Audit Committee – 12 April 2011

Chair:  Councillor Whiteley

Venue:  Pittwood House, Scunthorpe (Function Room 1)

Time:  10am

AGENDA

  1. Substitutions (if any)
  2. Declarations of personal or personal and prejudicial interests (if any)
  3. To take the minutes of the meeting held on 25 January, 2011 as a correct record and authorise the chair to sign
  4. Sickness Absence – Report of the Head of Strategy Development
  5. Final accounts and accountancy policies 2010/11
  6. Audit Committee – forward plan and assurance map 2011/12
  7. Internal audit plan, strategy and terms of reference 2011/12
  8. Internal audit progress report
  9. External audit recommendations – progress report
  10. External audit reports
  11. Quarterly Treasury management and strategy report
  12. Risk management strategy 2011/12
  13. Member training update
  14. Any other items which the chair decides are urgent by reasons of special circumstances which must be specified.

Note:  Reports are by the Director of Finance unless otherwise stated.

MINUTES

PRESENT: Councillor Whiteley in the chair

Councillors Wilson (vice-chair), Cawsey, T Foster and N Sherwood

Also in attendance was a representative of the Audit Commission (the council’s external auditors).

The committee met at Pittwood House, Scunthorpe.

200 DECLARATIONS OF PERSONAL OR PERSONAL AND PREJUDICIAL INTERESTS – There were no declarations of personal or personal and prejudicial interests made at the meeting.

201 MINUTES – Resolved – That the minutes of the proceedings of the meeting held on 25January 2011, having been printed and circulated amongst the members be taken as read and correctly recorded and be signed by the chair.

202 (29) SICKNESS ABSENCE – Further to minute 188, the Head of Strategy Development submitted a report informing the committee of the impact of the improvement plan for sickness absence in the council.

The report explained that there continued to be an improvement in sickness absence and the council was now almost on track to achieve its annual target of 9.25 days. For the reporting period April to February the council had achieved an average of 8.56 days which was now very slightly more than the target of 8.53 days per person. This was a reduction from the 9.49 days reported during the same period last year.

There was still variation in performance of services, as identified in an appendix, but there had been significant reductions in some services where sickness was previously above average.

Sickness targets for each service continue to be monitored through Quarterly Performance Reviews. These showed seven on track, two slightly off track (up to five per cent) and five off track (above five per cent). However, three areas that were off track did have absence levels still significantly below the council’s.

The Head of Strategy Development also stated that progress had been made in Children’s Services on the improvement action instigated in the last quarter with a reduction to bring it back almost to average. The increases in Neighbourhood Services had however continued to rise to a 17.8 per cent increase on the same period last year. This would therefore continue to be monitored over the next quarter and if the trend continued further improvement action may need to be considered.

Resolved – (a) That following consideration of the report and discussion of its content, the committee agrees that the impact of improvement action provides sufficient assurance that the risk to capacity due to sickness absence is being reduced, and (b) that a further progress report be submitted to the committee after the next performance quarter this should also identify the reasons for sickness absence in Neighbourhood and Environmental Services and where possible compare this council’s level of sickness with other local and national council/public sector organisations.

203 (30) FINAL ACCOUNTS AND ACCOUNTING POLICIES 2010/11 – The Director of Finance submitted a report seeking approval of the accounting policies that the council would use to close the 2010/11 accounts. This year there were changes to the regulatory framework for the accounts, which were now to be compiled in line with International Financial Reporting Standards (IFRS). There were also changes to the Account and Audit Regulations which imposed further requirements on local authority accounting.

The report explained that The Code of Practice on Local Authority Accounting in the United Kingdom 2010/11 (CoP) required each local authority to adopt accounting policies that set principles for recording financial transactions within the Council’s accounts. The CoP was, in effect, a legal requirement as it was recognised in Government legislation as ‘Proper accounting practice’.

The CoP required that polices were set within UK accounting standards, which were from 2010/11 to be based on International Financial Reporting Standards (IFRS), but otherwise they may reflect matters appropriate to an authority’s circumstances.

The policies proposed for North Lincolnshire were based upon guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and took account of local circumstances.

The Director of Finance in his report stated that in January 2011 the Government consulted on changes to the Accounts and Audit Regulations. The main proposal was the alignment of the accounts approval process for public bodies with that of the private sector. This meant member approval of the draft accounts was no longer a requirement. Members were still required to approve a final set of accounts in September, which would incorporate any audit findings. This was sensible, as the committee would have the assurance provided by the audit when taking the decision to approve. A report on the council’s Financial Outturn would continue to be presented to cabinet in June. CIPFA has considered the proposals and has given them its support.

Also, the Annual Governance Statement (AGS) must accompany the Final Accounts and be considered in its own right, as had been the case in North Lincolnshire. Under the new Regulations this could take place in September. However, the committee could still opt to consider the AGS in June as well as in September, irrespective of whether it continued to approve the accounts in June or delegate that task to the Director of Finance. This would allow early action to be taken on any issues identified by the AGS.

The report requested that members satisfy themselves that the Accounting Policies set out in appendix A were appropriate, paying particular attention to local amendments, modifications and accounting standards required by IFRS, as listed and summarised in the report.

The Director of Finance also circulated and explained an amendment to paragraph 5 (i) ‘Benefits Payable During Employment’ of the accounting policies document.

Resolved – (a) That the accounting policies, as set out in appendix A of the report with the addition of the amendment to paragraph 5 (i) ‘Benefits Payable During Employment’ circulated at the meeting, be approved; (b) that the approval of the draft accounts by 30 June be delegated to the Director of Finance, but the committee continue to receive the Annual Governance Statement for approval at the June meeting, and (c) that the power to make new accounting policies as may become necessary in the production of the accounts be delegated to the Director of Finance, with any such changes being reported to the next meeting of the committee.

204 (31) AUDIT COMMITTEE – FORWARD PLAN AND ASSURANCE MAP 2011/12 – Further to minute 153, the Director of Finance submitted a report containing a forward plan of reports and map of assurances for 2011/12. The plan also showed the assurance each report would provide to allow the committee to fulfil its terms of reference and whether the source of assurance was primary or supporting. Changes had been made to reflect timing adjustments to some external audit reports, the removal of Use of Resources judgements, the impact of recent changes to the Accounts and Audit Regulations on reporting requirements and VFM opinion work. Further details on the revised Accounts and Audit Regulations were explained in the Final Accounts and Accounting Policies Report (minute 202 refers).

Appendix A of the report showed the categories and level of assurance the Audit Committee needed to fulfill its terms of reference and culminating in the approval of the council’s accounts and Annual Governance Statement.A forward plan of reports for the committee to consider was set out in Appendix B.

Resolved – (a) That following consideration of the report and discussion of its content, the committee agrees that the Forward Plan for 2011/12 provides sufficient scope to provide an appropriate level of assurance on the adequacy of the council’s internal control and governance arrangements, and (b) that the Forward Plan for 2011/12 be approved.