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 25th March 2019.
The minutes of the Committee’s last meeting, held on 25th March 2019, were agreed as a correct record by those Members in attendance at that meeting and were signed by the Chairman. The Chairman asked the Committee to note that the recommendations set out in Minute 54 would not go forward, as the terms of reference had already been considered and approved by Full Council.
To receive apologies for absence.
There were apologies for absence from Mr Alan Pickering and Councillor Judith Welbourn.
(A letter to be presented by Jon Machej, Engagement Manager, Mazars)
Jon Machej, Manager – Public Sector, Mazars, presented the Annual Audit Fee letter, which set out Mazars’ proposed fee for 2019/20 with a summary of the company’s method statement attached as Appendix 1.
Public Sector Audit Appointments Ltd (PSAA) had consulted on its scale fees for 2019/20. It had not made any changes to the work programme for 2019/20 and scale fees remained at the same level as the previous year.
Mazars’ fee was set as £33,961, in line with the scale fee. Should there be a need to undertake additional work to that planned as part of the fee-setting process, Mazars would communicate with the Council and PSAA on the matter.
Mazars had also been engaged to carry out the non-audit work involved with the Housing Benefit Assurance Process at a proposed cost of £6,600.
The proposed audit fee covered:
· The audit of the Council’s financial statements;
· Work to conclude on the Council’s arrangements for securing value for money; and
· The assurance they were required to provide to the National Audit Office on the consistency of the Council’s Whole of Government Accounts return with the audited financial statements.
It was noted that the Public Sector Audit Appointments (PSAA) tender had resulted in a 23% national decrease in audit fees and the fees had been set for five years.
(A report presented by Jon Machej, Engagement Manager, Mazars)
Jon Machej, Manager – Public Sector, Mazars, presented a report, which provided an update on progress in Mazars’ delivery of their responsibilities as the Council’s External Auditor.
The report also included a briefing for the Committee on recent publications, which were relevant to its responsibilities.
Since the Committee last met, Mazars had:
· Met with finance staff to clarify requirements and expectations in respect of their 2018/19 final audit visit;
· Issued their ‘Client Deliverable List’ to the finance team, setting out the expected working papers and supporting information required to complete the final audit visit;
· Continued detailed audit work for the 2018/19 Value for Money (VfM) conclusion; and
· Held ongoing liaison discussions with Internal Audit colleagues as part of their approach to maintain an accurate understanding of the Council for the 2018/19 audit.
Detailed audit work would continue with the final audit visit, which commenced on 20th May 2019.
Mazars’ work was on track and there were no significant matters arising from their work that they were required to report to the Committee at this stage.
(A report by Kelly Clarke, Credit Control Manager)
The Credit Control Manager presented a report advising the Committee on counter fraud performance during the financial year 2018/19 and the current position of the Fraud Section, including:-
· The National Fraud Initiative
· Single Person’s Discount Review
· The Single Fraud Investigation Service (SFIS)
· Benefit Fraud Investigations conducted by SFIS
· Corporate and Employee Conduct Cases
· Member Conduct
· The way forward
The Credit Control Manager commented that the report was straight forward as a result of the good governance the Council had in place.
A Member commended the results of a collaborative piece of work as part of the Lincolnshire Counter Fraud Partnership to review council tax accounts where single person’s discounts had been awarded. In response to questions, it was explained that those residents whose discounts had been removed could reapply, though if they did so within a certain timespan from the removal then this would be investigated. The review of the discounts was commissioned every year so any recurring problems would be identified. The Department for Work and Pensions (DWP) followed up any monies owing for cases under their responsibility.
(A report by Paul Julian, Chief Finance Officer)
The Committee considered a report by the Chief Finance Officer, which presented the pre-audit Financial Report 2018/19, including the Statement of Accounts.
The Committee was asked to consider the Financial Report, prior to it being presented for audit. The timescales involved with the approval, inspection and audit of the accounts were set out in the report; the Chief Finance Officer would sign the accounts off for auditing by the end of the week and the audited report would be submitted to the Committee for approval on 22nd July.
The Chief Finance Officer went through the key points of the report and highlighted the major changes in the Balance Sheet that were considered significant enough to warrant specific reference, as detailed in the report.
Members queried the reason for, and impact of, one of the changes: the reclassification of the Guildhall as an operational asset rather than a heritage asset, which had resulted in an adjustment of £6m between the two classes. The Chief Finance Officer explained that the Guildhall had previously been held as a heritage asset due to its principal historical value. During a review of the classification of assets, this was reviewed, and as the Guildhall was also a museum it was considered more appropriate to be classed as an operational asset. This simply changed where the asset sat under the balance sheet and nothing else; it did not affect the carrying value.
In response to further questions, it was explained that the Accounting Policies set out how to classify historical assets and in this instance the asset’s valuation was the same whether it was classed as historical or operational. The Depreciation Replacement Cost was given in the event that it had to be replaced. The Guildhall was insured and this reclassification did not affect the insurance.
(A report by Paul Julian, Chief Finance Officer)
The Chief Finance Officer presented a report, which provided an analysis of the Council’s Treasury Management activities for the period 1 April 2018 to 31 March 2019.
The Council fully complied with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management (the Code) and the CIPFA Prudential Code for Capital Finance in Local Authorities (the Prudential Code). One of the requirements was that a year-end report be produced.
The Local Government Act 2003 (the Act) and supporting regulations required the Council to have regard to the Prudential Code, to set Prudential Indicators and to monitor performance against these indicators. By doing this, the Council had safeguards in place to ensure that its capital investment plans were affordable, prudent and sustainable; and it adhered to the investment and borrowing strategy.
The report provided an analysis of the Council’s Treasury Management activities for the 2018/19 financial year, during which the indicators were successfully managed within the parameters approved by Full Council in April 2018 for the 2018/19 Capital and Treasury Strategy.
The capital spending for the year (including slippage approved during the year) totalled £21.382m with an increased Capital Financing Requirement from £0.459m to £20.449m, to allow for the increased underlying need to borrow in order to finance the purchase of an additional £20m of property funds.
The level of deposits with counterparties including call accounts and Money Market Funds (MMF) at the year-end was £11.268m. The value of Property funds held at 31 March 2019 was £20.627m.
The average annual rate of return on cash investments was 0.69% and 3.80% annualised return on property funds. Total investment income for the year was £554,700, far exceeding the prudent annual budget of £117,000, set before the approval of the capital Property Fund purchases.
The Committee was asked to note the Treasury Management outturn position for 2018/19, and recommend the Annual Treasury Management Report for approval by Full Council.
During debate, it was noted that the Council’s loan with State Street had been subject to a very thorough examination by the Committee’s previous Chairman, who had established that no further action could be taken in the matter. A link to the report would be e-mailed to Members. Also, the previous S151 Officer had tried to renegotiate the loan without success.
Concerns were raised regarding the effect on property values of retailers going out of business. The Chief Finance Officer understood such concerns and for this reason the Council had used the rationale of spreading the risk by investing in a number of funds, and sectors other than retail. The Chief Finance Officer added that it would be entirely appropriate to ask the question of the Property Fund Managers when they came before the Committee, which would take place in due course. Questions could also be put to them regarding their decisions on acquisitions and disposals, as they had different approaches.
The Council had earned £554,700 in investment income in 2018/19, comprising £97,200 from cash investments and £457,500 from ... view the full minutes text for item 7.
(A report by John Scott, Internal Audit Manager)
The Internal Audit Manager presented a report, which summarised the audit work undertaken during 2018/19.
The report set out the Internal Audit opinion on the overall adequacy and effectiveness of the Council’s governance framework and internal control system and the extent to which the Council relied on it. The Internal Audit Manager highlighted that the report indicated that the Council was performing well across all areas and there were no qualifications to the opinion.
The report set out how the opinion had been reached; how the audit work plan had been discharged and the overall outcomes of the work undertaken.
During debate, the Internal Audit Manager responded to various questions. The combined assurance report findings concluded that management be recommended to consider whether the 8 areas rated as ‘amber’ be included in the Annual Governance Statement or Directorate Risk Registers.
The report did not give the detail of the factors taken into account as part of the combined assurance work. The amber rating did not necessarily indicate anything serious, but management agreed with the rating and they were areas to watch and to check if any governance issues should be looked at.
If there were governance issues to look at, this would be the responsibility of the relevant officer from the Corporate Management Team and the team was very aware of the ratings. Working to change amber ratings to green depended on various factors. For example, the Medium Term Financial Strategy (MTFS) and delivery of efficiency savings would remain amber until there was further information. Markets were rated amber due to the level of income, which had been subject to a scrutiny review. All areas were looked at on a regular basis.
During 2018/19, some changes had been made to the Internal Audit Plan with the approval of the Chief Finance Officer and the Committee. One of these was the postponement of an Ethical Culture audit. This was now scheduled for later in the current financial year and would cover a range of topics including the Employees’ Code of Conduct.
The Chief Finance Officer added that the Ethical Culture audit had come out of national work, particularly relating to funding pressures and local authorities’ responses, and the Corporate Management Team had agreed it was appropriate that it be examined. It would include the interaction between Members, officers and contractors, and whether they were operating along Nolan lines.
The Corporate Management Team considered that complaints were important; therefore, audit had reviewed the complaints procedures to check they were robust.
(A report by John Scott, Internal Audit Manager)
The Internal Audit Manager presented a report, which detailed progress of the Internal Audit Plan of work.
The 2018/19 audit plan had been completed and the Internal Audit Manager went through the summaries of the audits set out in the report. Five audits had been completed since the last progress report. Governance and Risk had been given High Assurance. Four others had been given Substantial Assurance: ICT Infrastructure Follow Up; Migration Fund; Complaints and Digital Strategy.
The 2019/20 audit plan had been started. The fieldwork was in progress with respect to two audits – Homelessness and Markets Income – and a Health & Safety audit was being prepared.
Financial returns completed by recipients of Migration Funding would be taken to the Funding Board and quarterly information would be included in future. The Council’s quarterly monitoring report contained a separate section on the funding.
With respect to the Complaints audit, the Chief Finance Officer explained that the Council’s performance relating to its service standard of responding to complaints within 20 days of 69% was acceptable in terms of the available resources number of complaints received and did not indicate the detail of the complexity of resolving complaints. Members’ comments, including the use of a standard acknowledgement letter, would be taken back to the Corporate Management Team. It was believed the target was the timescale for full resolution of complaints, but this would be confirmed.
(For Members to consider the Committee’s work programme.)
Members noted the work programme.