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 23rd July 2018.
The minutes of the Committee’s last meeting, held on 23 July 2018, were agreed as a correct record and signed by the Chairman.
To receive apologies for absence.
There were apologies for absence from Councillors Tom Ashton and Gordon Gregory.
INTRODUCTION TO NEW EXTERNAL AUDITOR - MAZARS
(Mark Surridge, Mazars’ Audit Director, will be attending)
The Accountancy Manager introduced the Audit Director from Mazars, the Council’s new external auditors.
The Audit Director expressed great pleasure at working with the Council and developing a successful relationship. The company had a portfolio of clients across the East Midlands and the Council would be served by a dedicated team of local authority experts including himself and Jon Machej, the audit manager who would be responsible for working with the Council, both of whom had 20 years’ public sector experience.
Responding to questions, the Audit Director advised the Committee that Mazars prided itself on being accessible and committed to high quality audit work and excellent client services. It was one of the most experienced firms in public sector work and provided tailored services to a high quality with independence and objectivity.
In due course, the Audit Director would take the Committee through the firm’s Audit Plan for the Council in detail. The Audit Director took assurance from the regulator that inspected the firm in relation to the quality of its opinions etc. They would have open and constructive discussions with the Committee on future situations and have continuous dialogue with officers.
Mazars was one of the top ten audit firms globally and had the right resources, team, training and infrastructure to serve the Council well. The engagement and commitment of the audit team would soon become evident. The team, of which 3-4 staff would serve the Council, were based at the firm’s hub in Nottingham.
The Audit Director confirmed that he was responsible for the clients across Lincolnshire, which included most of the districts and the County Council.
The Committee thanked the Audit Director and welcomed him on behalf of the Council.
(A report presented by Suzanne Rolfe, Transformation & Governance Manager)
The Transformation & Governance Manager presented an update on risks for Quarter 1, being 1 April to 30 June 2018.
Strategic risks, i.e. those risks which could impact most on the achievements of the Council’s corporate priorities as set out in the Corporate Plan, being Prosperity; People; Place; Public Service. There were no new strategic risks to report in Quarter 1.
The Corporate Management Team (CMT) had completed their in-depth review of the strategic risks. The outcome for each risk was set out in Appendix A.
In response to questions, the Transformation & Governance Manager explained that actions to monitor the housing risk, which had been increased to high, included examining legislation and policies. Two new systems were being rolled out and a watching brief was ongoing to check whether the Council was comfortable with the risk or whether to put additional controls in place with action to be taken as appropriate.
A Member suggested that the health risk should be higher than medium due to the situation at Pilgrim Hospital. This would be referred to the lead officer to consider.
The Transformation & Governance Manager confirmed that the housing risk included the roll out of the licensing relating to Houses in Multiple Occupation and that the system was based on Prince II. Controls that had been in place for some time needed to be reviewed regularly. Further detail would be provided to Members on various issues as requested during debate.
(A report presented by Colin Wyatt, Accountancy Manager - Treasury & Capital)
The Accountancy Manager presented an update on the Council’s property funds.
The amended 2018-19 Treasury and Capital Strategy incorporating £20m purchase of capital property Fund holdings was approved at Council in April. The purpose of the report was to update Members on progress to date in acquiring these holdings.
Presentations from 5 fund managers were held in July, with the process being supported by the Council’s Treasury Advisors, Link Asset Services.
The decision had been taken to place roughly equal amounts with BlackRock, Threadneedle, Schroders, M&G and AEW, with transactions taking place when willing buyers and sellers could be matched. Officers’ expectations were that all sums would be placed by the end of the calendar year.
So far, funds had been placed with:
· Schroder’s £4m
· Threadneedle £3m
Since circulating this report the following funds had also been placed:
· M&G – £4m settlement date being 14 September
Future trades agreed were:
· BlackRock – £4m with a settlement date of 28 September
· Treadneedle - £0.5m with a settlement date of 28 September, and £0.5m with at settlement at the end of October.
There had been no movement yet with AEW.
The intention was, ultimately, to finance the holdings from 50 year maturity Public Works Loan Board (PWLB) loans. PWLB rates had been increasing over the past couple of weeks, with today’s rate at 2.53%. The Council’s advisors did expect rates to reduce, if only slightly, over the coming weeks. Officers were monitoring rates on a daily basis and would borrow from the PWLB when and if rates became more favourable.
In advance of PWLB Borrowing, to meet the first £11m, officers had used £5m of existing cash funds, with temporary borrowing of £2m from South Holland for one month at 1% and £4m from Edinburgh City Council for 2 months at 0.83%.
Officers would update the Committee on the acquisition and fund performance as part of the half yearly treasury update report in November (showing fund valuations at 30 September).
In response to questions and comments, the Accountancy Manager confirmed that the decision not to borrow immediately was part of the balancing act between forecast PWLB rates and the timing of units becoming available. He had been involved in the due diligence process, had met the five fund managers and their representatives, and, following the advice of the Council’s advisors, considered that the deals were appropriate. The funds were well balanced with retail and commercial holdings. The interest rate of 0.83% on short-term loans was an annual rate.
A Member commented that, hopefully, the interest rate would decrease and the Council could repay its short-term borrowing, but asked whether, if it did decrease, officers would take the £20m or risk the rate increasing again.
The Accountancy Manager agreed this was a valid point, and consideration on the approach would depend on the circumstances and forecasts at that time.
(A report presented by John Scott, Internal Audit Manager)
The Internal Audit Manager presented the Internal Audit Progress Report for July – August 2018,
The 2018/19 Audit Plan was progressing well and was on track. At the end of August 30% of the Plan had been completed; two audits had been completed with three in progress and others being prepared. No final audits had been issued since the last progress report.
In response to questions, the Internal Audit Manager confirmed that more details would be provided in the Plan in future. The review of housing benefit would cover support and external subsidy arrangements.
(For Members to consider the Committee’s work programme.)
Members considered the work programme.
It was noted that the mid-year Treasury Management Update would include the figures on the capital property fund investments in tabular format.
Members discussed the Committee’s governance role and the work of the Code of Conduct Working Group. It was agreed that the group’s work would be submitted to the Committee and an additional meeting could be arranged in order to accommodate it at the stage it was ready.