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 22nd May 2019.
The minutes of the Committee’s last meeting, held on 22nd May 2019, were agreed as a correct record and signed by the Chairman.
DECLARATION OF INTERESTS
To receive declarations of interests in respect of any item on the agenda.
Councillor Alison Austin declared her position as director for CentrePoint Outreach in relation to homelessness data supplied by the organisation.
(A report by Jon Machej, Engagement Manager, Mazars)
The Engagement Manager from Mazars presented the Audit Completion Report which set out the findings from the company’s audit of the Council’s Accounts for the year ending 31st March 2019.
The report outlined the detailed findings from Mazars’ work on the financial statements and its conclusion on the Council’s arrangements to achieve economy, efficiency and effectiveness in its use of resources. The report also contained Mazars’ conclusions on the audit risks and areas of management judgement in the Audit Strategy Memorandum.
The Engagement Manager said it was testament to the Council’s officers that the Accounts had been presented free of material errors and that there had only been a few minor ones.
It was anticipated that an unqualified opinion would be issued, without modification, on the financial statements, and that the Council had proper arrangements in place to secure economy, efficiency and effectiveness in its use of resources.
At the time of preparing the report, the only outstanding issue had related to assurance over the net pensions liability; however, the final report from the external auditors of the Lincolnshire Pension Fund had now been received and Mazars had nothing further to report in relation to the matter.
With respect to property funds, the Engagement Manager highlighted Mazars’ conclusion that the Committee had not yet taken up the opportunity of receiving an update from the fund managers.
The Committee discussed the challenges of gaining an understanding of property funds before receiving updates. The Chief Finance Officer confirmed that discussions were being held with Link Asset Services, the Council’s Treasury advisors, to provide training for Members so that they would be more able to question the property fund managers. The training would be held immediately prior to the Committee’s next meeting. In accordance with the Capital Strategy, the Council’s involvement with property funds would be long-term; therefore, the property fund managers would be invited to present to the Committee in the future.
In response to questions, the Engagement Manager explained that there was no reason to believe that the provision for rate appeals, based on an estimate of the likely success rate, would not be adequate.
The Internal Audit Manager confirmed that the Council had progressed the closure of the bank account for Boston Area Regeneration Company (BARC), but the bank had not closed it due to an administrative oversight; it was not a failure on the Council’s part.
Management override of controls was a default risk that had to be considered as part of the audit standards, as management could manipulate figures to move income in or out of accounting records. This was not an issue for the Council and the Internal Audit Manager had not actually come across this happening within a local authority.
(A report by Suzanne Rolfe, Transformation & Governance Manager)
The Transformation & Governance Manager presented a report which provided the quarterly monitoring information on strategic risks for the period ending on 31st March 2019.
Strategic risks were those which could impact most on the achievement of the Council’s corporate priorities as set out in the current Corporate Plan – Prosperity; People; Place; Public Service. There were no new strategic risks to report in Quarter 4.
The report contained a summary of strategic risks, with full details set out in Appendix A along with the ‘risk owner’, i.e. the service manager for Members to contact for further information.
The two highest risks for Quarter 4 remained as Housing and Budget, many aspects of which were outside the Council’s control.
The strategic risks for 2019/20 would be reviewed alongside the development of the next Corporate Plan. Operational risks for 2019/20 were currently being reviewed by service managers and would be reported in Quarter 1 of 2019/20. There would be a session for Members before the next meeting to cover how to identify and monitor risks in order to gain further knowledge before they considered the strategy. The Strategic Risk Register would normally also be reviewed, but it would be preferable to consider it alongside the new Corporate Plan.
The Local Plan risk had been removed as a strategic risk as the Plan had now been adopted, though the delivery of the Plan would continue to be monitored as an operational risk. A Member suggested that the delivery of the Local Plan could be seen as a strategic risk in terms of the Corporate Priority of ‘Place’ if the Council was in the position where it did not have strategic control over the planning applications being progressed. The Transformation & Governance Manager agreed; however, the strategic risk that had been removed related purely to the situation when there had been no Local Plan in place.
Committee Members’ comments included reference to the effect of the Transformation Programme and Brexit on the Hanseatic League and a suggestion that Boston be made a free port area.
In response to questions, it was explained that the Housing risk had been rated ‘high’ and ‘red’, whereas the Budget risk had been rated ‘high’ and ‘amber’ because of the controls in place with respect to the Budget risk.
The Transformation & Governance Manager noted that there were two entries in Appendix A where the risk control was stated as ‘treat’, but the appendix did not give details of target risk score and explanation.
Members discussed the effect of Brexit and the impact of the level of immigration on the lack of housing delivery, rated as a high risk, which was linked to the risk of population change, rated as medium. It had been reported to the Corporate and Community Committee that the net level of migration had reduced significantly since 2015, and Members referred to the effect of the Controlling Migration Fund ... view the full minutes text for item 14.
(A report by Paul Julian, Chief Finance Officer)
The Chief Finance Officer presented a report updating the Committee on the outcome of the audit of the Financial Report 2018/19, and sought formal approval prior to its publication.
The Council had a statutory requirement for the Statement of Accounts to be approved prior to the annual deadline of 31 July, and the audit opinion issued.
It was pleasing to note that the External Auditors had commented positively upon the processes that the Council had in place to support the preparation of the statutory Statement of Accounts and the associated working papers. This helped support the assurances relating to governance of the funds used by the Council. A significant amount of work had been undertaken by both the auditors and officers. There were only minor amendments and much of the report was as presented to the Committee in May. The Chief Finance Officer thanked the finance team for their hard work and diligence.
The Committee was asked to formally approve the audited Financial Report, and Statement of Accounts, which would then be published before the 31 July deadline. The audit opinion would be issued once the standard Letter of Representation had been signed.
Members asked various questions, including the effect of the reclassification of the Guildhall as an operational asset. It was explained that, traditionally, the Guildhall had been classed as a heritage asset; however, this had been challenged by the new External Auditor on the basis that it was a museum and, therefore, was more properly classed as an operational asset under accounting requirements. There was no difference financially.
The increase in total expenditure shown in the expenditure and income analysis was mostly accounted for by the notional business rates tariff, which had increased significantly following the success of the 2018/19 pilot scheme that had allowed the Council to retain 100% of the rates collected.
Members commented on planning performance with concern expressed that it depended entirely on the number of applications being submitted and the number of officers dealing with them, and it was suggested that the targets might be too high.
The council tax banding had not been uprated since the introduction of council tax, which was a decision made by central government.
The number of premises found by Trading Standards to be selling illegal cigarettes and alcohol was not reported by the Council, but the information could be obtained.
The amount of debts written off were included in the Quarterly Monitoring Reports. The amount of Housing Benefit write-offs were small compared to the total paid.
A Member commended the report and was reassured by the Auditors’ conclusions.
[Mr Pickering was also in favour of this resolution.]
(A report by Paul Julian, Chief Finance Officer)
The Chief Finance Officer presented a report, which set out the Council’s Treasury Management and relevant capital strategy activities the period 1 April to 30 June 2019, in compliance with the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management 2017 and generally accepted best practice.
In terms of investment returns, the Council was expecting to achieve a total of £737,000 for 2019/20, comprising £645,000 net distribution income from property fund holdings (i.e. after deduction of management fees) and £92,000 from cash investments. This compared favourably to the total budget of £711,000.
The Council was generally keeping cash investments short-term up to a maximum of twelve months. As the financial climate changes, who the Council invested with, and the amount invested, was under constant scrutiny, taking into account risk at any particular moment in time.
The report covered information on the economic background; interest rate forecast; investment income; capital strategy and property fund valuation; borrowing; compliance with Treasury and Prudential limits; and changes in risk appetite.
In response to questions, it was explained that the difference between purchase price (i.e. the amounts invested) and the latest fair value reflected premiums paid or discount received against the funds’ ‘Net Asset Value’ at the date of purchase, together with the movement in fund valuations since acquisition. Values had decreased only very slightly during quarter 1. Investment in the property funds had been a considered officers’ decision following discussion with advisors, and the prime objective was for long-term capital appreciation. Full details of the property funds were included in the Capital Strategy report set out in the report approved by Full Council on 30th April 2018.
The Committee noted the Treasury Management and Capital Strategy update position as at 30 June 2019.
(A report by John Scott, Internal Audit Manager)
The Internal Audit Manager presented a report, which detailed progress with Internal Audit work on the 2019/20 audit plan during May and June 2019.
Two audits had been completed and were summarised in the report: Markets Income, which had been given High Assurance and Homelessness, which had been given Substantial Assurance. One recommendation had been made with respect to Homelessness and this had been agreed and implemented.
There were three audits in progress: Health & Safety, ICT Assurance Map and Medium Term Financial Strategy, for which the fieldwork was scheduled to start in late July.
Assurance Lincolnshire had won the “Good Governance and Risk Management” award at the Public Finance Awards 2019 for their work on culture, value and ethics and a Member commended them for this.
During debate, a Member expressed concern that the bulk of market income was paid in cash, presenting increased risks, when there was a range of options to pay electronically. It was suggested this matter could be raised with the Environment and Performance Committee.
In response to questions, Members were advised that the Council could use the Surveillance Camera Commissioner’s new self-assessment tool, intended to help organisations find out how well they were complying with the 12 guiding principles in the surveillance camera code of practice. It was a requirement for all local authorities to undertake checks to ensure compliance.
Following the Markets Review by the Environment and Performance Committee’s Task and Finish Group, officers had looked at the action plan to address the reduction in markets income. There was a national decline, but they were confident the return could be increased. This would be reported in the quarterly monitoring reports.
It was noted that the Homelessness audit related to the relevant processes and procedures, rather than performance.
[Councillor Anne Dorrian left the meeting at 7.55 pm]
(For Members to consider the Committee’s work programme.)
It was noted that Mazars would provide the Annual Audit Letter for 2019/20 at the next meeting on 16th September 2019.