Agenda and minutes
Tuesday, 8 November 2011 7:00 pm
Venue: Salon, York House, Richmond Road, Twickenham
Contact: Louise Hall, 020 8891 7813, Email: email@example.com
No apologies were received.
DECLARATIONS OF INTEREST
Members are asked to declare any interests in matters for consideration at the meeting.
Council Cardy declared a personal, non-prejudicial interest as a Board Member at Richmond Housing Partnership.
To approve the minutes of the meeting held on 14th June 2011.
Minutes of the previous meeting were agreed as a correct record and
the Chairman authorised to sign them.
REPRESENTATIONS FROM MEMBERS OF THE PUBLIC (IF ANY)
No representations from members of the public had been registered.
To receive a report of the external auditors the Audit Commission in accordance with the provisions of International Auditing Standard 260 (“ISA 260”), requiring a report to Members with responsibility for financial reporting (those charged with governance) containing the key findings from the audit, prior to issuing of an opinion of the financial statements.
Representatives of the Audit Commission will be in attendance to speak to the report.
The Committee received a report of the Director of Finance and Corporate Services, the purpose of which was to report the completion of the annual external audit which had commenced in July 2011. The ‘Annual Governance Report’ attached at appendix a of the report, summarised the auditor’s comments on both the financial statements signed off in June and the Council’s arrangements to secure value for money on use of resources.
It was reported that the auditor proposed to issue an unqualified opinion on the accounts concluding that there were no material errors and that proper corporate arrangements for securing value for money were in place.
The District Auditor was in attendance to present the findings of the audit. He outlined the contents of the statement for the committee and in particular referred to the following:
(i) That the annual audit report and annual audit letter were both contained as appendices to the report for the consideration of the committee.
(ii) That the key message was positive
(iii) That future challenges had been recognised as the economic downturn and the impact on workers of redundancies etc
(iv) The continued impact of shared services and the management of risk in such circumstances.
(v) That the opinion was unqualified and a certificate would not be issued on the 2010/11 accounts owing to two outstanding objections raised by local electors. On resolution of the two outstanding objections the certificate would be issued.
The Committee discussed the information received and pursued the following themes in debate:
(i) That the delay in issuing the certificate was unfortunate but that it was hoped it would be resolved shortly in light of recent efforts.
(ii) That the finance team had coped well with the introduction of FRS reporting standards.
The key features of the accounts be noted
2. That the Annual Governance Report and Annual Audit Letter be noted.
To receive a report of the Head of Internal Audit and Risk Management summarising the work carried out by internal audit since April 2011.
The Committee received a report of the Director of Finance and Corporate Services, the purpose of which was to provide a summary of the work carried out by internal audit since April 2011.
Joint Heads of Internal Audit were in attendance to present the
report to the Committee. They outlined the most important features
(i) That Internal audit had agreed a total of 28 Priority 1 or High recommendations with management since April 2011, with an acceptance level of 100%. Appendix A to the report set out a schedule of the Priority 1 recommendations made since the last Audit Committee, together with the management response.
(ii) Only one audit resulted in a determination of ‘no assurance’being offered and this related to the transport audit where anumber of findings had been classified as priority 1. Actions hadbeen taken including the replacement of staff and the situationwould continue to be monitored.
(iii) That 5 priority 1 issues were identified in relation to disasterrecovery programme, actions had been taken to resolve theserisks.
Committee discussed the information received and the following
themes were explored between Councillors and Officers:
(i) That it was not feasible to wholly mitigate risk; the aim ofinternal audit was to find an acceptable level of risk and helpdepartments to manage it.
(ii) Risks surrounding ICT were discussed; in particular thoseservices that would be affected by a failure in the council’scomputer system. Risks created by incompatible softwareand other considerations were mitigated by various methodsincluding the regular back up of information and off sitestorage in case of fire / flood.
(iii) That data protection issues were important in a climate were commissioning and shared services were becoming moreprevalent.
That actions had been taken to address issues
identifiedsurrounding invoice production and
1. That the progress of the actions taken regarding the transport audit be further reported at the next committee.
2. That the monitoring report be noted.
3. That the assurance levels and management action inrespect of audit reviews undertaken be noted
To receive a report of the Head of Internal Audit and Risk management summarising the progress on previously reported audits.
The Committee received a report of the Joint Heads of Internal Audit and Risk Management, the purpose of which was to provide a summary of the progress made on previously reported audits.
The Joint Heads of Internal Audit were in attendance to present the report to the Committee. The committee considered the 13 areas where priority recommendations had previously been made.
The Joint Heads of Internal Audit described some of the key information related to the risks and responded to questions as follows:
(i) That one priority recommendation assessed as amber, leisure contracts, had not been resolved since it was identified in 2008/09. This related to the formalisation of the relationship between the council and a company running leisure pursuits in Richmond Park. An agreement had been reached which would define and monitor the working practices of the company but it was unlikely a more formal contract would be signed. The situation would continue to be monitored.
(ii) In relation to records management there was no substantial risk to data. The risk identified related to value for money and the possibility that the council was paying for storage for documents that need no longer be kept. Actions had been taken and would continue to rectify the issue.
(iii) That of those passwords set to never expire, 50 belonged to Councillors. The others numbering 87 were being traced and deactivated.
It was RESOLVED:
That the management actiontaken in response to audit reviews undertaken be noted.
To receive a report of the Director of Finance and Corporate Resources containing the Treasury Management Annual Report for 2010/11 and actual performance against the Prudential Indicators for 2010/11 and seeking a recommendation to full Council for the approval of these documents. The report also contains updated information about Treasury Management activities and investment criteria documents.
The Committee received a report of the Director of Finance and Corporate Resources containing the Treasury Management Annual Report for 2010/11 and actual performance against the Prudential Indicators for 2010/11. In addition it included information relating to Treasury Management activities and investment criteria.
The role of the Audit Committee in Treasury management was new, and related to risk. Councillors had undergone training in January 2011 in order to this role.
The Head of Capital Finance was in attendance to present the report to the Committee and to answer any questions raised as a result of its consideration. In introducing the report she referred in particular, to the following:
(i) Changes to the markets during 2011 including the change to ratings of sovereign currencies and financial institutions, many of which were downgraded.
(ii) That to some extent local authority borrowing was protected from short term changes by the long term nature of its borrowing but that new borrowing would be affected by the instability.
(iii) That the British Government was protecting some investments made within the UK and this discouraged investment in new markets abroad.
It was RESOLVED:
To receive a report of the Head of Internal Audit and Risk Management setting out a revised Anti-Fraud and Corruption Strategy, Whistleblowing Policy, Prosecution Policy and Anti-Money Laundering Policy. The report seeks the endorsement of the Committee and a recommendation for approval to full council of the Anti-Fraud and Corruption Strategy and Whistleblowing Policy and the approval of the Prosecution Policy and Anti-Money Laundering Policy.
The Committee received a report of the Director of Finance and Corporate Resources, the purpose of which was to provide revised copies of four strategies and policies relevant to the work of the Audit Committee for consideration and endorsement.
· Anti Fraud and Corruption Strategy
· Whistleblowing policy
· Prosecution Policy
· Anti-Money Laundering Policy
The Joint Heads of Internal Audit were in attendance to present the report to the Committee the following points were particularly referred to:
(i) That the number of sanctions made for 2011/12 was lower than the previous year. This was a result of a shift in strategy from the pursuit of volume of fraud to the overpayment value.
(ii) That the development of a Single Fraud Investigation Service, as announced by the coalition government in October 2010 was now being reconsidered and had been opened to consultation with Local authorities. Of the four options being considered LBRUT would recommend that the status quo be maintained. All four options were contained in the report.
The committee discussed the report and in particular, with officers, explored the following themes:
(i) That the data matching exercise undertaken was now producing fewer successes owing to the fact that many had been uncovered and this acted as a deterrent to others.
That all successful prosecutions were reported via press releases
to the local paper in order that they may act as a deterrent to
[Councillor Linnette left the meeting]
That creditor payments over 50k had been audited and one
inappropriate payment identified, however the council could not
claim back the monies as services had been received.
It was RESOLVED that:
1. That the revised Anti- Fraud and Corruption Strategy and the Whistleblowing Policy be endorsed and recommended for approval by Council
That the revised Prosecution Policy and the Anti-Money Laundering
Policy be approved.
To receive a report of the Head of Internal Audit and Risk Management setting out the annual review of the Council’s Risk Management Strategy and details of progress achieved since the last review in November 2010.
The Committee received a report of the Joint Heads of Internal Audit the purpose of which was to set out for the consideration of the committee the Annual Review of the Council’s Risk Management Strategy and the progress made over the last year.
The Joint Heads of Internal Audit and Risk Management were in attendance to present the report to the committee. The referred to the following prescient information contained within it:
(i) That during a time of change for the council were efficiencies were being sought and made and steps were being taken towards becoming a commissioning council, risk management and its integration into the heart of corporate planning and decision taking was more important than ever.
(ii) Processes must be made secure and awareness of risk by managers must be maintained at a high level.
(iii) That the way in which Internal audit was working had changed. Staff would now go into departments to help proactively avoid risk and encourage risk management in order to avoid retrospective measures having to be taken. When an audit was then undertaken in the future, a different member of the team would conduct it to avoid any conflict of interest.
(iv) The ‘report a risk’ address had received two reports from staff. 1 was withdrawn and one was not deemed to be a risk but a service management issues which would dealt with as such.
Following a question form the committee officer confirmed that the level of service provided to them by the council’s legal team following the introduction of shared services with Merton had not been negatively affected.
It was RESOLVED that the current position of risk management work be noted and the further actions contained within the report agreed.
To receive a report of the Director of Finance and Corporate Services providing an
update on the Corporate Risk Register maintained by the Executive Board.
The Committee received a report of the Director of Finance and Corporate Resources providing for consideration an update on the Corporate Risk Register maintained by the Executive Board.
The report detailed the changes to the register since the committee had last reviewed it and the Director fo Finance and Corporate Resources explained that on this occasion these were largely related to the repositioning of existing risks as opposed to creation of new risks.
In particular he referred to the following:
Following from a query raised by the committee, officers clarified that education and school places was not higher on the list as the current economic climate had not had as great an impact as previously thought in terms of movement from private to state school. In addition as much was being done to protect the council’s responsibility to school its residents as was financially feasible.
It was RESOLVED:
That the initial outputs from the Executive Board review of the Corporate Risk Register be noted.
To receive a report of the Head of Internal Audit and Risk Management on the future of the department and possible changes to the structure and functions there in.
The Committee received a report of the Joint Heads of Internal Audit detailing the proposal to develop a shared service with the Royal Borough of Kingston for the delivery if an internal audit and investigations service.
The Joint Heads of Internal Audit and Risk Management described for the committee the central points contained within the report namely the implementation of a shared service with Kingston and how this would help to satisfy one of the 13 priority strands of the council’s transformation project.
In the interim the Joint Heads from LBRUT would be seconded to Kingston for 2 ½ days per week should the Cabinet agree when the decision was put before it later in the month. This arrangement would then begin from the 1st December 2011. The committee was assured that it would not impact on their ability to scrutinise or on the support received in this duty from officers.
Targets for internal audit already in place not be changed and officers were confident that they would still be met. It would require a pragmatic approach to job roles and may require the use of temporary staff at times.
It was RESOLVED:
That the proposals to Cabinet be supported
To receive a report of the Head of Democratic Services seeking approval of a Job Description and Person Specification for the role of Independent Member of the Audit Committee and endorsement of an approach to advertising and selection.
The Committee received a report of the Head of Democratic Services containing the proposed Job Description and Person Specification for the post of Independent Audit Committee. In addition the report sought agreement from the committee on the nature and type of advertisement.
The report also contained a proposed selection process and reported the delegation already in place for appointment.
The committee discussed the content of the Proposed Job Description and Person Specification and in particular discussed the inclusion of a requirement that applicants must not have been convicted of any offence. Various options and scenarios were discussed and the committee agreed that the wording remain.
It was RESOLVED: