Apologies were received from Councillor Harrison.

Members are asked to declare any interests in matters for consideration at the meeting.

No declarations of interest were received.

To approve the minutes of the previous meeting

The minutes of the previous meeting held on 9^th November 2010 were agreed as an accurate record of proceedings and the Chairman authorised to sign them.

An update was received on minute 22.1 regarding the possibility of an additional pathway to report risk for staff.  The Head of Internal Audit reported that she could confirm the technology to implement such an e-mail address was possible and could be implemented by March 2011 with the proviso that funding could be identified. 

It was RESOLVED that the detail and the implementation of the risk reporting channel be delegated to the Chairman and Vice Chairman in conjunction with the Heads of Internal Audit.  

No representations were received from members of the public.

To receive and note the final Annual Audit letter of external auditors PKF for 2009/10 and the Audit Plan and update of the new external Auditors, the Audit Commission.   

The committee received a report of External Auditors, PKF containing the annual letter 2009/10.  Lee Lloyd Thames of PKF introduced the report and described its contents. In particular he referred to the following:

• The report was a summary of the work undertaken by PKF in the last year
• That although 95% of the work towards the CAA had been completed, following its abolition by the government a score could not be given
• Associated National Indicators had also now been abolished to be replaced by locally set indicators.
• That work carried out showed that LBRUT gave good value for money and had clear strategies in place to mitigate efficiency savings
• That assets were well managed but there was opportunity to utilise them further.
• That resources were being well managed and Directors’ plans were clearly linked to political and strategic objectives.

In response to comments made and questions raised the committee heard that:

(i)      For 2011 the All in One consultation would be the major consultation aide for budget priorities.

(ii)    Risks would continue to be reported to members via the regular budget reports and the corporate risk register.

(iii)   20-30% of council owned assets were audited and this was considered to be adequate for auditing purposes and enough on which to give an opinion.

The committee expressed its gratitude to Lee Lloyd Thomas and to PKF for their work as external auditors.

The committee received a further report of the Audit Commission; incoming external auditors. The report was presented by Lyndsey Mallors of the Audit Commission and included the Audit plan for 2010/11. The plan set out the work that the Audit Commission intended to carry out to enable an opinion to be given at the end of the yearly cycle.

The specific risks identified for audit were:

• Efficiency review and redundancies
• Implementation of international financial reporting standards
• Property disposals
• The S75 agreement between LBRUT and NHS Richmond
• Estimates and journals
• Related party transitions

In response to comments made and questions raised the committee heard that:

(i)      There was no historical evidence that planning appeal costs needed to be included in the audit. If they became evident in the budget this could be reassessed.

(ii)    Any work outside of the agreement by the external Auditors would be charged on an hourly basis.

(iii)   That unless they were likely to impact on specific areas used to form the opinion, possible risks from planned legalisation changes were not included.

(iv)  That although the efficiency programme was identified as an area of increased risk, there were already robust processes in place to mitigate those increased risks.

(v)    That auditing of assets would generally focus on those assets worth over £5m.

(vi)  Benchmarking exercises showed that LBRUT had both a low number and low values of benefit fraud incidences. In addition, efforts to prevent and detect fraud had yielded results better than the previous two years.  When investigated as part of the External Auditors brief; comparisons with other similar Boroughs would be included in any  ...  view the full minutes text for item 30.

To receive, note and make comment upon where appropriate, the key Treasury Management documents for 2011/12. 

These documents are the Treasury Management Strategy, the Treasury Management Policy and the Approved Investment Criteria. 

The Committee received a report of the Deputy Leader and Cabinet Member for Resources and the Director of Finance and Corporate Services containing the key Treasury Management documents for 2011/12.  Namely, the Treasury Management Strategy, Treasury Management Policy and the Approved Investment Criteria. 

The Head of Capital Finance presented the report and in particular referred to the following:

·         New regulatory requirements for Treasury Management and reporting practices.

·         The Treasury Management Strategy which set out the risks and the means by which these risks would be managed.

·         Investment Options.  LBRuT has traditionally shown a low appetite for risk and currently limited itself to investment in only three of the six areas in which it was legally allowed to do so.

·         That an opportunity to arisen to become a seed funder in the Church of England, Charities and Local Authorities (CCLA) Money Market Fund (MMF) called the Public Sector Deposit Fund (PSDF).

·         Changes to Building Society investment criteria.

·         Council borrowing limits, and changes to the council borrowing strategy for 2011/12.  

In response to questions raised and comments made the Committee received the following information:

(i)      That the building society criteria were necessarily cautious as the impact of one failing had not yet been tested

(ii)    That the PSDF referred to above, was expected to become a comparatively good opportunity for investment in the future but there was an element of risk involved in the seed funder opportunity described.

It was RESOLVED:

1. That the Treasury Management Policy for 2011/12 as set out in Appendix A be recommended to Council for approval
   
   
2. That the Treasury Management and Investment Strategy for 2011/12 as set out in Appendix B be recommended to Council for approval
   
   
3. That the investment Criteria for 2011/12 as set out in Appendix C be recommended to Council for approval
   
   
4. That a decision to become a seed funder or an investor or neither in the CCLA PSDF be deferred for further information to be provided at the next meeting.

The Committee received a report of the Director of Adult and Community Services containing the key risks associated with Adult Care Service Transformation and provide information also requested by the Committee on Mental Capacity issues.

The Assistant Director of Adult and Community Services presented the report to the committee and briefly described the Whole System Redesign which had taken place in Adult Services.  He explained that the Committee had asked for information on the programme risks, in particular in relation to Self Directed Support.  The Committee heard that:

·         The key risks remained with consolidating practice following Whole System Redesign,  SDS and Market development (encouraging innovation from providers).

·         Whole system redesign is now in phase two and is expected to be completed by April 2011.  Full implementation is currently on schedule.

·         Implementation of SDS was progressing well.  The programme now included a small pilot for people with Mental Health Issues and due regard was given to the Mental Health Capacity Act 2005 when conducting assessments in order to protect those with diminished mental capacity.  Safeguarding people from abuse remained the highest priority.

·         It was crucial to the success of the project and therefore identified as a risk, that there was a vibrant market for local care services in order that people had sufficient choice to meet their care needs.  To this end the Richmond Innovation Fund had been established in September 2010 to support innovation.  In addition a pilot project as underway to test an “outcome based” approach to commissioning in order to encourage flexible support services.

·         Governance arrangements to monitor the implementation of the above, including the Personalisation Programme Board, the Personalisation Partnership Board and reporting structures within the Directorate to the Executive Board.

·         The number of people who had not had a review, the level of risk associated with this delay and the timetable for completion of delayed reviews.

In response to questions raised and comments made the Committee heard the following additional information:

• That satisfaction levels of those people that controlled their own budgets was almost twice as high as those who had their care packages provided for them. 
• That £200,000 of a total £250,000 payments made but not used had been reclaimed.
• That those people with dementia would be reviewed at each assessment in line with the Mental Capacity Act in order to asses their capability to complete the assessment.  All degenerative mental illnesses would be treated in the same way.
• That those people deemed high risk and waiting for a review were at minimised risk of abuse and all delayed reviews would be completed by May 2011.
• That it was crucial to maintain a balance between freedom of choice, right to make unwise decisions and protection of the vulnerable.
• That it was acknowledged that the programme carried high risks and that both the ACS department and Internal Audit were keeping the programme under constant review.

It was RESOLVED that the risks and mitigation were NOTED.

 The Committee received a report of the Director of Education, Children’s and Cultural Services.  As requested by the Audit Committee the report provided information to Members about the factors included and the challenges inherent within the methodology for forecasting school places.

The Head of Schools Commissioning introduced the report to the Committee and briefly explained the school planning process, which included various factors such as birth data, the ‘cohort retention’ rate from birth and also wider information such as the economic climate and housing developments. 

In response to questions asked and comments made, the committee heard the following further information:

• That the Child Benefit Agency would not provide information on children in the Borough owing to Data Protection issues, principally due to security fears.  However, officers had repeatedly asked DCSF/DfE officers in the past whether it might be possible to share information on a more general statistical level, perhaps within the first four digits of postcodes.
• That the PCT had previously been approached to share information on families with young children registering at local doctors’ surgeries but that again data protection issues had been a barrier.
• That a relatively high level of parents in Richmond had the means to send their children to private schools and often did so; and that fluctuations in the rate of that meant that it was difficult to predict demand for state-school places within the borough.
• That anecdotal evidence was also factored into any decisions on admission, e.g. in relation to parental perception of schools’ performance/standards, but to a lesser extent than entirely factual evidence.
• That private schools in the borough would not share information on applications and admissions with the Council.
• That new large housing developments would normally expect to have an S106 attached to mitigate additional children being brought into the area, but that the comparatively small size of developments meant that the amount of the contribution would only ever pay for a small part of the cost of expanding schools to match the anticipated ‘child yield’ from the developments.

It was RESOLVED that the report be NOTED.

To receive and note information on the impact of the Bribery Act 2010 and agree the recommendations required to ensure the Authority meets the requirements of the Act.

The Committee received a report of the Joint Head of Internal Audit advising members of the likely impact of the introduction of the Bribery Act 2010 and the actions needed to ensure the authority meets the requirements within it.

The Joint Head of Internal Audit presented the report to the Committee.  She explained that although the report stated that the Act was due to take effect on the 1^st April 2011 that since publication this introduction had delayed.  This was to allow further work to the Act after criticism of its practical applicability.

Of significance within the Act was the introduction of a “corporate offence” whereby employers will be liable to criminal prosecution for the action of employees involved in bribery unless adequate measures were in place to prevent it. 

Internal Audit had conducted a review and found that LBRuT was largely compliant with the Act and therefore the risk to the Council of the introduction of “corporate offences” was not high.

It was RESOVED that the report be NOTED and the actions contained within it APPROVED.

To receive information on the council’s use of covert surveillance and covert human intelligence sources (CHIS) from 2007 to date.

The Committee received a report of the Head of Internal Audit & Risk Management the purpose of which was to advise members of the LBRuT’s use of covert surveillance and covert human intelligence sources (CHIS) from 2007 to date.

The Joint Head of Internal Audit presented the report and explained to the committee that it appeared before them in order to meet new Home Office guidance that members review the use of directed surveillance at least annually in order to ensure that actions taken comply with RIPA legislation.

During the discussion that followed the Committee heard the following information from officers:

• A RIPA review had been undertaken and the recommendations of this review sought to severely limit the use of such measures.
• LBRuT had mostly used RIPA in relation to Trading Standards work carried out in the Borough and the Council had now been advised that this work did not require RIPA authorisation.
• That further operations were unlikely but that should they take place they would be reported to the committee.

It was RESOLVED that the report be NOTED

To receive an update on the options being considered for the future delivery of internal audit services.

The Committee received a report of the Head of Internal Audit the purpose of which was to provide for members of the Committee an update on the options being considered for the future delivery of internal audit services.

The Head of Internal Audit presented the report for consideration and the following salient comments were made and information given:

• That outsourcing options were currently still under consideration but that full outsourcing was unlikely to be recommended due prohibitive costs involved.

• That the current vacancies were not currently affecting the performance of the department and this was sustainable over the short to medium term.
• That the changing structure of the authority was a concern for internal audit.  It was important that the department could manage the process whatever the outcome of other changes to the council structure such as shared services.

It was RESOLVED that the report be NOTED.