Agenda and minutes

Apologies for absence were received from Councillor Sue Woolley and Councillor Peter Stephens.

The minutes of the meeting held on 19 June 2024 were proposed, seconded and AGREED as a correct record.

To consider updates on Actions agreed at the meeting held on 19 June 2024

All actions were complete.

To be presented by the Council’s External Auditors, KPMG.

The External Auditor from KPMG, Audit Director Salma Younis presented the draft External Audit Plan and Strategy for the year ending 31 March 2024 to the Committee.  The Audit Plan set out the risk assessment of the work carried out by the External Auditors and the significant risk areas that the Auditors would be focusing on.  Other standard risk areas would be looked at but were not included in the significant risk areas.

The Committee were referred to page 19 of the agenda pack which outlined the scope of the work to be carried out in respect of the audited accounts and the materiality levels that would be looked at.  An audit threshold of £82.5m had been set and anything audited above this amount would be reported to the Governance and Audit Committee.

Page 20 of the agenda pack listed specialist teams that supported the auditors and this included KPMG’s Pensions Centre of Excellence which would look at the balances in respect of the Council’s local government pensions scheme and also a Real Estate Valuation Team that would look at the Council’s asset valuation in respect of the audit.

The group audit scope included LeisureSK Ltd but this would be audited separately by another auditor, however, it would be looked at for the purposes of consolidating the group accounts only.

The Audit Director then referred to the five significant risk areas summarised within the Audit Plan and these were:

·       Land and buildings

·       Investment property

·       Management override of controls

·       Valuation of post-retirement benefit obligations

·       Expenditure recognition

A further audit risk was where Revenue expenditure was inappropriately recognised as capital expenditure.

The Auditor then spoke about Revenue Recognition which was a mandatory audit risk that auditors had to apply across all areas and this was explained within the plan and covered the income streams such as;

·       Council tax

·       Business rates

·       Fees and charges

·       Grant income

The rationale was included in the plan against each income stream which had been rebutted as it was felt that often, rather than income this was an expenditure risk to allow a balance budget for the end of year.

As well as auditing financial statements the auditors also looked at Value for Money (VFM) arrangements.  The risk assessment approach of the auditors was set out in the plan but unfortunately this had been unable to be progressed at the current time and the Committee would receive the arrangements at a future meeting, as they were still awaiting final documents from management.  The three areas that would be looked at covered; Financial sustainability, Governance, and Improving economy, efficiency and effectiveness.  There was no change to the framework that had been outlined by the previous auditors. 

The appendices to the plan and strategy included details on the audit team, confirmation of independence, KPMG’s Audit quality framework and the auditing standards.

The Auditor was thanked for her report and the well laid out documents presented.  Comments were made about the challenges nationally with the late sign off of accounts by  ...  view the full minutes text for item 19.

The Deputy Chief Executive and Section 151 Officer presented the Counter Fraud Annual Report 2023/24.  As part of the Committee’s terms of reference it was a requirement to produce an annual report on the counter fraud arrangements in place and the activities undertaken. The report documented the work undertaken during 2023/24 and indicated the work that would be undertaken during 2024/25.

The document was split into four broad headings covering:

·       Counter Fraud Risk Assessments

·       Housing Benefit and Council Tax Support Fund

·       Single Person Discount

·       Business Rate Relief – Retail Discount

It was stated that one area of work for the Committee to consider receiving information on was in respect of the risk assessment work carried out by the previous internal auditors RSM, working with senior officers to develop a Fraud Risk Register which had been developed and independently verified.

The document highlighted key theoretical risk areas across the authority around internal controls such as:

·       Segregation of duties

·       Separation of roles and responsibilities

·       External frauds around claimants and inappropriate declarations

The document would help direct future work plans of the internal audit and also senior management.  The information could be used to generate a Heat Map using the RAG status to show where vulnerabilities lie and what measures and processes could be put in place to help strengthened these areas.  Work was still progressing on the document and the Committee would be kept informed of its progress during the year.

Further work was being done in respect of Housing Benefit and Council Tax Support Fund and the potential for fraud vulnerabilities in this area. The council was working closely with the DWP on any referrals and false declaration information.  Members were referred to the table at 4.7 of the report which detailed the Housing Benefits Overpayments made during 2023/24.  There was around a quarter of million pounds of fraud debt that had been identified either through the DWP or whistleblowers.  There was a dedicated officer that was focused solely on this type of work looking at referrals and reclaimants. 

The other area of work was in respect of Single Person Discount (SPD) and this was where a person self-declared that they lived in a property on their own and received a 25% discount on their Council Tax.  This was policed by the individual and it was their responsibility to notify the council of any changes.  This area was open to fraud and the Council had worked with an external provider in March 2024 to review the SPD which had resulted in the removal of 573 from the Council Tax account and generated revenue of £75,611.  The review would be complete in August 2024 and it was proposed that a rolling review rather than an annual review be put in place and that the analysis of further options would be explored including the use of a fraud referral service to identify historic cases for revenue collection and options to pursue sanctions, including prosecution.  The use of a fraud referral service provided all  ...  view the full minutes text for item 20.

One of the key areas for Governance and Audit Committee, as part of its terms of reference, is to monitor and review the counter fraud arrangements in place which includes approving the Counter Fraud, Bribery, and Corruption Strategy.

The Cabinet Member for Corporate Governance and Licensing introduced the report.  As part of the Committee’s terms of reference, one of the key areas was the monitoring and review of the counter fraud arrangements in place.  The Counter Fraud framework had been reviewed and the Whistleblowing and the Anti-Money Laundering Polices had been removed as it was felt that these should be standalone policies as they may cover things that may not be related to fraud.

The Counter Fraud, Bribery, and Corruption Strategy 2024-26 aligned to the Fighting Fraud and Corruption Locally (FFCL) 2020: A strategy for the 2020s, the counter fraud and corruption strategy for local government which was endorsed by a range of organisations including the Local Government Association, CIPFA Counter Fraud Centre and SOLACE.

The Counter Fraud, Bribery, and Corruption Strategy 2024-26 aligned to the FFCL’s pillars of activity; Govern, Acknowledge, Prevent, Pursue and Protect and these were detailed within the report.

Members were supportive of the document and it was stated that the detail within the document was at a high level.  The Governance and Risk Officer referred Members to page 68 of the agenda pack which detailed the key priorities for the period and the proactive programme of activity to be undertaken.

The Interim Head of Finance stated that the document would influence the Internal Audit Plan and the key controls in place, although they would not look directly at fraud.

One Member referenced the Corporate Risk Group at the County Council to which the Governance and Risk Officer replied that there was a Risk Management Group which covered, fraud, internal audit and insurance which was similar.  The Statutory Officers within the Council received regular reports on any issues raised.

The Cabinet Member for Corporate Governance and Licensing thanked the Governance and Risk Officer for her work on the document together with the other officers involved.  Reference was also made to the mandatory training sessions on counter fraud that Members should be attending.

It was proposed, seconded and AGREED to approve the Counter Fraud, Bribery, and Corruption Strategy 2024-26.

Decision

That the Governance and Audit Committee approves the Counter Fraud, Bribery, and Corruption Strategy 2024-26 as appended to the report at Appendix A.

The Cabinet Member for Corporate Governance and Licensing introduced the report and reminded the Committee that they had approved the Whistleblowing Policy 2024-26 at the last meeting of the Committee.   The report before the Committee summarised the instances of whistleblowing allegations that had been received during 2023/24. 

The Whistleblowing Policy had been separated from the Counter Fraud Framework.  During 2023/24 14 allegations of whistleblowing had occurred, 11 had been reported through the whistleblowing hot line and three direct from members of the public direct to the Council.  All allegations had been made by external people.

Paragraph 4.3 of the report summarised the categories of disclosures made during 2023/24.  The Statutory Officers Group received a monthly whistleblowing report which included any investigation reports in respect of whistleblowing disclosures and the Group reviewed the reports and agreed the actions to be taken where appropriate.

A comment was made about vexatious whistleblowing allegations and it was stated that due diligence was carried out on all allegations made. 

Identification of whistleblowers was highlighted and it was stated that it was often more difficult to investigate anonymous allegations and an example was given of an incident that more information had been gained by repeat contact with the person making the allegation.  To enable a clear audit trail in respect of allegations a Confidential Whistleblowing Investigation Report template was appended to the report to be completed in respect of all allegations made.

Comments were made in respect of the alleged incidents and the outcomes and other reporting mechanisms to which the Governance and Risk Officer replied.

The Committee noted the report.

The Leader of the Council introduced the report which updated the Committee on the progress of the Statement of Account for 2023/24.  A full statement of accounts was not expected before November 2024.  The issues with the close down and auditing of the Statement of Accounts within Local Government had been well documented.  Nationally there was a shortage of auditors, the issue had become so severe that the Department of Levelling Up, Housing and Communities (DLUHC) had intervened and had created phased deadline dates or back stop dates for each financial year’s accounts and these were detailed in the report.

Some local authorities had two years outstanding accounts, with some having three and four years outstanding accounts, it was not known what the consequence of not meeting the back stop dates would be, but it was expected that auditors would make a modified or disclaimer opinion on the outstanding accounts.

The Council was not in that position with the accounts for 2022/23 as they had been in only 10% of local authorities who had their accounts audited.  Progress on the 2023/24 Statement of Accounts had been positive, however there were a small number of issues that had delayed the provisional outturn, including the implementation of a new housing rent system and staffing capacity issues. 

The main issue that had impacted the closedown of the financial year had related specifically to the implementation of a new housing rent system.  The system had gone live in January 2024 and the information required for the outturn of the accounts had proven difficult to acquire.  The implementation of the Council’s new finance system, Unit 4, was also having an impact as the finance officer’s input was required throughout the implementation.

Comments were made about staffing capacity around the new systems that had been implemented to which the Interim Finance Officer replied.

The Committee noted the current position.

The Leader of the Council introduced the report. The Draft Annual Governance Statement 2023/24 formed part of the Statement of Accounts and was a statutory document required by the Accounts and Audit Regulations 2015.  The document assessed how the Council had complied with the Local Code of Corporate Governance, provided an opinion of the effectiveness of the Council’s arrangements and provided details of how the continued governance would be achieved.  The Statement was issued annually and would be issued with the Statement of Accounts in November.  The content of the Foreword of the document remained the same, how the Council would be held to account and how the Corporate Plan goals would be achieved in an effective way.

The Deputy Chief Executive and Section 151 Officer stated that the document was for noting, but also for the Committee to provide feedback that the document reflected accurately the work that the Council had undertaken. It was a key document that the external auditors, KPMG would look at together with external bodies to see the work of the Council.   The document should show how the Council was open and transparent in how it dealt with governance.    The document followed the seven principles that had been set out by CIPFA and SOLACE in 2016 and the Council operated within that set framework.  Reference was made to the Foreword which had been refreshed and updated to give a more open and pragmatic approach to the work of the Council and the journey that the Council was on and the changes to the Corporate Plan.  The document was in draft format and would come back to the Committee with the Statement of Accounts in November 2024.

The Committee considered and noted the content of the report.

The Leader of the Council presented the report which concerned the Provisional Outturn Report for 2023/24.  He thanked Officers for their hard work and diligence in putting all the reports together for the Committee.  The report covered:

·       The General Fund (GF) Revenue Budget

·       The Housing Revenue Account (HRA) Budget

·       The Capital Programmes – General Fund and Housing Revenue Account

·       The Reserves Statement – General Fund and Housing Revenue Account

In introducing the report, the Leader commented on the new Housing System which had not interacted with the other accounting systems as expected, which had caused problems in retrieving the necessary data for the outturn report.  The Leader also commented on the scheduling of the report to the Governance and Audit Committee, ideally the report should have been to the Finance and Economic OSC first, however, this had not happened even with the change of date for the Finance and Economic OSC.

The Council was in a relatively positive position, it had been anticipated that £1.534m of the Budget Stabilisation Reserve would be needed during 2023/24 in response to an unprecedented increase in budgets relating to utilities, inflation, material and fuel costs.  However, the Budget Stabilisation Reserve had not been required as the situation had improved which had given the Council more flexibility with the General Fund and the Housing Revenue Account budgets.  The Provisional Outturn report had been considered and debated at a recent Cabinet meeting and would be going before the next Finance and Economic OSC.

The Cabinet had considered a number of budget carry forwards which were listed within tables 1 and 3 of the report in respect of General Fund budget carry forwards and tables 6 and 8 of the report in respect of Housing Revenue Account budget carry forwards.  Regular monitoring reports had been provided throughout the year to keep Members informed of the accounting position and that the requirement to use the Budget Stabilisation Reserve was not needed due to the Council’s investments performing better than expected and the way that the Council had managed its money internally.

It was proposed that two reserves were strengthened and these were the ICT Reserve, an increase of £200K and the Property Maintenance Reserve, an increase of £250K which reflected the importance of keeping these reserves at a level that enabled continued investment to be made.  Reference was made to the recent cyber attacks on ICT systems nationally and the need to have systems that were up to date and resilient to attacks.  It was proposed that new reserves were formed and these were:

·       The creation of a Flood Reserve of £30K to fund unforeseen costs in the event of extreme weather conditions such as Storm Babet.

·       The creation of a Leisure Investment Reserve of £200K in order to provide one-off funding in respect of leisure initiatives, with reference being made to the investments required in respect of the management and maintenance of the leisure centres and the change in government policy following the recent election.  Reference was  ...  view the full minutes text for item 25.

This report provides the Governance and Audit Committee with an opportunity to consider proposed amendments to the Council’s Constitution and make any recommendations to Full Council for approval.

The Cabinet Member for Corporate Governance and Licensing presented the report to the Committee. He withdrew recommendation 2 as outlined within the report as there was already a mechanism within the Constitution for a Committee to deal with these policies. 

The Committee was only dealing with the recommendations contained at recommendation 1 which was split into three: 

a)    Provision of a public open forum at meetings of Cabinet.

b)    Provision of Member questions at meetings of Cabinet.

c)     Provision of Member questions at the annual meeting of Full Council.

The recommendations introduced further measures to allow Members and the public to question the Leader and the Cabinet in a formal meeting.  Currently there was a public forum at the beginning of Full Council to allow the public to ask questions.  However, due to the length of recent Full Council meetings Members open questions, where there was an opportunity to ask questions of the Leader and Cabinet Members, had not been able to take place.  The Cabinet Member for Corporate Governance and Licensing felt that it was an important right of Members to be able to question the Leader and other Cabinet Members and ask questions about their communities and also the business of the Cabinet.

During the last few months, the Leader had given Members the opportunity to ask questions at Cabinet meetings and it was now proposed that this became a right of Members to be able to ask questions at Cabinet meetings and that this be added to the Constitution.  It was also proposed that this right be extended to the public and that a public open forum be held at the start of Cabinet meetings, the rules of which would be included within the Constitution and follow the rules already in place for public speaking at other meetings.

A further proposal was that the Constitution was amended to allow for Members Open questions to be included on the agenda at the Council AGM. 

Members welcomed the proposals put forward.  Comments were made in respect of when questions could be asked and it was stated that the Members Open Questions proposed at Cabinet was in addition to Members being able to ask questions on particular agenda items.  Further comments were made in respect of the submission of written questions and timeframes and it was stated that having questions in advance, allowed for a more informative response to be given.  The Leader stated that questions could be asked of the Leader and Cabinet at any time, not just in the public domain via the Council’s meetings.

Further comments were made about time and the length of Full Council meetings and the timing of Lincolnshire County Council meetings.  It was commented that the agenda for Full Council meetings at South Kesteven were often “heavy” however, the length of time was not helped by some Members taking too long to make their point on an agenda item.  Questions in advance of any meeting were always better as a more informative response  ...  view the full minutes text for item 26.

To consider the Committee’s Work Programme for 2024-2025.

Nothing was added to the Work Programme.

There was no other business to discuss and the meeting closed at 11:51.