Audit Committee – 23 September 2014
Chairman: Councillor Eckhardt
Venue: Civic Centre, Scunthorpe (Function Room 1)
Time: 10 am
AGENDA
1. Substitutions (if any).
2. Declarations of Disclosable Pecuniary Interests and Personal or Personal and Prejudicial Interests (if any).
3. To take the minutes of the meeting held on 24 June 2014 as a correct record and authorise the chairman to sign.
4. Sickness Absence – report of the Assistant Director : Human Resources.
5. Internal Audit Progress Report.
6. External Audit Report.
7. Risk Management Progress Report.
8. Quarterly Treasury Management and Strategy Report.
9. Annual Governance Statement 2013/14 (updates have been highlighted in red for ease of reference).
10. Audit of Accounts 2013/14 – Matters Arising from the Audit.
11. Member Training – Update.
12. Any other items which the chairman decides are urgent by reasons of special circumstances which must be specified.
Note: Reports are by the Director of Policy and Resources unless otherwise stated.
MINUTES
PRESENT: Councillor Eckhardt in the chair
Councillors England (vice-chairman), T Foster, Gosling, Swift, Wells and Whiteley.
Also in attendance was a representative of KPMG (the council’s external auditors).
The committee met at the Civic Centre, Scunthorpe.
362 DECLARATIONS OF DISCLOSABLE PECUNIARY, PERSONAL OR PERSONAL AND PREJUDICIAL INTERESTS – There were no declarations of personal or personal and prejudicial interests made at the meeting.
363 MINUTES – Resolved – That the minutes of the proceedings of the meeting held on 24 June 2014, having been printed and circulated amongst the members be taken as read and correctly recorded and be signed by the chairman.
364 (10) SICKNESS ABSENCE – Further to minute 327, the Assistant Director Human Resources submitted a progress report informing the committee of sickness absence levels of employees of North Lincolnshire Council and the 2013/14 year-end position.
The Assistant Director explained that the average number of working days lost due to sickness absence in 2013/14 to date was 9.46 days against a target of 8.25 days. This was a decrease of 0.55 days compared to 2012/13 and represented a reverse in the upwards trend identified last year. A year end figure of 9.18 days was projected (against an annual target of 8.25 days) which represented a 0.83 day reduction compared to 2012/13. Statistical data for full time equivalent short term and long term absences, periods of sickness absence, reasons for sickness absence, and continuing action being taken as part of the managing attendance improvement plan to address sickness absence, was also set out in the report.
The report stated that the number of days lost due to sickness absence for 2014/15 based on the latest data available (April to July 2014) was 2.91 days. This was compared to 3.08 days in the same period last year, with a projected year-end figure for 2014/15 currently standing at 8.92 days against the annual target of 8.25 days.
The Assistant Director Human Resources, who was in attendance at the meeting, responded to questions asked by members.
Resolved – That following consideration of the above report and discussion of its content, the committee agrees that there is continuing assurance that the risk to capacity due to sickness absence is being managed through adequate controls.
365 (11) INTERNAL AUDIT PROGRESS REPORT – Further to minute 345, the Director of Policy and Resources submitted a report updating the committee on key issues arising from work undertaken by Internal Audit in the 2014/15 audit plan year. Internal Audit delivered an annual programme of audit work designed to raise standards of governance, risk management and internal control across the council. This work culminated in the Internal Audit’s Annual Report that was used to inform the Annual Governance Statement. The Director in his report summarised key issues from work undertaken in the 2014/15 audit plan year, which included –
• Progress on completion of the Internal Audit Plan which was summarised in Appendix A;
• Significant Audit Findings – 2014/15 Audit Plan – no significant control weaknesses were reported and work on Adult Services income procedures had been put back as a result of significant restructure within the service. An insignificant level of consultancy work (5 to 15 days) carried out by internal audit was also identified.
• Unplanned Work – an allocation of 185 days had been set aside in 2014/15 for unplanned work, with 108 days been used to date. Also referrals received via the Whistleblowers’ hotline were summarised;
• Proactive Work – a summary of work undertaken was given together with two bids made for DCLG counter fraud funding in partnership with neighbouring humber councils. Also comments made in response to consultation on the CIPFA Code of Practice on Managing the risk of Fraud and Corruption, and
• An update on the progress of the Local Audit and Accountability Act, and responding to recommendations made in external audit’s ISA 260 report addressed through changes made to the council’s closure of accounts process for 2014/15.
The Director responded to members’ questions on aspects of his report.
Resolved – That following consideration of the above report and discussion of its content, the committee agrees that the progress report contributes to a sufficient level of assurance on the adequacy of internal control arrangements.
366 (12) EXTERNAL AUDIT REPORT – The Director of Policy and Resources
submitted a report on external audit’s Progress Report and Technical Update. He, and the representative of KPMG (the council’s external auditors), explained that the Progress and Technical Update report provided the Audit Committee with a summary on progress in delivering external audit’s statutory responsibilities. It also highlighted key emerging national issues and developments which may be of interest to members. A copy of the report is attached in appendix A.
Resolved – That following consideration of the above report and discussion of its content, the Progress and Technical Update Report be noted.
367 (13) RISK MANAGEMENT PROGRESS REPORT – Further to minute 357, the Director of Policy and Resources submitted a report updating the committee of key issues arising from Risk Management work. Regular reporting on risk management issues was an important source of assurance for the committee to fulfil its role, and provided supporting evidence for the annual approval of the council’s Governance Statement.
The Director in his report addressed and commented upon progress made including –
• The revised Strategic Risk register was reported to the committee at its January 2014 meeting and a review of strategic risk controls had been completed. The outcome of this work was summarised in appendix A to the report;
• An important aspect of the risk management action plan was to continue raising awareness across the council. This was achieved through comprehensive training programmes and communication networks. A ‘Quick Guide to Risk Management’ had been produced and was published on the Intralinc. This was also attached as appendix B to the report;
• Edition 17 of the Risk Roundup newsletter issued in September 2014 was attached as appendix C of the report, and
• Progress on operational risk registers and additional ongoing risk management work.
Resolved – That following consideration of the above report and discussion of its content, the committee agrees that the Risk Management progress report contributes to assurance on the adequacy of risk management arrangements.
368 (14) QUARTERLY TREASURY MANAGEMENT AND STRATEGY REPORT – Further to minute 359, the Director of Policy and Resources submitted a report which provided the committee with a regular review of the treasury strategy approved each year by the council.
The report outlined treasury management performance between April and August 2014. It explained how the strategy had been implemented to date and the response to changing conditions in financial markets.
Resolved – (a) That following consideration of the above report and discussion of its content, the committee agrees that the quarterly report provides sufficient assurance on the effectiveness of arrangements for treasury management, and (b) that the treasury management performance for the period be noted.
369 (15) ANNUAL GOVERNANCE STATEMENT 2013/14 – Further to minute 360, the Director of Policy and Resources submitted a report attaching the updated Annual Governance Statement (AGS) 2013/14 following the audit of the council’s accounts, for the committee’s consideration and approval. The report explained that under the changes to the Accounts and Audit (England) Regulations 2011 the AGS must accompany the final accounts and be considered in its own right. This could take place in September, however the Audit Committee had decided it should be considered in June as well as in September to allow early action to be taken on any issues identified by the AGS. The report summarised where the AGS had been updated in three areas, together with four governance issues requiring development. The updated AGS was attached as an appendix to the report.
The Director stated that the AGS was generally positive and showed that the council’s governance arrangements continued to be generally good and met best practice in most areas. Developments designed to address significant issues were also identified in the AGS. Although the AGS had been updated, there were no further development issues identified through the accounts audit process. The AGS also showed that the council had well established governance arrangements that were monitored and reviewed on a regular basis. Changes and enhancements described in the AGS demonstrated the council’s commitment to continual improvement.
Members asked questions on the content of the AGS, which the Director of Policy and Resources responded to.
Resolved – (a) That following consideration of the above report and discussion of its content, the committee agrees that the Annual Governance Statement for 2013/14 provides a sufficient level of assurance on the adequacy of governance arrangements throughout the council to allow the committee to fulfil its role, and (b) that the Annual Governance Statement for 2013/2014 be approved.
370 (16) AUDIT OF ACCOUNTS 2013/2014 – MATTERS ARISING FROM THE AUDIT – The Director of Policy and Resources submitted a report informing the committee that the Accounts and Audit Regulations required the council to publish a statement of accounts each financial year. These accounts were the formal statement of the council’s financial performance for the year and its financial position at the end of that period. A financial year ran from April to March.
The accounts had been considered and approved by the council’s Director of Policy and Resources on 27 June 2014, which met the statutory requirement that they be approved by 30 June 2014. Subsequently, they must then be audited and published within six months of the financial year-end or 30 September. These deadlines were statutory requirements.
The report explained that the International Standard on Auditing 260 – ‘The Auditor’s Communication with those Charged with Governance’ (‘ISA 260’) required auditors to report certain matters arising from the audit of the council’s final statements before giving an opinion on them. Consequently, a report from the council’s external auditors KPMG was attached as appendix A setting out matters arising from the audit of the council’s 2013/14 accounts.
The Director’s report summarised the main findings of the external auditor’s report and the main issues resulting from the audit, and confirmed that he was in agreement with its findings. A representative of KPMG in attendance at the meeting presented their report and thanked the Director and his team for their cooperation during the audit.
The Director in his report explained that the International Standard on Auditing 580 ‘Management Representations’ required auditors to obtain written confirmations of appropriate representations from management before the audit report was issued. Additionally IAS 570 required a specific statement on the applicability of the ‘Going Concern’ concept to the council. The council’s accounts had been prepared on a going concern basis, and the committee was asked to confirm its agreement with this view. Also a proposed letter of representation was attached, which the committee was requested to approve and authorise its Chairman and Director of Policy and Resources to sign.
The Statement of Accounts 2013/14 was attached as an appendix B to the report. The Director referred to minor amendments to the accounts, which required approval, and confirmed that they did not change the final position of the accounts previously reported to cabinet in terms of General Fund or balances available. There was therefore, no impact on the Medium Term Financial Plan. The council’s external auditors were expected to issue an unqualified opinion on the accounts shortly.
Members asked questions on particular aspects of the council’s Statement of Accounts 2013/2014 and ISO 260 Report to which the Director of Policy and Resources and representatives of KPMG responded to.
Resolved – (a) That following consideration of the above report and discussion of its content the Statement of Accounts for 2013/14 prepared on a going-concern basis and as amended in line with the auditors’ findings, be received and approved; (b) that the content of the ISO 260 Report be noted; (c) that the signing of the Letter of Representation by the Chairman and Director of Policy and Resources be endorsed, and (d) that the Director of Policy and Resources and his staff be thanked for their work in preparing and delivering the audited Statement of Accounts 2013/14.
371 MEMBER TRAINING – UPDATE – The Director of Policy and Resources referred to minute 361 and referred to previous training events held, and reminded members of future dates and subjects of the finance/audit related training events scheduled throughout 2014/15 and listed in the council’s year book/committee timetable.
Resolved – That the position be noted and any further training suggestions be welcomed.