Apologies were received from Councillor Elloy who was substituted by Councillor Gibbons.

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

Councillor Cardy declared a personal interest in item 7 as a member of the Hampton Hill Junior School Finance Committee.

To approve the minutes of the meeting held on 8^th February 2011.

The minutes of the previous meting, held on 8^th February 2011 were agreed as an accurate record and the Chairman authorised to sign them.

No representations from members of the public were received.

To receive a report of the Internal Head of Internal Audit and Risk Management providing follow-up information about the CCLA (Church of England, Charities and Local Authorities) PSDF (Public Sector Deposit Fund) MMF (Money Market Fund) as requested by the Committee.

The Committee received a report of the Deputy Leader and Cabinet Member for Resources, requested by the Committee at its previous meeting, the purpose of which was to provide further information on the opportunity cost of investing £5 million in the new Public Sector Deposit Fund (PDSF) as a seed funder.  The Opportunity Cost of such an investment was reported to potentially be approx £100,000. However the Committee was advised that there may be longer term non-financial benefits of becoming a seed funder such as mutual ownership and the creation of a fund with a public sector ethos that should be taken into account in any decision to invest or otherwise.

The Committee expressed the view that its normal remit would be compromised by such an investment as it had previously attempted to provide the highest possible returns from safe investment.

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

Ø      That the Church of England, Charities and Local Authorities (CCLA) had commented on the report before the Committee and were not entirely happy with the 18 month fixed term comparisons given; they argued that as the money could be withdrawn at any time such a comparison was not legitimate.  The Committee was advised that, whilst this comment was fair, any seed fund benefits would be lost if monies were withdrawn before the 18 month period was over.

Ø      That the £100 million required for the fund to start up had been reached and it would launch in June 2011.  This would make it a smaller fund than one in which the council would normally invest.  However in order to achieve the seed funder benefits, investment would need to be made immediately.

Ø      That the initial yield predicted was in line, if not slightly better, than other money market funds used by the council, however the size of the fund made it open to vagaries not associated with larger funds and this created risk should a major investor pull out.

Ø      That only the initial investment would be subject to the benefits of seed funder status.  It would not be possible to make a small investment now and expect benefits from future investments.

The Committee concurred with the advice of officers that the benefits of becoming a seed investor were not clear enough to warrant investment at this stage.

It was RESOLVED

1. That LBRuT not become seed funders in the PSDF
   
   
2. That investment be reconsidered in the future when the fund were better established.

To receive reports of the External Auditors, The Audit Commission.

The Committee received a report of the External Auditors, the Audit Commission.  The report was presented by Lindsey Mallors of the Audit Commission and contained the pre-statement reports for LBRuT.

In particular she referred to the following:

Ø      That this report was an opportunity to bring before the Committee any weaknesses that had arisen as part of the auditor’s initial observations.  There were no serious concerns to report.

Ø      There were areas of investigation that the committee was asked to note.  These were:

§         Payroll and the possibility of ‘ghost staff’ appearing. 

§         Business rates

§         Access rights and ensuring that staff only had access to the resources that they need.

Ø      That the Audit Commission would continue to make quarterly reports with the testing occurring at year end as was required for certification of the accounts.  The Finance Department would bring forward year end work where appropriate.

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

Ø      That there was no indication that access rights were excessive only that there was not sufficient evidence to ensure this was not the case.

It was RESOLVED that the report 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 2010.

 Councillor Cardy declared a personal interest in the item to be discussed as a member of the Hampton Hill Junior School Finance Committee.

The Committee received a report of the Joint Heads of Internal Audit summarising the work carried out by the Internal Audit Department since the last report in November 2010.

The Head of Internal Audit presented the report to the Committee in particular she referred to the following:

Ø      That of the work carried out, only one audit gave ‘no assurance’.  This related to Teddington Pool & Fitness Centre where 38 recommendations were identified including 8 regarded as priority 1 and 19 as priority 2. 

Ø      That 102% of the Audit Plan had been completed to date.

In response to questions raised and comments made the Committee heard the following further information from the Joint Head of Internal Audit:

Ø      That the Council did not have a statutory responsibility for the auditing of Academies in the Borough.  Should the Academy scheme be expanded it would be possible for the Department to compete with other auditors to sell its services to the Academies.  It was noted with concern that the S151 Officer would still be expected to sign off accounts for academies even where the council had not been able to conduct an audit.

Ø      That the FMSIS reporting requirements for schools had been removed by national government and would be replaced in the future with something new.  In the meantime the Internal Audit department was using the pre-FMSIS audit mechanisms to assess schools.

Ø      That in relation to Orleans Park School discussions had taken place and while further tests would continue to be conducted Internal Audit was happy with the response so far.

Ø      That consolidation work was planned in order to establish where workers had ceased to be employed by the council but ID cards had not been de-activated.  This was particularly important during the implementation of the efficiency programme.

Ø      That a programme of changes would be implemented to ensure that managers filled out leavers’ forms in a timely and accurate fashion and that this would be linked to information sent by managers to payroll at the same time.

Ø      That overtime costs at the Sheen Lane Centre had been addressed by bringing the two members of staff concerned into the central team. A member of staff had been employed to redistribute hours on a new staff rota.  Any new structure and rotas would be designed to mitigate negative impacts on the site.

Ø      That the risk that residents receiving contributions towards care would be overpaid owing to benefits and allowances not having been taken into account had been addressed and these benefits and allowances now formed part of financial assessments undertaken.

Ø      That a balance must be struck between investigating the income of those claiming financial support for care and cost of officer time spent on those investigations.

Ø      That the cessation of employment of two ‘looked after children’ in the pantry service at LBRuT was  ...  view the full minutes text for item 42.

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 & Risk Management the purpose of which was to summarise the progress of previously reported audits.

The Joint Head of Internal Audit presented the report to the Committee and in particular referred to the following points:

Ø      Almost all of the previously reported audits had been implemented or superseded by other developments or policy.  6 remained outstanding and these were:

§         Leisure contracts - various

§         Safeguarding Adults – Vetting of Voluntary Group Staff

§         Waste Contract – Delivery Plan for Veolia to be agreed and signed

§         Records Management – Contract for Offsite Storage.

§         Networks  - Password Settings.

In response to questions asked and comments made the Committee heard the following further information from officers:

Ø      That contract changes to Leisure Services were intended to formalise what already existed rather than to change services provided.  That although the process had been long and difficult it was near to resolution.

It was RESOLVED that the report be NOTED.

To receive a report of the Head of Internal Audit and Risk Management setting out the proposed Internal Audit Strategy and Internal Audit Terms of Reference for 2011-12.

The Committee received a report of the Joint Heads of Internal Audit the purpose of which was to set out the proposed Internal Audit Terms of Reference and Internal Audit Strategy for 2011/12 in accordance with the CIPFA recommendations that these documents be considered by the committee on an annual basis (included in Regulation 6 of the Accounts and Audit Regulations 2011).

The report also contained the key priorities identified within the Internal Audit Annual Service Plan to support the achievement of corporate objectives.

These key priorities would feed into the detailed annual audit plan which would be presented for consideration by the committee at its next meeting in June.

The Committee considered the impact of the recent efficiencies programme and subsequent reduction of staff in Internal Audit and sought assurances that these reductions would not impact negatively on the work of the department.  The Joint Heads of Internal Audit assured the Committee that at present there was flexibility of internal staffing and the budget to purchase additional days externally which would ensure that the work programme was fulfilled.  The situation would be constantly monitored in order to indentify any issues which might arise in the future as the result of local or national changes.  The Committee expressed the view that internal audit work must be maintained at its current level while the Efficiency programme is being implemented.

In response to the committees ensuing discussion, officers provided the following additional information:

Ø      That shared services implemented between LBRuT and various authorities would be monitored. There was an implicit risk involved in sharing services but providing that risks were well managed, they should be successful.

Ø      The focus of Internal Audit had evolved over recent years to ensuring that all key risks are identified and managed cost effectively, whilst recognising that the authority may have to accept a greater exposure to risk in the future in response to demands for ever greater efficiency.

It was RESOLVED that the Internal Audit Terms of Reference and the Internal Audit Strategy 2011/12 be NOTED.

To receive a report of the Head of Internal Audit and Risk Management updating the Committee on the Corporate Risk Register maintained by the Executive Board.

The Committee received a report of the Director of Finance and Corporate Services providing an update on the Corporate Risk Register maintained by the Executive Board.

The Director of Finance and Corporate Services presented the report for the Committee and referred in particular to the following:

Ø      That the Risk Management process in place at LBRuT was effective and well managed. However, reporting in this format was somewhat simplistic and sometimes failed to capture the essence of the work undertaken in identifying risk.  Work was being conducted to establish best practice in other local authorities and look for ways of improving the reporting of risk to the Committee.

In response to questions raised and comments made the committee heard the following information from the Director of Finance and Corporate Services:

Ø      That political risk was included at election time as a change in administration created risk for work underway but was later dropped from the list during mid term.

Ø      That the ‘likelihood’ score was derived from the likelihood of something happening within a certain time frame as opposed to it ever happening.  Time since the last occurrence of said risk was also incorporated.

Ø      That a new Property Management Board had been created to oversee the risks relating to all projects relating to the building and expansion of schools.

Ø      That the risk rating to equalities had not altered since the last report.

Ø      That although theft from parking meters had occurred in the Borough and was not welcome, the risk was not great enough to be included as part of the Corporate Risk Register but would be within the operational service risk register.

In addition following issues were discussed:

(i)                  The Committee discussed the risk relating to the need for school places in the Borough.   It expressed a view that in light of the various risks relating to project management, insufficient S106 agreements on new housing developments and the economic climate affecting the level of private schoolers in the Borough; the likelihood score of this particular risk should be raised to 5.  The committee heard that the risk would not be given any additional scrutiny should the score be raised as all risks on the register were considered important enough to receive constant scrutiny. 

(ii)                The Committee expressed concern regarding the potential risk to the council of having no control over the allocation of academy places but retaining its statutory duties to provide school places for residents.  It was considered that this might be included on the register as a new risk.

(iii)               There was some discussion regarding whether the risk to equalities identified as part of the Risk register should be scored more highly in light of the recent decision to award a contract for sexual health advice to young people to a religious organisation.  The Committee did not form a united view on the matter.

It was RESOLVED:

1.                  That the points made at (i) and (ii) above, be reported to the Executive Board  ...  view the full minutes text for item 45.

To receive information on the DCLG Consultation on Local Public Audit.

The Committee received a report of the Joint Heads of Internal Audit the purpose of which was to set out the principles contained within a consultation document issued by the DCLG entitled the Future of Local Public Audit for the consideration of the committee.

The consultation dealt with Government plans to abolish the Audit Commission and decentralise the current audit regime.  With particular impact on the committee it recommended that more independent members be recruited and further said that the Chair and Vice Chair should be independent members.  The Committee had agreed some time ago to have one independent member; this post would be advertised shortly alongside attempts to recruit members for other Council bodies.  In addition the Committee would be expected to take on more responsibilities including some of those previously executed by external auditors.

The Committee agreed that the document was too detailed to address at the meeting and requested that it be sent to members of the Committee for comment by the 20^th May 2011. In addition they requested that those areas that would particularly impact on the committee be highlighted by officers for ease of reference.

It was RESOLVED:

1.                  That the consultation document be noted

2.                  That the document be distributed to members of the committee for comment and that these comments be received by the Joint Head of Internal Audit by 20^th May 2011

That the formal response of the Council be brought before the Committee for consideration at its next meeting.