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Apologies for Absence and Substitutions
The Committee is asked to note any apologies for absence and substitutions received from Members.
There were no apologies or substitutions on this occasion.
To confirm and sign as a correct record, the minutes of the last meeting of the Committee, held on Thursday 21 September 2017.
The minutes of the meeting of the Committee held on 21 September 2017 were approved as a correct record and signed by the Chairman.
Declarations of Interest
Councillors are invited to declare any Disclosable Pecuniary Interests or other interest, and the nature of it, in relation to any item on the agenda.
There were none on this occasion.
To provide the Committee with a periodic report on the Internal Audit function for the period September to November 2017.
The Committee had before it a periodic report (A.1) on the Internal Audit function for the period of September to November 2017.
The Council’s Principal Auditor (Craig Clawson) informed the Committee that ten audits had been completed in the period of which four had been given Substantial Assurance and six had been given Adequate Assurance.
The Committee was aware that The Public Sector Internal Audit Standards required the Audit and Governance Manager, in their role as Chief Audit Executive / Head of Internal Audit, to make arrangements for reporting periodically to senior management (Management Team) and to the board (Audit Committee). Following the recent retirement of the Audit and Governance Manager it was a requirement of the relevant CIPFA Code of Practice that the Council appointed an alternative Officer to undertake the role of Head of Internal Audit.
Members were informed that it was proposed to appoint the Head of Finance, Revenues and Benefits to the role of Head of Internal Audit for an interim period whilst a restructure of the Internal Audit Service was considered, which would, in turn, provide a longer term appointment to the role. However, in order to ensure the independence required of the role, it was proposed to delegate the day-to-day operation of delivering an effective Internal Audit Service to the Council’s Principal Auditor via acting up arrangements to the role of Audit and Governance Manager.
The Committee was advised that the Head of Finance, Revenues and Benefits would support the Principal Auditor, where necessary, via a consultative approach, to enable him to independently undertake the relevant duties set out in the CIPFA Code of Practice. The Principle Auditor would therefore retain the required independence to report directly to the Chief Executive, Management Team and the Audit Committee as he felt necessary in order to ensure that there was no undue influence from the Head of Finance, Revenues and Benefits.
The Principal Auditor also informed the Committee of the current position in relation to:
(i) Internal Audit Plan Progress – Proposed removal of Payments Received Audit, deferral of Corporate Counter-Fraud and Departmental Procurement audits;
(ii) Quality Assurance;
(iii) Outcomes of Internal Audit Work;
(iv) Management response to Internal Audit Findings;
(v) External Quality Assessment – Assessor’s Final Report; and
(vi) Internal Audit Budget 2018/19.
Following discussion and questions by Members, it was moved by Councillor Scott, seconded by Councillor Alexander and:
RESOLVED that –
(a) the contents of the report be noted;
(b) the changes to the Internal Audit Plan, as detailed in the report, be approved; and
(c) the Committee approves the appointment of the Head of Finance, Revenues and benefits to the role of Head of Internal Audit in the interim period whilst the future structure of Internal Audit is decided.
To present to the Audit Committee the Risk Management Framework and updated Corporate Risk Register.
The Head of Finance, Revenues & Benefits Services & Section 151 Officer (Richard Barrett) presented to the Committee a report on the Risk Management Framework and the updated Corporate Risk Register.
It was reported that, within the period under review, no new risks had been added to the register, no risks had been removed, one risk score had been amended and there were no items that were currently under review. Risks had been amended in respect of –
(1) 1b Catastrophic IT Network Failure;
(2) 1c Ineffective Communication / Management of Information;
(3) 2c Community Leadership Projects;
(4) 5a Financial Strtaegy
(5) 6c Disconnection from PCN Network; and
(6) 7a Local Plan.
The Risk Score in respect of item 7a Local Plan had been reduced from 16 to 12 to reflect the latest position.
It was reported that during the year a review had been carried out by the Council’s Internal Audit Team relating to Risk Management. The following table set out the recommendations identified and the current position against each of those actions:
The Committee was informed that although no changes had been identified as being required at this time, the Risk Management Framework was included at Appendix A to the report for information purposes only.
After consideration of this item it was RESOLVED that -
(a) the contents of the updates provided to the current Risk Register be noted; and
(b) the Head of Finance, Revenues & Benefits Services requests the Head ... view the full minutes text for item 19.
To present to the Committee the External Auditor’s Annual Audit Letter 2016/17.
There was submitted a report by the Council’s Corporate Director (Corporate Services), which presented to the Committee the External Auditor’s Annual Audit Letter 2016/17.
The Committee was informed that the Letter primarily summarised the outcomes from various audit activities undertaken during the year. The key messages set out in the letter highlighted that the Council had received an unqualified opinion on both its financial statements and value for money arrangements.
It was reported that, whilst no significant concerns had been raised relating to 2016/17, risks highlighted in connection with financial resilience / sustainability and the Garden Communities project had been included within last year’s Annual Governance Statement with on-going updates provided to the Committee.
Chris Hewitt (Audit Manager – Ernst & Young, the Council’s External Auditor) highlighted the salient points in the Annual Audit Letter and, in particular, two issues to consider in the future. Responses to both those issues formed part of the work currently being undertaken to close the accounts and produce the Statement of Accounts for 2017/18 by the required deadlines. Those two issues were –
(1) earlier deadline for the production and audit of the financial statements from 2017/18; and
(2) forthcoming changes to accounting standards IFRS 9 (Financial Instruments), IFRS 15 (Revenue from contracts with customers) and IFRS 16 (Leases).
Mr Hewitt also highlighted that a final decision was still awaited from PSAA Ltd in relation to a scale fee variation for the Audit Fee for 2016/17.
After consideration of this item it was -
RESOLVED that the contents of the Annual Audit Letter for the year ended 31 March 2017 be noted.
An update will be given on the progress against outstanding actions identified by the Committee.
There was submitted a report by the Council’s Corporate Director (Corporate Services) (A.4) which presented to Members the progress against outstanding actions identified by the Committee.
It was reported that there were no significant issues to bring to the attention of the Committee, with updates provided against individual items, as set out in Appendix A to item A.4 of the Report of the Corporate Director (Corporate Services), or elsewhere on the agenda where appropriate.
Updates on the actions identified within the latest Annual Governance Statement were set out in Appendix Bto the aforementioned report with no significant issues to highlight at the present time.
In respect of the latest position in terms of the legionella issue experienced at the Frinton and Walton Lifestyles facility, the Head of Finance, Revenues & Benefits Services informed Members that the Council had now finalised a Legionella Policy alongside undertaking a range of actions / activities in response to this issue. However, the Health and Safety Executive’s final report and recommendations was still awaited. Once that report was received, any further actions required would be reviewed and a further update provided to the Audit Committee.
The Head of Finance, Revenues & Benefits Services also informed the Committee that although work had progressed on the Counter Fraud Strategy the Department for Works and Pensions (DWP) had recently approached the Council to ask if it would be willing to work together and undertake joint fraud investigations where opportunities arose. Discussions remained on-going with the DWP and as this would have an impact on the Counter Fraud Strategy it had been decided to defer this item until March 2018 in order to enable the associated arrangements to be finalised and reflected in the Strategy.
It was RESOLVED that the progress made against the outstanding issues be noted.
Exclusion of Press and Public
The Cabinet is asked to consider the following resolution:
“That under Section 100A(4) of the Local Government Act 1972, the press and public be excluded from the meeting during consideration of Agenda Item 9 on the grounds that it involves the likely disclosure of exempt information as defined in the relevant paragraphs of Part 1 of Schedule 12A, as amended, of the Act.”
It was moved by Councillor Scott, seconded by Councillor Hones and –
RESOLVED that, under Section 100A(4) of the Local Government Act 1972, the press and public be excluded from the meeting during consideration of Agenda Item 9 on the grounds that it involves the likely disclosure of exempt information as defined in Paragraph 7 of Part 1 of Schedule 12A, as amended, of the Act.
Report of Corporate Director (Corporate Services) - B.1 - Risk Based Verification Policy
To seek the Committee’s necessary annual approval of the Council’s Risk Based Verification Policy.
RESOLVED that, following the 2017/2018 annual review, the Risk Based Verification Policy as set out in Appendix A attached to the Report B.1 of the Corporate Director (Corporate Services) be approved.