasonable Progress” (2 medium risk recommendations raised). Details about the recommendations were included in the RSM report. The Asset Management Plan (HRA) audit was given a green opinion and the Business Continuity Audit was given an amber opinion.


    With regards to the Asset Management Plan, a recommendation had been provided in respect of updating the property data base.  New hand held devices were being provided for operatives to use out on site which enabled faster synchronisation with the data base. 


    The Business Continuity medium findings were: the retention of evidence in relation to the communication of Business Continuity Plans to staff; a number of departmental Business Impact Analysis and Business Continuity Plans that had not been subject to review and subsequent approval by the relevant Executive Manager; Business Impact Analysis and the impact of score totalling when it came to risks and that the Business Continuity Plans had only been tested as a desk top exercise and not in a simulated environment. 


    The Committee noted the contents of the report.


Internal Audit Follow Up Report pdf icon PDF 354 KB

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    The Internal Audit Follow Up Report had been circulated with the agenda and was presented by Chris Williams from RSM.  He explained that as part of the approved internal audit periodic plan for 2017/18 a review to follow up progress made by the Council had been undertaken. 


    Reference was made to the five follow ups that had been undertaken, Tenancy Management, Absence Management, Income and Bank, Income and Debtors and Purchase Orders and Creditors.  The management actions that had been reviewed were all “medium” priority actions.  The focus of the review had been to provide assurance that all actions previously made and agreed had been adequately implemented.


    The Committee queried whether it was usual to have outstanding actions and were assured there was no cause for concern.  There would be a number of reasons why dates and deadlines for actions being implemented could not be met and these would always be factored in.


    The Committee noted the contents of the report.





Request for additonal audit work

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    The Chairman invited the Cabinet Member for Environment to provide the Committee with an overview of the additional work he was requesting to be undertaken.


    The Cabinet Member for Environment referred to national and local underlying issues regarding missed bin collections.  He recognised there were a variety of reasons why bin collections were missed, such as a contaminated bin or the incorrect bin being presented for collection. He was requesting that a review of the system be undertaken and suggested that the main areas would need to be effectiveness, value for money and wider issues.  Above all he wanted a better understanding and reassurance that the current processes were correct and met both the customer need as well as the needs of the Council.


    The Committee was informed that there was potential for a review to be undertaken within the current Audit Programme.


    Action Point:


    It was proposed, seconded and accepted in principle that a review be undertaken into missed bin collections and that the Cabinet Member for Environment discuss the potential scope of the review with the Internal Audit provider.


Annual Governance Report 2016/17 pdf icon PDF 2 MB

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    Report of the external auditor, KPMG LLP UK



    Mr Cornett, KPMG presented the Annual Governance Report 2016/17. He stated that KPMG anticipated giving an unqualified opinion on the Council’s 2016/17 financial statements by 30 September 2017. It would be reported that the Annual Governance Statement complied with the guidance issued by CIPFA/SOLACE (Delivering Good Governance in Local Government) published in April 2016.Reference was also made to some minor presentational changes within the report. 


    External Audit was required to provide a separate value for money conclusion. No significant risks had been identified. Mr Cornett explained that the 2016/17 Value for Money conclusion considered whether the Authority had proper arrangements in place to ensure properly informed decisions were taken and the appropriate resources deployed to achieve planned and sustainable outcomes for tax payers and local people. 


    The conclusion was the Authority had proper arrangements in place to ensure properly informed decisions and appropriate resources were deployed to achieve planned and sustainable outcomes for tax payers and local people. It was also noted that no material mistakes had been identified and no uncorrected or non-material differences needed to be brought to members’ attention.


    External Audit reported that a balanced approach had been identified in all aspects where an audit had been undertaken and there were no concerns regarding accounting policies, accounting estimates and financial statement disclosures. The requested working papers had been supplied at the start of the audit progress and the officers’ response to further requests for working papers and information was efficient.


    Mr. Norman (KPMG) confirmed that all the requirements relating to objectivity and independence had been complied with.  In addition he commended officers for their help and assistance noting that it was a good outcome for the authority. 


    Members were pleased with the contents of the report and felt it reflected the diligence and hard work of members and officers. The Committee noted the contents of the report and expressed their gratitude to the Council’s finance officers who had compiled the accounts. Members’ thanks was also extended to External Audit for its work.





Statement of Accounts 2016/17 pdf icon PDF 90 KB

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    Report CFM432 of the Cabinet Member for Finance


    Additional documents:


    The Senior Financial Accountant introduced report number CFM384 which presented the Council’s Statement of Accounts 2016/17. It covered requirements of the Account and Audit (England) Regulations 2015, Section 21(2) of the Local Government Act 2003, the revised Statement of Accounts and commentary on the outcome of the audit of the Statement of Accounts. Members were reminded that the draft Accounts were presented to the Committee at its meeting on 29 June 2017.


    Reference was made to the Draft Statement of Accounts that were originally presented to this committee at its meeting on 29 June 2017. The external audit had now been completed and the Statement of Accounts revised to reflect the outcome of this work along with members comments made at that meeting in June. The updated set of accounts was now being presented to Committee together with a commentary setting out the main findings from the audit and subsequent amendments for members consideration and approval. A summary of accounts was also being presented for Committee approval.


    The required changes following the external audit were minor presentational, typographical and narrative changes and noted under 1.6 of the report. The changes provided a better understanding of the figures in the accounts.


    During their discussions on the Statement of Accounts, members asked for an explanation and reasons why there was movement in reserves; the movement was a combination of several issues one of which was the new home bonus money not being fully used as anticipated.  The combined reserves of the HRA did not include the General Fund.  The HRA reserves were used for major repairs and projects driven by the policies of the Council.  It was also used for known commitments such as pensions and elements tagged to policies or legal issues.  There was no mandatory figure set for the amount of reserves a Council could hold although the Auditors would express a view if appropriate.


    The recommendations listed in report number CFM432 were proposed, seconded and agreed.




    The Governance and Audit Committee


    1.    Approves the revised Statement of Accounts 2016/17 as per appendix 1 of report number CFM432

    2.    Notes the commentary on the outcome of audit work

    3.    Approves the publication of the summary of accounts on the Council’s website

    4.    Approves the signing of the Letter of Representation


    It was also proposed and seconded that the Letter of Representation be signed. On being put to the vote, the Committee approved the signing of the document.


    14:25-14:30 – The meeting adjourned.


Treasury Management Annual Report pdf icon PDF 115 KB

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    Report CFM434 of the Cabinet Member for Finance




    The Senior Financial Accountant presented Report number CFM434 that primarily concentrated on the Council’s borrowing and investment portfolios as at 31 March 2017.


    The Governance and Audit Committee had delegated powers from Council to deal with matters relating to the Council’s Treasury Management activities.  Specifically it had the responsibility to monitor, review and amend as appropriate the Council approved Treasury Management Strategy during the course of the financial year. During 2016/17 the Committee exercised its delegated powers by reviewing the Treasury Management Strategy at its meeting on 23rd September 2016. The regulatory environment placed a much greater onus on members for the review and scrutiny of treasury management policy and activities.  This report was important in that respect, as it provided details of the outturn position for treasury activities and highlighted compliance with the Council’s policies previously approved by members.


    Two major landmark events had a significant influence on financial markets during the 2016/17 financial year.  These were the EU referendum in June 2016 and the election of President Trump in the USA in November 2016.  The first event had an immediate impact in terms of market expectations of when the first increase in Bank Rate might happen.  Although there had been a slight deterioration in interest rates for investments which meant that the investment market was currently flat, investments were fluid. The mid year figures would be available in December 2017. 


    In respect of the major preceptors, around £40m was collected from Business Rates and £25m collected from Council Tax.  No additional long term borrowing had been required during 2016/17. The long term debt outstanding as at 31 March 2017 was £102.321m of which £101.321m was in relation to the HRA self financing payment and £1m PWLB (Public Works Loan Boards) loans.


    The short term/temporary borrowing outstanding as at 31 March 2017 was £4.222m.  No rescheduling of debt was undertaken during the year as the average 1% differential between PWLB new borrowing rates and premature repayment rates made rescheduling unviable.


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


    The net treasury position at the end of 2016/17 was £60.74m, which comprised £106.543m of debt against £53.00m of investments. The report also showed the authorised limits to the total long-term borrowing and the operational boundary.

    Committee members queried whether there was of list of investments, how the interest rates effected investments and how often investments were reviewed.  Members were informed there was a list in investments; low interest rates meant that the Council was limited on the amount and types of investments that could be made.  The investments were monitored on a daily basis.


    Reference was also made to the Council’s HRA Loan following the buy out of the subsidy system back in 2013 when the Council had to buy it’s own stock from the Government.  The majority of the borrowing was with  ...  view the full minutes text for item 20.


Ombudsman Annual Report 2016/17 pdf icon PDF 81 KB

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    Report LDS233 of the Cabinet Member for Business Transformation and Commissioning


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    The Assistant Director, Legal and Democratic, summarised report number LDS233 which informed the Committee about the contents of the Ombudsman Annual Review Letter for 2016/17 which was appended to the report.


    She explained that 13 complaints had been received by the Local Government Ombudsman (LGO) relating to services provided by the Council. For the same period the LGO had made 13 decisions.  One decision related to a complaint that had been made in the period before the 1 April 2016.  The 13 complaints compared well with the 22 received for the period 2015/16.


    Of the 13 decisions made during the period of the Annual Review Letter, 9 were referred back to the Council for local resolution. Of those 9 referred back, only 2 complainants pursued their issues as complaints through the Council’s complaints procedure. Both these complaints were dealt with at all 3 stages of the Council’s complaints procedure. For both complaints, the Council determined that there had been no fault by the Council in the provision of the service.


    One complaint relating to planning enforcement had been resubmitted to the LGO by the complainant. This was not contained in the statistics provided for the period of this Annual Review Letter.  The LGO decided that no further investigation would be undertaken due to there being insufficient evidence of fault. The other complaint related to the grant of planning permission and health and safety and was pursued by the complainant to a judicial review in the High Court. The application for judicial review was not allowed by the High Court because the claim was determined to be totally without merit and costs were awarded against the complainant.


    Of the remaining 4 decisions made by the LGO, 2 complaints were not upheld and 2 were closed after initial enquiries. The 2 complaints which were not upheld related to a noise nuisance investigation and banding on the housing register. In respect of the noise nuisance, the LGO was satisfied that there was no evidence of fault by the Council and the Council had correctly investigated the complaint about noise. In respect of the complaint about the housing register, the LGO was satisfied that the Council correctly considered and applied its housing allocations policy.


    The 2 complaints were closed because the complainant had the right of appeal against a refusal of planning permission and where the complaint was made by a parish council, the LGO confirmed that it would not investigate a complaint which was made by a public body.


    The Committee welcomed the reduction in the number of complaints.


    The Committee noted the report.


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

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    The Chairman noted that following a recent joint procurement exercise run by the LGA (Under PSAA) to appoint Auditors to the external audit positions via contract across the country, the Council’s Audit work would, from 1 April 2018, be undertaken by Grant Thornton. Although KPMG would be involved with auditing the accounts up to that date, the Chairman wanted to have noted the Committee’s appreciation for the work undertaken by KPMG.


    A Member requested that future Governance and Audit meetings be moved back to 2.00pm due to work commitments.


    It was proposed, seconded and agreed that future Governance and Audit Committee Meetings would start at 2.00pm rather than 1.00pm.


    Action point:


    That the time for the meetings of the Governance and Audit Committee are changed from 1.00pm to 2.00pm.


Close of meeting

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    The meeting closed at 14:55.