Agenda and minutes
Tuesday, 14 June 2011 7:00 pm
Venue: Council Chamber, York House, Richmond Road, Twickenham
Contact: Angus Huck, 020 8891 7191, Email: email@example.com
There were no apologies.
DECLARATIONS OF INTEREST
Members are asked to declare any interests in matters for consideration at the meeting.
Councillor Cardy declared a personal, non-prejudicial interest in Item 7 as a Counci9l nominee on the Board of Governors of the Richmond Housing Partnership.
Councillor Marlow declared a personal, non-prejudicial interest in Item 7 as a former governor of Orleans Park School.
To approve the minutes of the meeting held on 27th April 2011.
The minutes of the previous meeting, held on 27th April 2011, were agreed as an accurate record and the Chairman was authorised to sign them.
REPRESENTATIONS FROM MEMBERS OF THE PUBLIC (IF ANY)
No representations from members of the public were received.
To receive a report of the External Auditor, the Audit Commission.
The District Auditor presented the Committee with a report entitled “Audit Committee Update June 2011” (pages 9-18 of the Agenda pack).
The purpose of the report was to provide the Audit Committee with an update on progress in delivering the External Auditor’s responsibilities. The report also sought to highlight key emerging national issues and developments which might be of interest to the Committee and relevant to the Council.
The following actions were highlighted for particular attention:
- There were ongoing discussions with officers on the restatement of the 2009/10 accounts under International Financial Reporting Standards (IFRS). The restated figures were required as comparators in the 2010/11 accounts. The Council’s restatement would be reviewed during June and July 2011.
- It was anticipated that work on the Audit Opinion would commence on 4th July 2011 following receipt of the draft financial statements. A list of expected working papers had been agreed with officers and the audit approach had been discussed. It was expected that the Annual Governance Report would be agreed with officers in early September 2011.
- It was intended that a Value for Money (VFM) Conclusion would be given at the same time as the Audit Opinion.
In response to questions and comments from Members, it was explained that the government’s recent announcement of changes to the Audit Commission meant that in future all audit work would be put out to tender and this would bring about a complete change in the way that work was allocated. In response to a supplementary question, it was reported that the timeframe for implementation was unclear.
It was RESOLVED that the report be noted.
UPDATE ON "REPORT A RISK"
To receive a verbal update from the Joint Head of Internal Audit on progress made to the “Report a Risk” function.
The Joint Heads of Internal Audit reported that the Council was now ready to launch a “Report a Risk” facility to all staff. This would be comprised of an online facility, an email facility and a dedicated telephone number, and as such it would mirror the fraud reporting facility. It was explained that the all-staff emails announcing the new system would go out the following week, and Internal Audit would (1) monitor what came in and (2) report back issues after three months.
In response to a concern raised about the difficulty of explaining what was meant by “risk” in this context, and the possibility of inappropriate reporting resulting from any confusion, the Committee was advised that a link would be inserted into the all-staff email that would explain the risk management process, and that staff should be engaged with the risk process though the Departmental Management Teams.
To receive a report of the Joint Head of Internal Audit summarising the work carried out by Internal Audit since April 2010.
The Joint Heads of Internal Audit presented the Committee with a report entitled “Annual Internal Audit Report 2010/11” (pages 19-40 of the Agenda pack).
The following key issues were highlighted:
- Payroll & Pensions, Treasury Management, Accounts Payable and Cash and Bank had been given a “limited” assurance. Three Priority 1 recommendations had been raised against the Accounts Payable Audit. All these issues had been responded to by management.
- Eight Priority 1 recommendations had been raised in respect of the audit of Teddington Pool.
- The Corporate Anti-Fraud Team (CAFT) had improved its systems around investigating fraud and had increased the number of sanctions and prosecutions as a result (pages 31-35 of the Agenda pack).
In response to questions and comments from Members, the following information was given:
- It was the practice of Internal Audit to report in detail on Priority 1 recommendations at the April and November meetings, then do follow-up work and report on actual implementation to those meetings. The overall annual summary was reported in June.
- Proactive Fraud work was part of the internal control environment (pages 12-15 of the Agenda pack). It was useful to be able to identify errors and process issues even where no fraud was uncovered. There was a need to review the schedule of proactive fraud work on a regular basis.
- The audit of compliance with the Council’s Recruitment Code of Practice by the Borough’s schools had revealed that every school in the sample had been found to be non-compliant to the extent that at least one check had not been done. It was pointed out that recruitment fraud was a growing risk and a particular concern for schools. As the Council was not the employer or the budget-holder, the appropriate course of action was for the Director of Education & Children’s Services to raise the issue with the governors and insurers of the Borough’s schools.
- There was more than £100,000 difference in the value of benefit overpayments between 2009/10 and 2010/11 (page 14 of the Agenda pack). It was explained that changes in process within the Corporate Anti-Fraud Team had resulted in improved results. However the value of individual overpayments might vary considerably case by case. All cases that came through would be risk-assessed and work only undertaken on higher risk cases.
It was RESOLVED that:
(1) The Annual Internal Audit Report 2010/11 be agreed.
(2) The Director of Education & Children’s Services be requested to raise the issue of non-compliance with the Council’s Recruitment Code of Practice with the governors and insurers of the Borough’s schools.
(3) The Joint Heads of Internal Audit present the Committee at its next meeting with an expanded report on the subject of non-compliance with the Council’s Recruitment Code of Practice by the Borough’s schools.
To receive a report of the Director of Finance & Corporate Services to set out details of the officer level review process undertaken in order to produce the draft Annual Governance Statement (AGS).
The Director of Finance and Corporate Services presented the Committee with a report entitled “Review of Internal Control and the Draft Annual Governance Statement 2010/11” (pages 41-44 of the Agenda pack).
The report set out details of the officer-level review process undertaken in order to produce the draft Annual Governance Statement (AGS), which was attached to the report at Appendix A. The Committee was asked to review all the assurance evidence contained in the AGS before approving it for signature by the Leader of the Council and Chief Executive, for publication together with the Statement of Accounts for 2010/11.
In response to a comment from a Member, it was stated that the principal purpose of the AGS was to put the information it contained in one accessible place, and that it was envisaged that officers would look at how best to do this in future years.
It was RESOLVED that the Committee approve the Annual Governance Statement set out at Appendix A to the report and recommend it for signature by the Leader of the Council and Chief Executive.
To receive a report of the Joint Head of Internal Audit summarising the proposed Internal Audit Plan for 2011/2012.
The Joint Heads of Internal Audit presented the Committee with a report entitled “Internal Audit Plan 2011/12” (pages 105-114 of the Agenda pack).
It was explained that the Annual Audit Plan was mainly risk based, with individual audits derived from or linked to the key risks identified in the Corporate and Services Risk Registers (where they had been established). This meant that audit work was targeted at the organisation’s high risk areas.
It was reported that with respect to the proposed Audit Plan 2011/12, the main driver would be efficiency work, and in particular, the development of shared services with Kingston, that had been agreed in principle and would take effect on 1st April 2012.
In response to questions and comments from Members, the following information was given:
- Some of the Internal Audit work would continue be undertaken by the external contractor, Deloitte, which also did work for Kingston.
- There were insufficient resources to allow officers to audit all areas every year. Priority was always given to the most important parts of the Council. Audit work had been risk based since 2004/5, and if the risk was considered low, an audit would not normally be undertaken.
- The audit of highways would be followed up during the current year.
- Property disposal had not been audited for a few years as there had not been a great deal of activity due to the recession and fall in the property market.
- The arboricultural management contract had been audited and had been found to be fairly satisfactory. Specific issues raised by Members would be investigated.
It was RESOLVED that the Internal Audit Plan for 2011/12 be agreed.
To receive a report of the Joint Head of Internal Audit containing the draft LBRuT response to the DCLG Consultation on the Future of Public Audit.
The Joint Heads of Internal Audit presented the Committee with a report entitled “Consultation on the Future of Local Public Audit (DCLG) – Draft Response” (pages 115-124 of the Agenda pack).
The Committee was reminded that the Department for Communities and Local Government (DCLG) had issued a consultation document on the Future of Public Audit: www.communities.gov.uk/documents/localgovernment/pdf/1876169.pdf.
The Council’s Draft Response was attached at Appendix A to the report (pages 119-124 of the Agenda pack).
Members were advised that the key proposals were as follows:
- A requirement to have a majority of Independent Members of the Committee and the option to have an Independent Chairman. The four options for the scope of independent audit work (set out at page 118 of the Agenda pack).
Members were supportive of the recommended responses and the following opinions were expressed:
- The convention that the Chair be an opposition Member should be maintained.
- It would be difficult to recruit Independent Members, since few would have the requisite knowledge of the day-to-day workings of the authority, but the Council should not be seen to be defensive on this point.
- In relation to the recent banking crisis, independent audit committees in the private sector had proved supine and ineffective. It was not a model to be welcomed.
- Independent members would be costly to appoint, but the Council should not be seen to be acting as judge and jury.
It was RESOLVED that the Draft Response to the Consultation on the Future of Local Public Audit be agreed and submitted by the Director of Finance and Corporate Services to the DCLG on behalf of the Committee by the deadline of 30th June 2011.