Venue: Committee Room, Municipal Buildings, West Street, Boston, PE21 8QR
Contact: Janette Collier, Senior Democratic Services Officer 01205 314227 email: firstname.lastname@example.org
To sign and confirm the minutes of the last meeting, held on 30th May 2017.
The minutes of the Committee’s last meeting, held on 30 May 2017, were agreed as a correct record and signed by the Vice-Chairman.
To receive apologies for absence.
There were apologies for absence from the Councillors Anton Dani, Barrie Pierpoint and Felicity Ransome. Councillor Richard Austin was substituting for Councillor Pierpoint.
(A report by John Cornett, KPMG Director)
The KPMG Director presented a report, which summarised the key findings in relation to the 2016-17 external audit of the Council. Subject to all outstanding queries being resolved to KPMG’s satisfaction, it was anticipated that an unqualified audit opinion would be issued on the Council’s financial statements before the deadline of 30 September.
The audit had not identified any material misstatements. There were a number of minor presentational matters, which officers had agreed to amend. Two recommendations had been raised around strengthening controls over starters and leavers to the eFinancials general accounting ledger and the Academy system which supports council tax, business rates and housing benefits. Details of the recommendations were set out in Appendix 1.
KPMG was in the completion stage of the audit and anticipated issuing the Annual Audit letter in October 2017. The audit of the financial statements was substantially complete and would be complete by 4th August. A signed management representation letter was required before the opinion could be issued. The following year, the audit for 2017/18 would need to be completed by the new deadline of 31st July.
KPMG had completed their risk-based work to consider whether in all significant respects the Council had proper arrangements to ensure it had taken properly informed decisions and deployed resources to achieve planed and sustainable outcomes for taxpayers and local people. Their conclusion was that the Council had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources. KPMG, therefore, anticipated issuing an unqualified value for money opinion.
The KPMG Director went through the detail of the report, adding his thanks to the finance team for their co-operation throughout the audit, and asked the Committee to note the report.
The Chairman echoed thanks to the finance team and commended the report.
In response to a question, the Head of Financial Services explained that the starters and leavers mentioned in reference to the Academy system were employees of the company that conducted a review of Council Tax Support cases for the Council.
(A report by Paul Julian, Head of Financial Services)
The Head of Financial Services presented a report regarding the outcome of the formal audit of the Financial Report 2016/17 by the Council’s appointed external auditor, KPMG, seeking formal approval prior to its publication.
The audited Financial Report was attached as Appendix A. Along with the Statement of Accounts, the Financial Report included the Narrative Statement, Annual Governance Statement (AGS) and Independent Auditor’s Report. There was one change to the covering report’s recommendations with regard to the AGS; it had been agreed with the auditors to add a late adjustment to include reference to the document produced by the Chartererd Institute of Public Finance and Accountancy (CIPFA) in 2016 concerning the role of the Section 151 Officer, which simply required the addition of a bullet point to the AGS to enable it to be comprehensive.
The Council had a statutory requirement for the Statement of Accounts to be approved prior to the annual deadline of 30 September, and the audit opinion issued. Once the Accounts had been approved, the Management Letter of Representation signed, and the auditor’s opinion issued, the Financial Report would be published on the Council’s website. It was noted that the deadline for approval of the Statement of Accounts from 2017/18 was being moved forward to 31 July.
It was pleasing that the auditors had commented positively upon the processes that the Council had in place to support the preparation of the statutory Statement of Accounts (previous Minute refers) and that only a small number of minor presentational changes had had to be made.
The Head of Financial Services concluded by thanking the finance team for their hard work in responding to the audit.
During consideration of the report, the Chairman reminded Members that their role was not to scrutinise policy, but if they wanted to see a particular area audited they could raise it to be added to the audit work plan.
In response to questions, it was confirmed that Members received information on Waterloo Housing Association’s funding expenditure in the Quarterly Monitoring Reports and the Housing Department would supply further details if required.
In answer to why the Council’s support had been paid to Waterloo Housing exclusively, and not shared with other housing associations building affordable homes, it was explained that the Council needed to work with housing providers and also with the Homes and Communities Agency to ensure they had schemes that met their criteria and, in the last couple of years, it had been Waterloo Housing that had been able to access money from the Homes and Communities Agency.
It was noted that details of how the Housing Strategy budget was spent were set out in a leaflet available in the Members’ Lounge, which also explained that Waterloo Housing had been selected as a partner and committed to provide new homes following a competitive tendering exercise.
Work was ongoing with respect to addressing the decline in market income, though a full strategy did not yet have a timeline; it would come ... view the full minutes text for item 15.
(A report by Paul Julian, Head of Financial Services)
The Head of Financial Services presented the regular quarterly update, which set out the Treasury Management activities of the Council for the period 1 April to 30 June 2017.
In terms of investment returns, the Council was expecting to exceed the prudent budgeted return estimate of £40,000, which was pleasing given the ongoing low bank rates. The Council was generally keeping investments short-term, although it had invested some monies in longer-term property funds, as approved in the 2016/17 Treasury Management Strategy. The update contained details on the performance of the property funds for the first time and it was pleasing that their initial performance had resulted in an uplift in capital value as well as some dividend return.
It was noted, however, that the outlook for returns was still quite depressed with little sign of any significant increase in rates in the medium-term. Officers would continue to be vigilant and monitor opportunities as they arose.
Members were advised that an experienced officer had been recruited to the post of Senior Accountant (Capital and Treasury).
In response to questions, it was confirmed that the level of investment in the property funds was being held at £1m in the current year; however, when officers looked at the position going forward for 2018/19 they would bring to Members a view on whether it was appropriate to increase it.
The counterparty list of investments included the Churches, Charities and Local Authorities (CCLA). It was confirmed that no investment had been made by the Council directly with another local authority, but with the body that helped to invest local authorities’ money.
(A report by John Scott, Internal Audit Manager)
The Internal Audit Manager presented a report which detailed progress with Internal Audit work on the 2017/18 audit plan.
Work was progressing well, with one audit completed – Strategic Risks, which had been given Substantial Assurance – and three in progress. Two pieces of work were scheduled to start late July. As at the end of June, 20% of the plan had been delivered, compared to the target of 18%. Details of the audits in the plan were set out in Appendix 2.
No High priority recommendations had become due since the previous report in May. A formal follow-up of all the recommendations made in the 2016/17 IT Infrastructure audit (which included some High priority ones) was currently being undertaken by an IT consultant and the findings would be reported to the next meeting. A full update on all overdue recommendations would also be provided.
The report also set out the results of the procurement process undertaken by Public Sector Audit Appointments Ltd (PSAA), which were expected to result in a reduction of approximately 18% in the scale fees paid by local authorities for external audit services. The contracts would cover a 5-year period commencing with the audit of accounts for 2018/19 with a possibility of a further 2-year extension. PSAA would begin a consultation process in due course leading to the appointment of named audit firms to individual authorities, with all appointments to be finalised by 31 December 2017.
In response to questions, the Internal Audit Manager confirmed that local authorities would be advised of the PSAA appointments by Christmas. The KPMG Director confirmed that KPMG had not been awarded a contract; therefore, the Council’s external auditors would definitely be changing with effect from 2018/19.
Copies of the Committee’s work programme were then circulated for information. The Head of Financial Services confirmed that governance matters were included in the Internal Audit work, either by way of comprehensive reports or contained within other reports. Members could raise any specific governance issues to add to the work programme.