Venue: Witham Room - South Kesteven House, St. Peter's Hill, Grantham. NG31 6PZ. View directions
Contact: Anita Eckersley
Apologies for absence were received from Councillors Damien Evans and Councillor Peter Stephens.
Disclosure of interests
Members are asked to disclose any interests in matters for consideration at the meeting.
No interests were disclosed.
The minutes of the meeting held on 20 September 2017 were proposed, seconded and agreed as a correct record.
Updates from previous meeting
The Chairman noted that an update on the HRA Capital Programme would be taken under Any Other Business.
John Cornett from KPMG presented the Annual Audit Letter 2016/17 which summarised the outcome of completed audit work. KPMG issued an unqualified opinion on the authority’s financial statements on 25 September 2017 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 no material errors had been identified during the audit. KPMG considered the Authority’s accounting processes to be appropriate and the draft accounts had been published well ahead of the deadline. The quality of supporting working papers was considered as good.
Members’ attention was drawn to appendix 3 of the letter, which provided detail on the audit fee. The final fee of £47,273 (excluding VAT) was in line with the planned fee. An additional £3,000 (excluding VAT) was charged for additional audit-related services relating to the 2015/16 Pooling of Housing Capital Receipts Return, which was outside the Public Sector Audit Appointment’s certification regime.
Certification work was still ongoing under the terms of Public Sector Audit Appointments in respect of the Authority’s housing benefit claim. The indicative scale fee set for by PSAA was £5325 but the final fee for undertaking this prescribed work would be confirmed in January 2018 once the outcome of the work had been reported.
Members welcomed such a good report and 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 2016/17.
Report of Internal Audit. (Enclosure)
Amjad Ali Manager from RSM presented the Internal Audit Progress Report. He informed Members that Internal Audit was on schedule to complete its annual audit plan and report its findings by the end of the year. It was reported that 59% of the audits within the 2016/17 plan had been completed, 1 audit was ongoing and the remainder were scheduled for early 2018.
Since the last progress report had been presented to Committee, four audits had been completed:
· Cyber Security (reasonable assurance with 4 medium and 5 low risk actions agreed)
· Housing Benefit (substantial assurance with 2 medium and 1 low risk actions agreed)
· Payroll and Expenses (substantial assurance with 2 medium risk actions agreed)
· Risk Management (substantial assurance with 1 medium and 1 low risk actions agreed)
A summary of the medium risk actions was included in the report.
The Committee was given the opportunity to ask questions about the Internal Audit’s findings.
The medium risk action related to:
A sample of 15 users on the housing benefit system, in one instance a declaration of interest could not be located and for five members of staff, a declaration was on file signed and dated, but the declaration was out of date as it had not been completed in the last 12 months.
A sample of 10 weeks BACS payments confirmed in all instances the value of the payment corresponds throughout the process and appropriate authorisation in place. However, it was noted that the same person submitting the BACS payment was also checking the submission value. In addition, it was noted in all 10 instances the date of checking the submission was not documented.
Payroll and Expenses
The medium findings related to:
The testing of the payroll payment reports for April 2017 to September 2017established that in one case there was no segregation of duties in the authorisation (transmitted by) and the checking of the BACS transmission report for one payroll payment run.
The testing of the payroll exception reports for the period April 2017 to September 2017 identified 15 instances where the payroll / exception reports were not subject to checking and/or review as the reports were not signed and/or dated to confirm this check. On testing the BACS transmission reports and output reports testing had identified three cases where the document was not date / signed and dated and as a result it could not be confirmed if the reports had been checked or reviewed.
The audit had identified an action in relation to the review of Risk Management Group meeting minutes. It was confirmed in some instances attendance from particular service areas was relatively poor. As such, the process of identifying, evaluating, controlling and reviewing risks may not be adequate which could impact on that service area.
The findings under this area were noted.
Members sought clarification on the definitions in respect of the criteria for the opinions issued and whether any timescales were set for addressing issues.
High: There was ... view the full minutes text for item 29.
Report of Internal Audit. (Enclosure)
Amjad Ali, Manager from RSM presented the Internal Audit Follow Up report for the year, which reviewed actions arising from three Internal Audit reports. He reported that the Council had demonstrated good progress in implementing the agreed management actions.
As part of the approved internal audit plan for 2017/18 a review to follow up progress made by the Council to implement the previously agreed management actions had been undertaken under the following areas:
· IT/Network Resilience (implementation was ongoing)
· Asset Management Plan (HRA) (implemented)
· Follow Up 1 (implemented)
The actions considered in this review comprised of three ‘medium’ and two ‘low’ priority management actions and the aim was to provide assurance that all actions previously made had been adequately implemented.
With regard to the findings of the issues identified and in line with the definitions set out in Appendix A the opinion was that South Kesteven District Council had demonstrated good progress in implementing the agreed management actions.
Members were informed that testing of systems was ongoing and that the implementation of any management actions was on target. No further clarification was sought by Members.
Members noted the Internal Audit Follow Up Report.
Report number CFM445 of the Cabinet Member for Finance. (Enclosure)
To approve the updated Corporate Risk Register as attached at appendix A of report number CFM445.
The Corporate Risk Register formed a key part of the Council’s governance framework. It is presented to the Governance and Audit Committee every 6 months and was last presented to the Committee in June 2017 where it was agreed to include cyber risk. This was due to constantly evolving threats and the profile of the Council being a potential target. Whilst there were barriers of strength in place to help prevent a successful attack, this included a new educational awareness programme, inclusion of this risk showed due diligence and ensured that the risk got scrutinised as a major risk to the Council. The Corporate Risk Register at Appendix A of the report had been updated to reflect any changes.
It was proposed that an externally facilitated workshop would be undertaken in the new year to review the risk register in order to ensure it reflected the environment (both internal and external) the Council was working within. The outcomes of the review would be presented to the Committee at the next risk register update presentation in June 2018.
Members were informed that Councils in Lincolnshire liaised on a regular basis to discuss a range of issues such as cyber risk, bench marking and strategies.
In response to a query about cyber attacks and whether lessons had been learned from the recent attacks on outside organisations, Members were informed that barriers were in place and the IT resilience was continually monitored and scrutinised. Training for both officers and Members was also a high priority.
The contents of the report were noted and it was proposed, seconded and agreed that the recommendation be approved.
Report number CFM431 of the Cabinet Member for Finance. (Enclosure)
To approve the Counter Fraud Annual Report CFM431 in respect of the Financial Year 2016-17
In accordance with the terms of reference of the Committee it was a requirement to produce an annual report on the counter fraud arrangements in place and the activities undertaken. Counter fraud was fundamental to the Council’s achievement of its strategic objectives. The report being presented covered the financial year 2016-17 and detailed the various aspects of work delivered during the course of the year.
The Council like any organisation was inherently vulnerable to the risk of fraud and corruption. It was vital that robust arrangements for the prevention and detection of fraud were maintained and the best information and knowledge used in order to ensure effective fraud prevention procedures were in place. The Assistant Director for Finance introduced the new Counter Fraud Officer to the Committee.
The Council’s Strategy was reviewed and updated in March 2016 to incorporate the new CIPFA Code of Practice on Managing the Risk of Fraud and Corruption.
There were 15 whistle-blowing concerns reported during 2016-17 all of which have been investigated and action taken where appropriate and reported back to the whistleblower where contact information had been provided.
The Lincolnshire Counter Fraud Partnership (LCFP) continued to co-ordinate the response of the Lincolnshire local authorities in tackling high-risk areas of fraud against Councils. The group had now been extended to include representatives from the Police and Crime Commissioner (PCC) for Lincolnshire and Lincolnshire Police. All partners contributed to LCFP's funding in 2017/18.
The Council continued to actively contribute to the work of the partnership. Areas of progress the Partnership were looking at were the development of e-learning and sharing with district partners to enable them to train their employees; successful delivery of a pilot Council Tax Reduction (CTR) review by a neighbouring authority which identified revenue of around £500k from CTR fraud and error. The approach would be rolled out across other districts in 2018/19.
Other areas covered were the delivery of a housing tenancy fraud briefing to encourage Districts with housing stock to participate in a housing tenancy fraud data check and an emphasis on working collaboratively with Procurement Lincolnshire to embed counter fraud messages in the scheduled procurement training roll out.
LCFP had also part funded a resource to deliver a pilot scheme to expand the National Non Domestic Rate base. The project identified potential missing and undervalued properties.
The Committee welcomed the report and the work being undertaken to reduce fraud.
The Governance and Audit Committee noted and approved the Counter Fraud Annual Report for the financial year 2016-17.
Report CFM448 Report of the Cabinet Member for Finance. (Enclosure)
That the Governance and Audit Committee note and approve the contents of the mid-year review of Treasury Management activity for 2017/18 and approve the amendments to the Treasury Management Strategy 2017/18 detailed within the report.
The Committee was reminded that the Council was required by regulations issued under the Local Government Act 2003 to produce regular reports on treasury and debt management operations during the financial year. The report met the requirements of the CIPFA Code of Practice on Treasury Management.
The Council had formally adopted key recommendations of the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for Treasury Management in the Public Services. In line with the Code the Council had also adopted a treasury management policy statement that required regular reports on treasury and debt management operations during the financial year.
In addition under Part 1 of the Local Government Act 2003, there was a requirement on the Council to have regard to the Prudential Code for Capital Finance which included the setting of Prudential Indicators. Relevant treasury management indicators were incorporated into the Treasury Management Strategy 2017/18 which had been approved by Council on 2 March 2017.
This report has been submitted in accordance with these requirements and provided a review of treasury management and current developments for the period ended 30 September 2017.
No additional long term borrowing was required during the first half of 2017/18. All Council borrowing was with the Public Works Loans Board (PWLB) and the average rate of interest paid on the debt portfolio was 2.82%. Appendix A showed loans outstanding as at 30 September 2017. Regular reviews were undertaken to consider redemption costs of natural maturity against new borrowing to settle the outstanding debt early. As part of borrowing requirements around the HRA self financing proposals the Council had created two separate debt portfolios which apportioned the existing debt between the General Fund and HRA.
Short-Term/Temporary Borrowing was defined as borrowing which was due to be repaid within 365 days. At 30 September 2017, the Council had short term borrowing of £3.722m with the next loan due to mature in November 2017 to the value of £0.500m. The remaining £3.022m to be repaid in the future.
The average size of the investment portfolio for the 6 month period was £69.9m compared to an average portfolio size of £62.2million during the same period in 2016/17.
The Council had a diverse portfolio and used a number of methods to invest its reserves which included direct deposit, certificate of deposits, notice accounts and money market funds. As at 30th September 2017, the Council held short term investments of £51.418m (specified investments), and £20m long term investment (non-specified investments). The Treasury Management Strategy stipulated that the Council should not hold more than 35% of investments as non–specified investments and this was adhered to during the first half of 2017/18. The schedule of investments as at 30 September 2017 could be found at Appendix B.
For the period ended 30 ... view the full minutes text for item 33.
Any other business, which the chairman, by reasons of special circumstances, decides is urgent.
HRA Capital Programme Update (Report RIM0375)
Members were reminded that a report to the Governance and Audit Committee on 20 September 2017 regarding the HRA Capital Programme had detailed circumstances contributing to underspends on the programme in previous years and the actions being taken to mitigate this 2017-18. At that meeting, the Committee requested a further update on the programme for the next meeting. The report provided an update on performance on the programme to the end of period 7 of the 2017-18 financial year.
It was noted that in general there had been a marked improvement of the management and delivery of the HRA Capital programme for the year to date. Committed expenditure, this was for work orders placed, was currently 86% of the current forecasted profile. Actual expenditure, this was completed work, was currently 70% of the current forecasted expenditure profile. The figures were based on those figures recorded at the end of period 7 (October 2017). Appendix A provided a more detailed breakdown.
The progress of the overall capital programme had been adversely affected by the performance on the stock growth and acquisitions budget. The forecasted expenditure of £907K against the actual spend of £26K was due to the speculative nature of the budget. Re-profiling of the budget was required for a number of planned house purchases and site acquisitions currently ongoing to reflect expenditure more in line with the latest forecasts. It was expected that on completion of the purchases and site acquisitions the majority of this budget would be utilised before the financial year end.
To date, the committed expenditure, this was orders placed excluding Growth Budget, was currently 99% of the current forecasted profile. The actual expenditure, this was completed work excluding the Growth Budget, to date was currently 83% of the current forecasted expenditure profile.
Some slippage on the new build housing programme in respect of the completion of the final scheme at Trent Road was due to delayed utility works. This had resulted in expenditure to date being less than forecast. The scheme was on track to complete in December when the full cost of the work and fees would be reconciled.
Other slippage had been as a result of the re-wiring programme, but work was now progressing and the budget was expected to be spent by the end of the financial year.
Work around engagement with contractors working on the Capital programme was being undertaken through monthly contract progress meetings and performance against budget forecasts were being stringently monitored as part of these meetings. Contractors now had a clear understanding of the requirements and were on board with ensuring that any slippage was effectively managed and resources employed to recover where possible.
Members noted the update.
That the Governance and Audit Committee receive an update at the next meeting.
Governance and Audit Committee Membership:
The Chairman highlighted the need for additional Members to be trained so the Committee had access to substitute members as and when required. ... view the full minutes text for item 34.
Close of meeting
The Chairman thanked everyone for attending and wished everyone Season’s Greetings.
The meeting closed at 3.15pm.