Venue: Committee Room, Municipal Buildings, West Street, Boston, PE21 8QR
Contact: Janette Collier, Senior Democratic Services Officer 01205 314227 email: email@example.com
To sign and confirm the minutes of the last meeting, held on 30th May 2018.
The minutes of the Committee’s last meeting, held on 30th May 2018, were agreed as a correct record and signed by the Chairman.
To receive apologies for absence.
There were apologies for absence from Councillor Felicity Ransome; Councillor Sue Ransome was attending as her substitute.
(A report by John Cornett, KPMG Director)
The KPMG Director presented the External Audit ISA 260 Report for 2017/18, which set out KPMG’s key findings in relation to their external audit of the Council. Subject to all outstanding queries being resolved to their satisfaction, KPMG anticipated issuing an unqualified audit opinion on the Council’s financial statements before the 31st July deadline.
The KPMG Director went through the summary of the key findings, covering the controls over key financial systems and the IT control environment; accounts production; the opinion on the financial statements; completion of the audit; value for money arrangements; and exercising of audit powers; and acknowledgments.
The report highlighted an exception in relation to controls with respect to general IT controls in that authorisation of starters and leavers on the Academy System were not evidenced or documented and it was recommended that this area be strengthened. This recommendation had been raised in the ISA 260 for 2016/17.
KPMG had received a complete set of accounts for audit on 22nd May 2018, well in advance of the statutory deadline of 31st May, and the Council had provided good-quality working papers.
Two significant risks, excluding those mandated by International Standards on Auditing, had been identified previously: Valuation of Property, Plant and Equipment (PPE), in particular land and buildings not valued for a considerable time, and the valuation of the Pensions Liabilities, for which the issue was the reliance on a third party for information for the accounts. KPMG had carried out a significant amount of work in these two areas and found no issues to raise; the risks with respect to both had been mitigated.
The audit had not identified any material adjustments. There were a small number of minor presentational matters, which officers had agreed to amend and these did not impact on the pre-audit outturn reported in May.
The audit of the financial statements was substantially complete subject to specific areas set out in the report. It was proposed that an unqualified opinion would be issued. Before issuing the opinion, a signed management representation letter was required. It was anticipated that the completion certificate and Annual Audit Letter would be issued in September 2018.
With respect to value for money arrangements, KPMG had concluded that the Council had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources and, therefore, anticipated issuing an unqualified value for money opinion. This was a positive outcome. It was stressed that the audit did not relate to delivery of value for money per se; it was an assessment of the processes and arrangements in place to secure it.
One significant value for money risk had been identified, Financial Resilience, relating to the Council’s ability to deliver its Medium Term Financial Plan. KPMG’s overall view was that the Council was well placed to do so as the arrangements, processes and systems underpinning it were fit for purpose. However, this did not mean delivering the plan would be easy, as the Council would still face ... view the full minutes text for item 13.
(A report by Paul Julian, Chief Finance Officer)
The Chief Finance Officer presented a report regarding the outcome of the audit of the Financial Report 2017/18 by the Council’s current appointed external auditor, KPMG, seeking formal approval prior to its publication.
The audited Financial Report was attached as Appendix A. In addition to the Statement of Accounts, the Financial Report also included the Narrative Statement, Annual Governance Statement (AGS) and Independent Auditor’s Report, but these were not considered to be part of the Statement of Accounts that had now been formally audited. The Committee had just received KPMG’s International Auditing Standards (ISA) 260 report on their audit findings.
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. 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.
This year’s Accounts audit process, the final to be undertaken by KPMG as the Council’s appointed external auditor, had progressed smoothly. A very small number of minor presentational amendments and changes had been identified and agreed, and had been included in the audited Accounts. There were no changes to the end of year balances reported in May. The auditor had made one recommendation in respect of administrative procedures for the Academy system, which officers had considered and had put processes in place to address this.
The auditors also planned to issue an unqualified opinion on the arrangements that the Council had in place to secure value for money.
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 Chief Finance Officer concluded by thanking the Accountancy Manager - Treasury & Capital and the finance team for their hard work and diligence in preparing the accounts and supporting the auditors.
The Chief Finance Officer also thanked the KPMG Director and his team for the way they had conducted the audit. KPMG’s relationship with the Council’s officers had been challenging, constructive and positive and it was hoped that a similar relationship would be built with the new appointed auditor, Mazars LLP, with whom work would commence shortly. Mazars’ representative would be introduced to the Committee at a future meeting.
Responding to Members’ questions, the Chief Finance Officer offered clarification of the information set out in the remuneration table. All the officers referred to in the table were Council employees; there were a small number of other officers engaged on interim arrangements pending recruitment.
The Collection Fund was the Council’s statement as agent for the collection of council tax and, more recently, business rates, as the collection and billing authority before they were passed to the Government and major preceptors. The General Fund contained the Council’s spending and income relating ... view the full minutes text for item 14.
(A report by Paul Julian, Chief Finance Officer)
The Chief Finance Officer presented the regular quarterly update, which set out the Treasury Management activities of the Council for the first quarter of 2018/19, 1 April to 30 June 2018.
In terms of investment returns the Council was expecting to achieve the budget estimate of £117,000 in 2018/19. 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. As the financial climate changed, who the Council invested with, and the amount invested, was under constant scrutiny, taking into account risk at any particular moment in time. There was ongoing preparatory work to progress the £20m borrowing and information on the Capital and Treasury Strategy would be included in the next quarterly treasury management update.
In response to questions, it was explained that the Capita colour rating of different institutions indicated the treasury advisors’ confidence in those institutions in terms of duration of investment at that time.
With respect to investment in property funds, investment had not been arranged with Hermes as the company had not had funds available at the time the funds were placed; therefore, the sum invested with one of the other companies had been doubled. Also, with respect to the forthcoming process for placing £20m funds, Hermes was classified as a revenue fund and, as the Council was undertaking a capital process, the company was ineligible.
There had been an initial meeting with the property fund companies with respect to the placing of funds and there had also been a significant amount of communication by way of e-mails and conference calls. East Lindsey District Council was also investing with the companies. It was unlikely that they would meet again prior to placement, but regular liaison would continue.
The report referred to uncertainties in relation to the interest rate forecast; however, the purpose of the report was to look back over the previous quarter.
(A report by John Scott, Internal Audit Manager)
The Internal Audit Manager presented a report, which detailed progress with Internal Audit work on the 2018/19 audit plan.
Work was progressing well with 15% of the plan delivered compared to the target of 16%. One audit had been completed, Elections & Electoral Registration and one was being finalised, Payroll Key Controls, both of which had been given High Assurance. Other audits were in the process of being prepared. Details of the audits in the plan were set out in Appendix 2.
The scope for work requested by management on Car Parking had been agreed with the Chief Finance Officer and the Head of Place and Space. It would be a combination of a review of the income controls and an assessment of possible value for money opportunities. To accommodate this work, it had been agreed that the Boston Town Area Committee (BTAC) audit would be moved to 2019/20. Two other audits were being prepared: Environmental Enforcement and Business Continuity & Emergency Planning.
CIPFA had recently refreshed its practical guidance for Audit Committees and a report on this would be presented to the Committee at a future meeting once it had been discussed with the S151 Officer.
During debate, it was commented that the Audit Forum meetings had been excellent, but had not been well attended by Members of the Committee.
Referring to the Elections & Electoral Registration audit, a question was raised as to whether work had been undertaken with respect to the possible misuse of postal voting. The Internal Audit Manager confirmed that the audit had included a review of the Council’s management of postal and proxy votes in the light of issues faced by voters in Newcastle under Lyme; they had not identified any issues of concern and had been satisfied that the Council’s processes and procedures mitigated the risk of similar issues occurring locally.
BTAC had not previously been audited and had been added to the audit plan due to its increased level of funds, to ensure it had appropriate governance arrangements in place. The audit had to be put back due to the limit of Internal Audit resources. However, the Chief Finance Officer confirmed that, as BTAC was not a separate entity from the Council and was subject to the same operational controls, the audit was not pressing.
LEARNING AND DEVELOPMENT
(For Members to consider any training needs they may have.)
Members considered whether they had any training needs.
Two Members new to the Committee pointed out that they had not received any training. It was noted that they were both experienced Members and they could undertake the CIPFA online training course, though some Members felt that online training was not as effective as that delivered by a trainer.
Members were asked to consider whether there was any specific training they felt should be included in Induction Training for any Members elected in May 2019, as they would certainly undertake training before the Committee’s first meeting of 2019/20. A suggestion put forward was to repeat the session on the accounts delivered by the previous Section 151 Officer.
It was further suggested that current Members would gain insights from discussions with the auditors and the Internal Audit Manager confirmed that they could hold audit effectiveness training with Members.
(For Members to consider the Committee’s work programme.)
The Committee noted the work programme and Members were urged to contact the clerk if they had any new items for a future agenda. In response to a request for an update report on the Council’s property fund investments, the Chief Finance Officer explained that the information to be reported to the next meeting in September would be a list of investments and where they had been invested. There would be a future agenda item as a result of the changes to the Audit Committee guidelines.