Location: Autun Room, Daneshill House
Present: Councillors R. Raynor (Chair), G. Clark and J. Gardner.
Others:
Duration:
Start Time: 6.00pm
End Time: 8.10pm
Status: Noted
Business: An apology for absence was submitted on behalf of Councillor A.T. Turner.
There were no declarations of interest.
The Assistant Chief Executive (Finance) informed Members that the advert for the vacant position of Independent Member would be placed soon and criteria for the appointment would be determined. It was hoped that this position would be filled when the Committee next met in September.
Decision:
Status: Noted
Business: The Assistant Chief Executive (Finance) explained the background to the formation of an Audit Committee. The Council established an Audit Committee in response to advice from the Audit Commission and CIPFA as a key aspect of corporate governance. It was considered that having an Audit Committee would raise the profile of internal control, risk management and financial reporting issues within the Council, and would provide a forum for discussion of issues raised by internal and external auditors.
The Council submitted its Terms of Reference to the Audit Commission and received comments on them. The Terms of Reference were presented to the Panel as agreed by Council, with the Audit Commission's comments also provided.
Members made the following comments:-
Was the area of procurement adequately covered in the Terms of Reference?
It was felt that this was covered within Contract Standing Orders. It was suggested that the Corporate Procurement Manager could present to Committee at a future meeting on the issues of Value for Money.
It was commented that if the process of Audit was right then the results would be positive.
Members suggested that a potential area for study could be the number of consultants needed by the Council.
Members noted that there be a general training session arranged from the start of the next Audit Committee on the work of the Audit Committee and relevant issues for Members serving on the Committee.
Decision: It was RESOLVED:-
1. That the Terms of Reference of the Committee be noted.
2. That the comments of the Audit Commission concerning the proposed terms of reference be noted.
It was recommended that the next meeting begin with a training session from 6.00pm - 6.30pm regarding the Audit Committee. It was noted that the Committee could receive a future presentation on corporate procurement.
Status: Noted
Business: The Assistant Chief Executive (Finance) introduced the interim Head of Finance and explained his role. The Interim Head of Finance gave a presentation on the requirements for and the maintenance of an Internal Control Mechanism at the Council.
The Assistant Chief Executive (Finance) drew Members attention to the internal Audit action on page 13 of the agenda papers where it states:-
'Arrangements to be put in place to ensure regular reconciliations of key financial systems'.
This comment should specifically relate to only Bank Reconciliation where there had been problems reconciling with a new system that was implemented in 2004/05. The comment in the SIC could give the impression that there were no financial systems reconciliation procedures in place and this is not the case.
Members asked if in practice scrutiny questions from the Scrutiny Overview Committee or Scrutiny & Value for Money Panels could be put directly to the Committee or would they be required to go via Council? It was proposed that in practice issues could be raised directly with the Committee and Council would receive recommendations and Minutes from the Audit Committee.
Decision: It was RESOLVED:
That Members RECOMMEND that the Statement of Accounts Committee approve the Statement on Internal Control as detailed in the Appendix for inclusion in the 2005/06 Statement of Accounts.
Status: Noted
Business: External Audit drew the Committees attention to its key messages arising from its audit and inspection work, detailed on page 24 of the agenda papers. Members made the following comments on the report.
- There was often a conflict between performance indicators and the public's aspirations for Council Services.
- It is difficult to judge whether fair comparisons are being made between the same service from Council to Council.
- Members and officers discussed at length External Audits Comments on 'The Accounts' Item 7 (page 24 of agenda papers). Members and officers stated that they understood External Audits view on this issue but were still of the view that the sum of £2.6m English Partnership debt Repayment in 2000/01 should be treated as a capital, not a revenue transaction.
Decision: It was RESOLVED:
1. That the Audit Commission's Audit and Inspection Letter 2004/05 be noted.
2. That the Audit Commission's Annual Audit Plan for 2006/07 be noted.
Status: Noted
Business: The Audit Partnership Manager informed Members that there would be a presentation on the Internal Audit methodology at the next Audit Committee.
The Audit Partnership Manager explained to Members how the audit plan ensures all services are reviewed on a cyclical basis. Internal Audit carry out risk assessments, which determine the frequency with which services are audited, these are categorised into low, medium and high. Also the audit plan is split into two parts, the first is horizontal or themed audits and cut across the Council's structure and effect more than one Service Delivery Unit. The second part of the audit plan is vertical, or self contained internal audits.
Decision: It was RESOLVED that:-
1. There be a presentation on the internal Audit Methodology at the next Audit Committee; and
2. That Members of the Audit Committee endorse the Internal Audit Plan for 2006/07 to 2010/2011.
Status: Noted
Business: The Audit Partnership Manager drew Members attention to the internal audits that were carried out during 2005/06, these included:-
KEY FINANCIAL SYSTEMS
* Cash & Income
* Creditors & Vat
* Salaries & Wages
* Housing Benefits
* Council Tax
* Main Accounting
* Business Rates
* Housing Rents
* Sundry Debtors
OTHER SYSTEMS
* Insurrance
* Officer Expenses
* Land & Property Management
* Members Allowance
* IT Change Control
* Recycling
* Car Park Revenue
* Improvement Grants
* Indoor/Outdoor Markets
* Right to Buy
* Cemetries
* Grants to Voluntary Bodies
* Current Contracts
* Best Value Performance Indicators
* EU Funding
Internal Audit was a statutory service that formed part of the Council's corporate governance framework. The service was an assurance function that primarily provides an independent and objective opinion on the management of operational risk, control and governance. It was delivered in partnership with Uttlesford District Council.
Internal Audit work partly informs the Statement of Internal Control contained in the Council's Statement of Accounts. The requirement for this Statement comes from the Accounts and Audit Regulations 2003. Financial Regulations also state that a report on the work of Internal Audit should be provided for Members information.
Audits opinion is that for 2005/06 risks identified by Internal Audit are largely adequately controlled.
The area that Audit had highlighted as areas of some concern were:-
- Some post opening arrangements
- Use of pro-forma invoices
- Review of Council tax discounts/exemptions
- Bank reconciliation
- Clearance of some suspense accounts
- Sundry debtor administration
- Petty cash claims
- Corporate credit card administration
- Car park revenue control
- Some benefit administration arrangements
There had been a positive response to these recommendations from management.
Finally the Audit Partnership Manager referred to the ten Standards of the Code of Audit Practice. The Council were compliant with all of these.
Members suggested that an area for challenge was for the Council to move away from cylo mentality when it came to Resources. This was not just the responsibility of the Resources Portfolio but was a consideration for all Service Areas and Portfolios. Members also recommended that a mechanism for reporting could be set up which highlighted and alerted individual Portfolio Holders/Service Areas when internal Audit had particular concerns that affect their area.
Decision: It was RESOLVED that:-
1. It be RECOMMENDED that future reports detail SDU's and/or Portfolio Holders against service areas to be audited; and
2. That internal audit coverage, the internal audit opinion for 2005/06 and compliance with The Code was noted.
Status: Noted
Business: The Assistant Chief Executive (Finance) outlined the Risk Management mechanisms at the Council.
Stevenage Borough Council introduced a formal risk management strategy in January 2003. In addition, a risk register was introduced in June 2005. Whilst both of these were effective in their own right it was felt they could be more joined up to ensure the potential benefits are delivered.
A complete review of the Council's approach to Risk Management was undertaken in the summer of 2005. This review included consultation with other Local Authorities, CIPFA's consultancy arm and an expert on risk management from the Council's insurance brokers.
The revised strategy covered the benefits of Risk Management, how the Council will deliver the benefits and the type of risk both strategic and operational.
Decision: It was RESOLVED that:-
1. JLT Thompson's Insurance Brokers would be invited to brief the Committee on Risk Management at a future Committee meeting; and
2. That the Risk Management Strategy as attached to the report at Appendix A be noted.
Status: Noted
Business: An oral update from the Assistant Chief Executive (Finance) on the Benefits Fraud was considered and noted by the Committee.
Decision:
Status: Noted
Business: An oral update from the Assistant Chief Executive (Finance) was considered and noted by the Committee.
Decision:
Status: Noted
Business: An oral update from the temporary Head of Finance was considered and noted by the Committee. It was agreed that a briefing note would be provided to Members when the information was available.
Decision:
Status: Noted
Business: None.
Decision:
Status: Noted
Business: None.
Decision:
Status: Noted
Business: None.
Decision: