| Place: | Cross Room, Civic Centre, West Paddock, Leyland, PR25 1DH |
| Present: | Councillors Ogilvie (in the chair), Breakell and Hamman |
| In attendance: | Head of Shared Assurance Services (Garry Barclay), Policy Manager (Rebecca Heap), Internal Audit Manager (Clare Ware), Principal Auditor (Dawn Highton), Risk Manager (Andrew Armstrong) and Democratic Services Officer (Carol Eddleston) Representatives from the council?s External Auditors (Audit Commission) Fiona Blatcher and Gareth Winstanley |
| Public attendance: | 1 |
| Other Officers: | 1 Other Members:- Councillors Clark, Mrs M Smith and P Smith. |
| Item | Description/Resolution | Status | Action | |
|---|---|---|---|---|
| OPEN ITEMS | ||||
| 43 |
Apologies for Absence Apologies for absence were submitted on behalf of Councillors Mrs Ball and O'Hare. |
Noted | ||
| 44 |
Declarations of Interest There were no declarations of interest. |
Noted | ||
| 45 |
Minutes of the Last Meeting Minutes attached RESOLVED: That the minutes of the meeting held on 8 March 2010 be approved as a correct record and signed by the chairman subject to the insertion of 'Ogilvie' in place of 'O'Hare' in minute no 40 Apologies for Absence. |
Agreed | ||
| 46 |
Data Quality Report attached The Policy Manager presented a report informing members of progress made in strengthening the council?s data quality arrangements where data was provided by third parties and used by the council. The Data Quality Policy was available on both the council?s website and Cllr CONNECT. In response to questions from members, the Policy Manager explained that there was a certain amount of trust involved, especially with an organisation such as the police which had its own data quality arrangements in place, but that validation and checking occurred in that anything that did not look quite right would be subject to close scrutiny and, additionally, random ?spot checks? took place. The Third Party Reporting Protocol was robust in that it had to be signed off by a senior manager in partner organisations as a declaration of their commitment to the council?s Data Quality Policy and, in a recent example, Serco?s legal department had poured over the protocol for four weeks before signing up to it. Although there might appear to be an additional administrative burden in the short term, it reduced the risk to the council in the longer term. Partners who were not currently in a position to sign up to the same standards of accuracy were permitted to sign to that effect and to declare that they were taking the necessary corrective action. Fiona Blatcher, Audit Commission Engagement Lead, confirmed that one of her colleagues had suggested that the report seemed to address the points made by the Audit Commission in its 2008/09 Use of Resources findings. Members joined the chairman in thanking the Policy Manager for attending the meeting, presenting the Data Quality progress report and responding to their questions. RESOLVED: That the committee note the progress made in strengthening the council?s data quality arrangements where data was provided by third parties. |
Agreed | ||
| 47 |
External Audit - Certification of Claims and Returns - Annual Report - Audit 2008-09 Report attached Representatives from the Audit Commission presented the annual report on their work to review and certify three claims totalling ?51 million in value (made up of ?22m funding from government grant-paying departments and ?29m as collection of non-domestic rates) and were pleased to report that their work had not identified any concerns about the council?s arrangements. The chairman noted that the report was the first of its kind and enquired why it was felt necessary to produce it now, whether representatives of this Council had any say over the appropriateness of new reports and how much of the audit fees paid by this council were attributable to the production of this report. Mrs Blatcher explained that the Audit Commission felt that it should raise the profile of its work and its staff were now mandated to produce this report. Members of audit and governance committees were entitled to write to the Audit Commission to question the need for and value of reports of this kind. She pointed out that the certification process identified quite a number of issues in some authorities but, in the case of this council, the report was relatively quick to produce and had had only a small impact on the total fee. Mrs Blatcher explained that the nature of all Housing Benefits claims for the Department of Work and Pensions was considered nationally to be of ?inherently high risk? because, among the huge number of small transactions which added up to a considerable value, there was a risk that the assessors would get something wrong. As confirmed at a previous meeting of the committee, the understatement of the Income Collectable referred to on page 6 of the report had been a classification error in the statement of accounts. The fee for grant claims was based on the amount of time taken to carry out the audit and this could change from time to time. The estimated planned fee for 2009/10 of ?18,000 was based on a supposition of no new claims to certify and nothing going wrong. Fees incurred by the council for this work could be claimed back from the relevant government department as an administration fee. Up until approximately 6 years ago the Audit Commission had to certify all claims, regardless of value, but since then, only claims in excess of ?100,000 had to be externally certified and so the Audit Commission was not privy to, and therefore could not comment on, any claims below that value. RESOLVED: That the report be noted. |
Agreed | ||
| 48 |
External Audit - Audit Opinion Plan - Audit 2009/10 Report attached Representatives from the Audit Commission presented the report which outlined their approach to identifying opinion audit organisational level and information system risks and the work which was planned to address those risks. The report was for information purposes only and contained no recommendations or findings. The risk areas shown in Table 1 of the report would be likely to be common to many local authorities at this time due to changes to disclosure requirements and reporting standards and increased financial pressures. Gareth Winstanley, Audit Commission Audit Manager responded to a number of questions on the report. Overall, the approach to the 2009/10 audit would be similar to that conducted in 2008/09. The ten material systems referred to on page 5 of the report were financial and information systems which produced sizeable material figures in the annual financial statements. These included payroll, debtors and creditors, housing benefit, national non domestic rates, council tax and capital receipting. If no new systems were implemented this year there would be ten material systems considered to be operating next year but, should any replacement system/s be implemented, additional work would need to be undertaken by the Audit Commission to ensure that its staff involved in the audit understood the controls in place. Where feasible the Audit Commission held joint meetings with Chorley and South Ribble Borough Councils employees who were essentially the same individuals and the risk areas identified in table 1 were essentially the same sort of risks because of the Shared Services Partnership. Mrs Blatcher informed the committee that there was a discrepancy of ?1764 between the planned fee for the audit of financial statements quoted in appendix 1 of the report and that quoted in the Annual Audit and Inspection Fee 2010/11 letter. She would ascertain which figure was correct and report back to the committee. Members joined the chairman in thanking the External Auditor?s representatives for attending the meeting, presenting the Certification and Claims Annual Report and the Audit Opinion Plan and responding to questions. RESOLVED: That the plan be noted and confirmation of the planned fee be received. |
Agreed | ||
| 49 |
Urgent Item of Business The chairman had authorised the consideration of the following item of business as one of urgency in accordance with Section 100B(4)(b) of the Local Government Act 1972. Although the item was presented for information purposes only, it related to audit and inspection work which would commence before the next meeting of the committee. |
Noted | ||
| 50 |
Annual Audit and Inspection Fee 2010/11 Letter (33K/bytes) attached Mrs Blatcher presented the indicative fee for the 2010/11 audit. The figure presented might change between now and 2011 as a result of any findings in the 2009/10 audit which might necessitate a different approach. Any changes required would be reported to the committee. The increase in fee between 2009/10 and 2010/11 was to cover the costs of additional audit work arising from the introduction of international financial reporting standards. The Audit Commission had considered the impact of this on all local authorities and had agreed a refund to offset that particular element of the cost. In response to questions from members, Mrs Blatcher reminded the committee that South Ribble Borough Council was considered to be a low risk organisation because of its size and, as such, it was already paying below the standard scale fee and it was difficult to see how the fee could be reduced further. All the audit fees were available on the Audit Commission website and were based on gross revenue expenditure. [http:www.audit-commission.gov.uk/localgov/audit/auditmethodology/fees/Pages/0910workprogfees.aspx] Looking beyond the implementation of the shared Authority Financials system as the Shared Services Partnership financial information system, which might result in some increased costs initially, it might be possible to achieve a reduction in future years as some of the audit work would only need to be carried out once whilst meeting the needs of both Authorities. RESOLVED: That the letter be noted and that the committee look forward to a potential reduction in fees as a result of the Shared Services Partnership?s shared Authority Financials system. |
Agreed | ||
| 51 |
Internal Audit - Annual Report 2009-10 Report attached The Internal Audit Manager presented and responded to questions on the report which summarised the work undertaken by the Internal Audit Service from April 2009 to March 2010, gave an audit opinion on the adequacy and effectiveness of the control environment in the council, gave an appraisal of the Internal Audit Service?s performance and provided an evaluation of the effectiveness of the council?s system of internal audit. In response to questions from members, the Internal Audit Manager assured the committee that, if there were ever a case of prolonged sickness absence which might have an adverse impact on service delivery, the Internal Audit Service could buy in resource from Lancashire County Council?s Audit Services. Although a limited control rating had been given to the housing grants operation at the time the audit work was carried out, the management actions which had been agreed to improve the overall arrangements regarding budget monitoring had now been implemented and, should a further audit be undertaken now, the rating given would be at least adequate. Similarly, the Data Quality adequate rating was based on the findings of the audit work carried out at the time. ?Unidentified income? referred to under Cash and Bank on page 4 was held in an internal suspense account, usually for a very short space of time, until it had been confirmed exactly where it needed to be credited. The council?s charging systems had been reviewed to identify whether mandatory charges and fees for services were appropriate or should be increased and whether fees and charges should be introduced for any services which were not currently chargeable. Any control ratings given to Shared Services areas were unlikely to change even though some of the reports were currently at draft stage ? the field work had been done and the auditor/s had formed an opinion. Management actions were derived from the areas for improvement identified in the course of an audit and the recommendations made by the auditor. The actions were then discussed with the relevant manager who would agree or not agree to them, outline how they intended to address them and by when. The Internal Audit Service followed up progress when the management actions were due to be implemented. If the actions had not been completed on schedule the manager would be asked for an explanation and an expected final completion date. Should the actions not be completed by this later date, the matter would be escalated up the management chain, including to Chief Executive level, and may result in reports being brought to this committee. The same would apply if a manager refused to agree to a management action. In Appendix 2, % of planned time used applied to all the chargeable work in the audit plan. Audit time utilised included time spent on unplanned activities e.g. team briefs. It was reported that a saving on the audit budget of approximately ?30,000 had been achieved, partly as a result of a lesser need to buy in resource from Lancashire Audit Services due to some audits being deferred to next year. The % of time planned for the Shared Services work had been affected by staff sickness at the end of the financial year when work on financial systems was scheduled. The management actions implemented following the audit of the property rentals area had resulted from an auditor identifying that a council tenant potentially owed the council ?20,000. Although the concessionary travel scheme was administered by the county council, senior management had been felt it appropriate for the Internal Audit Service to undertake a review of an unexpected refund to ensure that the council was entitled to the refund before it accepted it. RESOLVED: That the report be noted and that the % of planned time used and % of audit plan completed continue to be reported separately for SRBC and for the Shared Services Partnership. |
Agreed | ||
| 52 |
Internal Audit - Audit Plan 2010/11 Plan attached The Internal Audit Manager presented the report which explained the content of the Internal Audit work programme for the next financial year and responded to questions from members and the member of the public. Members suggested that it would be helpful to expand the Internal Audit Plan table (Appendix to the report) to show Budget 09/10, Actual 09/10 and 10/11 Budget so that year on year comparisons could be made for the areas which were subject to audit work on an annual basis. The audit work planned for the Key Operations had been identified through a risk assessment process using feedback from the Use of Resources assessment, the Annual Governance Statement, Senior Management Team requirements and the Internal Audit Service?s own experiences. The list of areas identified had then been prioritised as high or medium and, once the resources available had been identified, the plan had been approved by the Senior Management Team prior to presentation to this committee. Mrs Blatcher explained that Internal Audit was part of the internal control of an organisation and provided assurance to management. External Audit comprised of two main areas, an audit opinion on the authority?s accounts and a value for money judgement. Part of the External Auditor?s role was to give an outside view of the performance of the Internal Audit function which was, in some authorities, considered to be inadequate. In South Ribble Borough Council?s case, the External Auditor worked very closely with the Internal Auditor Service and, where possible, relied on the work of the internal auditors. The Internal Audit Plan 2010/11 had been put together before the proposals for shared services for revenues and benefits and IT were approved but there was some contingency in both the Shared Services and SRBC General Areas should this be required as a result. Moving forward, the plan for 2011/12 was likely to show a greater number of days against Shared Services and a small number of days against some of the SRBC areas. The 155 days allocated to the Shared Services was for all the work relating to shared services in both SRBC and Chorley Borough Council. The Chairman suggested that it would be useful for future reports to include the resource allocations against each area for last year as well as the year ahead in order to determine any trends in areas requiring particular focus. Once the shared services financial platform was implemented, work which currently had to be carried out separately for both authorities would only need to be carried out once. As shared services develop over time there would be a reduced audit need overall which, it was hoped, would reduce the need to buy in external audit resource. Members joined the chairman in thanking the Internal Audit Manager for attending the meeting, presenting the Annual Report and the Internal Audit Plan 2010/11 and responding to questions. RESOLVED: That the Internal Audit Plan 2010/11 be approved, subject to changes to the presentation of the allocation of days, as proposed above. |
Agreed | ||
| 53 |
Assurance Strategy 2010-11 Report attached A3 Strategy attached The Head of Shared Assurance Services presented and responded to questions on the strategy which set out the purpose, operating principles and strategic direction for the Internal Audit and Risk Management services provided to the council. Under the Code of Practice for Internal Auditing, the Internal Audit service was required to set out its strategy and work programme and in the case of the Shared Services, this had been extended to include Risk Management, Emergency Planning & Business Continuity and Insurance. Some of the Key Performance Indicators were common to all the areas eg % satisfaction score in customer survey which would be derived from the service areas? own internal customer service satisfaction questionnaires and from external customer satisfaction research conducted corporately. Whilst there might be some local differences in Chorley and South Ribble Borough Councils? risk management policies and procedures, they were increasingly broadly aligned as each drew on best practice from the other. Progress against the key projects/actions in the strategy would be reported to this committee in the form of an Annual Plan for Shared Services which would also be reported to the Shared Services Joint Committee and Chorley Borough Council?s Audit Committee. Working in partnership with Chorley Borough Council helped to create efficiencies and greater economies of scale. Members joined the chairman in thanking the Head of Shared Assurance Services for attending the meeting, presenting the report and responding to questions. RESOLVED: That the Assurance Strategy 2010/11 be approved for implementation by Shared Assurance Services in 2010/11 and beyond. |
Agreed | ||
| 54 |
Fraud Risk Management Report attached The Risk Manager presented a report on the outcome of a recent review by the Risk Management Team to identify exposure to both corporate and service level risks and responded to members? questions. The review had been carried out to ensure the council?s procedures and arrangements complied with guidance published by the Audit Commission and the Chartered Institute of Public Finance and Accountancy and to monitor implementation of the remaining actions in the Council?s Fraud and Corruption Risk Register. The review had identified that fraud was not a particular issue in this council, largely as a result of the effective anti fraud measures in place, but that further awareness raising among officers and clarification of existing procedures, such as guidance on copyright requirements, would be worthwhile. Members thanked the Risk Manager for attending the meeting, presenting and responding to their questions on the report which gave them confidence that the council?s fraud management procedures were robust. RESOLVED: That the report be noted. |
Agreed | ||
| 55 |
Forward Plan Plan attached It was noted that the next meeting on 14th June had, once again, a very full agenda but it was confirmed that all the proposed items required to be dealt with at that time and could not be deferred to a later meeting. RESOLVED: That the Forward Plan be agreed. |
Agreed | ||