Audit Committee – 24 September 2013
Chairman: Councillor Eckhardt
Venue: Civic Centre, Scunthorpe (Function Room 1)
Time: 10 AM
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 25 June 2013 as a correct record and authorise the chairman to sign.
4. Internal Audit Progress Report.
5. Risk Management Progress Report.
6. Quarterly Treasury Management and Strategy Report.
7. Annual Governance Statement 2012/13 (updates have been highlighted in red for ease of reference).
8. Audit of Accounts 2012/13 – Matters Arising from the Audit.
9. Member Training – Update.
10. 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.
PRESENT: Councillor Eckhardt in the chair
Councillors England (vice-chairman), T Foster, Gosling, Whiteley, Wilson and Wells
Also in attendance were representatives of KPMG (the council’s external auditors).
The committeemet at the Civic Centre, Scunthorpe.
317 DECLARATIONS OF PERSONAL OR PERSONAL AND PREJUDICIAL INTERESTS – There were no declarations of personal or personal and prejudicial interests made at the meeting.
318 MINUTES – Resolved – That the minutes of the proceedings of the meeting held on 25 June 2013, having been printed and circulated amongst the members be taken as read and correctly recorded and be signed by the chairman, subject to the substitution of ‘Thursday 24 September, 2013’ with ‘Tuesday 24 September, 2013’ in the item ‘Dates and Times of Meetings’ (minute 305 refers).
319 (10) INTERNAL AUDIT PROGRESS REPORT – Further to minute 300, the Director of Policy and Resources submitted a report updating the committee on key issues arising from work undertaken by Internal Audit in the 2013/14 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 addressed and commented upon the following –
- Progress on delivering the 2013/14 Internal Audit Plan 2013/14, which was summarised in appendix A;
- Significant Audit Findings – no systems had been assessed as providing no assurance, and an update was provided on progress made on improving systems relating to the ‘CareFirst’ financial system and Adult Social care Income Procedures;
- Progress of unplanned work against the allocation set aside for 2013/14, and the continuing increase of referrals received through the ‘Whistleblowers’ hotline;
- Proactive Counter Fraud Work – a summary of work undertaken was given including good progress made on this year’s National Fraud Initiative (NFI) data matching exercise, publicity and raising staff awareness through ‘Fraud Focus’ the council’s counter fraud newsletter, which was attached as appendix B, minor adjustments made to current procedures to comply with the new Public Sector Internal Audit Standards (PSIAS), and legislative changes introduced by the National Fraud Authority (NFA) to be included in a refreshed counter fraud strategy, which would be submitted to the committee in January 2014, and
- Progress on work in response to external audit recommendations.
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.
320 (11) RISK MANAGEMNT PROGRESS REPORT – Further to minute 312, the Director of Policy and Resources submitted a report updating the committee on 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 annual review of strategic risks was currently underway with the revised Strategic Risk Register to be reported to the January 2014 meeting of the committee;
- Edition 14 of the Risk Roundup newsletter issued in August 2013 was attached as appendix A of the report, also an eLearning training package was now available for all council staff and members, as well as managers;
- Results had now been received following data submitted to CIPFA/ALARM risk management benchmarking club in June 2013. This showed an encouraging level of compliance with best practice and risk maturity operated by the council. A summary of the results was attached as appendix B of the report. A comparison of results between 2012 and 2013 was also attached as appendix C;
- The Risk Management Group had received a presentation on ‘fleet management and associated risks’ as part of a schedule of reviews of key risks and major projects contained with the Risk Management Action Plan, and
- Outcomes of recent integrated risk management and internal audit work to provide assurance on the adequacy of controls and the management of risks.
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.
321 (12) QUARTERLY TREASURY MANAGEMENT AND STRATEGY REPORT – 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 2013. 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. He explained that maximising the timely recovery of funds remained a priority and to further progress this, on the 13th August a report was presented to the Policy and Resources Cabinet Member requesting approval to negotiate, acting collectively with other Local Authority Creditors, the sale of the Council’s Landsbanki Claim. Approval was granted, and the Local Government Association had procured a partner to negotiate on behalf of the Local Authority Creditors.
The Director responded to members’ questions on aspects of his report.
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 as outlined in the report, be noted.
322 (13) ANNUAL GOVERNANCE STATEMENT 2012/13 – Further to minute 315, the Director of Policy and Resources submitted a report attaching the updated Annual Governance Statement (AGS) 2012/13 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 five 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 2012/13 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 2012/2013 be approved.
323 (14) AUDIT OF ACCOUNTS 2012/2013 – 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 considered and 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.
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 2012/13 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. Changes would also be made to the council’s closure of accounts process for 2013/14 to ensure errors identified were not repeated. Representatives 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 2012/13 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 2012/2013 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 2012/13 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, and (c) that the signing of the Letter of Representation by the Chairman and Director of Policy and Resources be endorsed.
324 MEMBER TRAINING – UPDATE – The Director of Policy and Resources referred tominute 316 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 2012/13 and listed in the council’s year book/committee timetable.
Members expressed a preference for the ‘Understanding the Council’s final accounts’ training session to be re-scheduled in the near future and welcomed the external auditor’s suggestion to assist with training on public health and partnership working.
Resolved – That the position be noted and welcomed.