northlincs.gov.uk

Audit Committee – 27 September 2012

Chair:  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 28 June 2012 as a correct record and authorise the chairman to sign.

4.  Internal Audit Progress Report.

5.  External Audit – Update Report.

6.  Risk Management Progress Report.

7.  Quarterly Treasury Management and Strategy Report.

8.  Annual Governance Statement 2011/12 (updates have been highlighted in red for ease of reference).

9.  Audit of Accounts 2011/12 – Matters Arising from the Audit.

10.  Member Training – Update.

11.  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 Gosling, Marper, Ogg, Robinson, Wilson and Whiteley

Also in attendance were representatives of the Audit Commission (the council’s external auditors).

The committeemet at the Civic Centre, Scunthorpe.

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

276  MINUTES – Resolved – That the minutes of the proceedings of the meeting held on 28 June 2012, having been printed and circulated amongst the members be taken as read and correctly recorded and be signed by the chairman.

277  (10) INTERNAL AUDIT PROGRESS REPORT – Further to minute 244, the Director of Policy and Resources submitted a report updating the committee of key issues arising from Internal Audit’s work undertaken in the 2012/13 audit plan. 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 addressed and commented upon the following –

• Action taken to offset a shortfall in resources to ensure that there would be a sufficient level of completed planned work to provide an opinion on the adequacy of the control environment. A summary of the latest position relating to progress on the Internal Plan was attached as appendix A to the report;
• Update on the audit reviews of the council’s fundamental financial systems, including action taken on recommendations to improve controls relating to imprest account handing in one establishment (paragraph 2.4 refers) and ongoing work reviewing financial assessments and income collection procedures for the Adult Social Care Service (paragraph 2.5 refers). Also implementation of recommendations retested between April and July 2012;
• An update on key features of counter fraud work, proactive and reactive, with an update of the counter fraud plan which was attached as appendix B to the report;
• Progress in implementing external audit recommendations, with all being implemented and no further reports being issued;
• A summary of the main provisions of the draft Audit Bill and of the response sent to the consultation which reiterated the views of the Chairman and Director of Policy and Resources (then Director of Finance) on the initial consultation held in June 2011, and
• Development of draft Public Sector Internal Audit Standards.

Resolved – (a) That following consideration of the above report and discussion of its content, the committee agrees that the Internal Audit progress report contributes to a sufficient level of assurance on the adequacy of internal control arrangements; (b) that the Director of Policy and Resources write to the Chairman informing him of the up to date position on the outcome of further work been taken by the relevant Assistant Director to improve arrangements for imprest account handling procedures at one establishment, as summarised in paragraph 2.4 of the report, and (c) that the Chairman circulate this letter to all other members of the committee, and that further progress be reported to the January 2013 meeting of the committee.

278  (11) EXTERNAL AUDIT UPDATE REPORT – The Director of Policy and Resources submitted a report which considered external audit’s Update Report. The Update Report attached as an appendix to the report, provided the committee with progress on delivering external audit’s statutory responsibilities as well as highlighting key emerging national issues and developments which maybe of interest to members. Paragraph 35 of the report also contained specific questions for the committee to consider and the Director’s report summarised action taken in response to these.

Representatives of the Audit Commission, the council’s external auditors, presented their report and responded to questions asked by members.

Resolved – That the Update Report be noted.

279  (12) RISK MANAGEMENT PROGRESS REPORT – Further to minute 269, the Director of Policy and Resources submitted a report updating the committee of key issues arising from Risk Management work. Regular reporting of this work was an important source of assurance for the committee to fulfil its role, 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 review of strategic risk controls had been completed within the Strategic Risk Register with the outcome summarised in appendix A of the report. The evaluation of strategic risk controls had been enhanced by using a definition of the adequacy of controls to provide greater clarity to members on the level of assurance provided. The review showed that all strategic risks were managed to an acceptable level as there were no risks where no assurance was provided;
• Work carried out to reconfigure the 4Risk risk management system following the council restructure. Directors had been asked to confirm their risk owners and review their Operational Risk Registers;
• The Risk Management eLearning package was now available for new managers as part of the Risk Management Action Plan to raise awareness across the council. Work was also progressing to develop a similar package for all staff;
• Edition 11 of the Risk Roundup newsletter issued in August 2012 was attached as appendix B of the report, and
• Results had now been received following data submitted to the CIPFA/ALARM risk management benchmarking club. This showed an encouraging level of compliance, best practice and risk maturity operated by the council. A summary of the results was attached as appendix C to the report.

The chairman also commented on the current revised composition of the Risk Management Group following the council restructure. He welcomed the efficient use of resources and the continuing effectiveness of the group providing positive outcomes.

Resolved – That following consideration of the above report and discussion of its content, the committee agrees that the progress report contributes to assurance on the adequacy of risk management arrangements, as detailed in the report.

280  (13) QUARTERLY TREASURY MANAGEMNT AND STRATEGY REPORT – Further to minute 272, the Director of Policy and Resources submitted areport 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 2012. It explained how the strategy had been implemented to date and the response to changing conditions in financial markets.

The Director in his report also provided an update on the latest position with regard to recovering the council’s Icelandic investments.

Resolved – (a) That following consideration of the above report and discussion of its content, the committee agrees that the quarterly report provides a sufficient level of assurance on the effectiveness of arrangements for treasury management, and (b) that the treasury management performance for the period as outlined in the report, be noted.

281 (14) ANNUAL GOVERNANCE STATEMENT 2011/12 – Further to minute 273, the Director of Policy and Resources submitted a joint report attaching the updated Annual Governance Statement (AGS) 2011/12 following the audit of the council’s accounts, for the committee’s consideration and approval.

The joint 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 four areas, together with seven governance issues requiring development. The updated AGS was attached as an appendix to the report

The Directors 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. 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 2011/12 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 2011/2012 be approved.

282  (15) AUDIT OF ACCOUNTS 2010/2011 – 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 to be approved by the council’s Chief Financial Officer (Director of Policy and Resources) by 30 June each year and be audited and published within six months of the financial year-end or 30 September. These deadlines were government requirements. This year’s accounts also included (and for future years) where major policy changes had taken place and a restated balance sheet for the previous two years to assist comparability and consistency.

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, the Annual Governance Report (AGR) from the council’s external auditors, the Audit Commission, was attached as an appendix to the report. It set out the matters arising from the audit of the council’s 2011/12 accounts.

The Director of Policy and Resources in his 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. Associated recommendations and an accompanying action also required approval. The representatives of the Audit Commission in attendance at the meeting also gave a brief explanation of their report.

International Standard on Auditing 580 ‘Management Representations’ also 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 2011/12 was attached as an appendix to the report. The Director referred to minor amendments to the accounts which required approval. He explained the minor amendments and confirmed that they did not change the final position of the accounts.. The council’s external auditors were expected to issue an unqualified opinion on the accounts shortly.

Members asked questions on particular aspects of the Annual Governance Report and the council’s Statement of Accounts 2011/2012 to which the Director of Policy and Resources and representatives of the Audit Commission responded to.

Resolved – (a) That following consideration of the above report and discussion of its content the Statement of Accounts for 2011/12 prepared on a going-concern basis and as amended in line with the auditors’ recommendation, be received, approved and adopted; (b) that the action plan contained in the Annual Governance Report be approved, and (d) that the signing of the Letter of Representation by the Chairman and Director of Policy and Resources be approved.

283  MEMBER TRAINING – UPDATE – The Director of Policy and Resources referred tominute 274 and referred to previous training events held and reminded members of future dates and subjects of the finance/audit related training events scheduled throughout the 2011/12 council year.

Members also engaged in discussions on the possibilities of considering flexible times for training as well as distance learning and eLearning options.  The director confirmed that he would look into these and report back.

Resolved – (a) That the position be noted and welcomed, and (b) that the Director of Policy and Resources be thanked for the excellent training events held to date.