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 17th September 2018.
The minutes of the meeting held on 17th September 2018 were agreed as a correct record and signed by the Chairman.
To receive apologies for absence.
There were apologies for absence from Councillor Colin Brotherton.
(A report by John Cornett, KPMG Director)
The Committee received KPMG’s Annual Audit Letter. This summarised the key findings of KPMG’s audit of the Council’s 2017/18 financial statements and the 2017/18 value for money (VFM) conclusion.
All issues in the letter had been reported to the Committee previously; this was a reiteration of the key messages. The letter was a public-facing document and would be published on the Council’s and the regulator’s websites.
KPMG had previously confirmed that they would be issuing an unqualified opinion on the audit of the Council’s 2017/18 financial statements and the 2017/18 VFM conclusion and the letter gave assurance that they had been issued.
(A report presented by Suzanne Rolfe, Transformation & Governance Manager)
The Transformation & Governance Manager presented the Quarterly Risk Report, which set out information for the period to September 2018, to enable the Committee to monitor the Council’s strategic risks.
There were no new strategic risks to report in Quarter 2. The Corporate Management Team (CMT) had completed their in-depth review of the strategic risks, the outcome of which had been reported in Quarter 1. The report summarised the strategic risks and full details were set out in Appendix A. If Members had any questions about the content they should seek information from the officer responsible, the ‘risk owner’ named in the appendix. Any concerns about risks could be referred to the relevant scrutiny committee.
The report also contained information requested by Members at the last meeting with respect to the Lincolnshire Resilience Forum; monitoring of recent changes to housing requirements; and the change to the wording of the risk relating to population change.
The Transformation & Governance Manager reported that the focus would now move to an in-depth review of the operational risks as part of service planning for 2019/20. This would be carried out in Quarter 3 and reported to the Committee in Quarter 4.
The Committee were invited to identify a specific aspect of risk management to focus on in Quarter 3 reporting, for example, risk appetite.
In response to questions, the Transformation & Governance Manager explained that CMT had spent a significant amount of time reviewing strategic risks and the actions and monitoring to be undertaken to mitigate them, as set out in Appendix A. There would be further information in Quarter 4 regarding what was planned.
The guidance on how risks were scored in terms of likelihood and impact was set out at the end of Appendix A. Officers determined the score for each risk, but the scores were open for discussion and Members could suggest changes.
The Chief Finance Officer explained that consideration of the ongoing uncertainty of Brexit and its specific impact on the Council and Boston had resulted in the risk being given a green management assurance at this time.
A Member suggested that the Committee should consider risks in greater detail and it was agreed to consider the two highest risks at the next meeting.
(A report presented by Colin Wyatt, Accountancy Manager - Treasury & Capital)
The Chief Finance Officer presented a report, which set out Treasury Management and relevant capital strategy performance up to 30 September 2018, and looked ahead to the remainder of the financial year.
The Council’s Treasury Management Strategy Statement (TMSS) for 2018/19 was updated and approved by Council in April 2018 to include £20 million capital expenditure on property funds and the borrowing to finance their acquisition.
The report included a table of information from the Council’s treasury advisor (Link Asset Services), which provided a forecast of the bank base rate for September 2018 to March 2019. The bank base rate informed the rates that could be obtained from cash investments and the increase in August 2018 from 0.50% to 0.75% had increased expected returns slightly. The treasury advisor forecast an increase to 1.5% by March 2021.
The Council had budgeted to receive £117,000 in investment income in 2018/19 comprising £80,000 from cash investments and £37,000 from Property Funds. This estimate excluded any returns from new property fund expenditure, approved by Council on 30 April 2018.
Investment income earned to 30 September 2018 totalled £83,300, made up of £44,100 from cash investments and £39,200 from Property Funds. A significant uplift in property fund income would occur in the second half of this year following purchases at the end of August and September totalling £15.489m.
Investment income for 2018/19 was now expected to achieve £462,000 comprising £87,000 from cash investments and £375,000 from Property Funds. As previously reported, it was proposed that any investment returns above the costs of borrowing be initially placed in a reserve to mitigate the risks of any future reductions in the funds’ capital value. There was a proposed initial transfer to a mitigation reserve of £109,000 for the current year.
The counterparty list and investments table showed that the Council held cash investments at 30th September amounting to £14.1m, compared to £16.4m at the end of Quarter 1.
With respect to the Capital Strategy and property funds, the fair value of the £1m investment in three property funds stood at £1.136m at the end of September; an increase of £136,000 over the initial investment price, which was a positive return in that short time.
The report also set out the new property funds holdings, comparing the fair value at 30th September with the initial investment. During October, an additional £0.5m had been placed with Threadneedle and £4m in the AEW Core Property Fund, with settlement dates for both being 31st October.
During the period of due diligence running up to the acquisition of holdings in August and September, long-term Public Works Loan Board (PWLB) rates were closely monitored and there had been a rise in the long-term fixed rate. Discussions with advisors concluded this was likely to be reversed to some degree over the coming months; therefore, initial acquisitions had been financed with short-term borrowing of £10.5m with the remainder coming from existing cash resources. No long-term borrowing from PWLB had been taken to ... view the full minutes text for item 30.
(A report by John Scott, Internal Audit Manager)
The Internal Audit Manager presented the Internal Audit Progress Report, which detailed progress with work from the Audit Plan for 2018/19.
Work on the Plan was progressing well and was on track. At the end of September, 39% of the Plan had been completed compared to the target of 37% (the majority of the work was to be done in the second half of the year at management’s request).
One audit had been completed since the last report, Environmental Enforcement, and had achieved High assurance.
Another five were in progress:
· Key Controls (Housing Benefits, Council Tax & NNDR)
· Town Centre Events
· Affordable Housing
· IT Infrastructure & Disaster Recovery follow up
· Business Continuity & Emergency Planning
In response to questions, the Internal Audit Manager explained that a small number of councils assessed risk on a continuous basis and, therefore, had no formal audit plan at the start of the year. This was a far more proactive approach and something that Members could discuss with the S151 Officer.
Within the action plan for the Quality Assurance Improvement Programme appended to the report listed two opportunities for improvement relating to assurances linked to the Northamptonshire report. The Internal Audit Manager explained they were mapping governance issues identified in that report against their audit and combined assurance work to provide initial feedback to the Chief Finance Officer and hoped to provide the Committee with the results. In response to a suggestion that it might be worthwhile looking at other authorities where such issues had been identified, the Internal Audit Manager agreed there were others, though they were mostly county rather than district councils.
With respect to the statement that the majority of the work from the Audit Plan was being done in the second half of the year at management’s request, the Internal Audit Manager explained that the dates in the Plan had been agreed with management to best fit in with their requirements. The Chief Finance Officer added that the Plan slotted in with the busiest periods for officers.
(For Members to consider the Committee’s work programme.)
Members considered the work programme.
The Chief Finance Officer advised Members that there would be a future agenda item added to the work programme on the Committee’s Terms of Reference, following the publication of guidance by the Chartered Institute of Public Finance and Accountancy’s (CIPFA).
The Chairman confirmed that there would be an additional meeting of the Committee on 10th December to consider the recommendations of the Code of Conduct Working Group, which was in favour of establishing a Standards Sub-Committee as a Sub-Committee of the Audit and Governance Committee. Proposed revised terms of reference for the Committee had been drawn up. It would be within the Sub-Committee’s remit to review the Code of Conduct.
Mr Pickering asked that it be recorded that he was strongly against setting up a Standards Sub-Committee as no benefit was apparent and it would involve a significant amount of work.