| Place: | Cross Room, Civic Centre, West Paddock, Leyland, PR25 1DH |
| Present: | Councillors O'Hare (in the chair), Breakell, Edwards and Ogilvie. |
| In attendance: | Deputy Chief Executive (Mike Nuttall), Director of Governance (Maureen Wood), Head of Shared Assurance Services (Garry Barclay), Head of Shared Financial Services (Susan Guinness), Internal Audit Manager (Clare Ware), Risk Manager (Andrew Armstrong), Jane Blundell (Principal Management Accountant) and Gordon Whitehead (Acting Principal Financial Accountant), Carol Eddleston (Democratic Services Officer)and the Cabinet Member for Finance and Resources (Councillor S Robinson). |
| Public attendance: | 0 |
| Other Officers: | 1 Other Members:- Councillor Clark. |
| Item | Description/Resolution | Status | Action | |
|---|---|---|---|---|
| OPEN ITEMS | ||||
| 1 |
Apologies for Absence Apologies for absence were submitted on behalf of Councillors Mrs Moon and M Tomlinson. |
Noted | ||
| 2 |
Declarations of Interest There were no declarations of interest. |
Noted | ||
| 3 |
Minutes of the Last Meeting Minutes attached RESOLVED: 1) That the minutes of the meeting held on 29 April 2010 be approved as a correct record and signed by the chairman; and 2) that the Audit Commission be requested to clarify the discrepancy of ?1764 in the planned audit fee as highlighted by Mrs Blatcher at the meeting. |
Agreed | ||
| 4 |
Code of Corporate Governance Code attached The Head of Shared Assurance Services presented a report on the Code of Corporate Governance which had been drafted following recent organisational changes at SRBC and revised CIPFA SOLACE guidance in relation to the role of the Chief Finance Officer. He referred members to the six core good governance principles in section 2 and to the five principles in section 4 relating to the activities and behaviours of the Chief Finance Officer. He explained that a self-assessment against all these principles led to the Annual Governance Statement which would be discussed later in the meeting. Any serious breaches of the code could be referred to CIPFA by the Council or by the External Auditor. In response to questions from members, the Deputy Chief Executive confirmed that the content accurately reflected his role and ensured that members were aware of the arrangements that the council had in place. Members commented that the code was very worthy but seemed somewhat aspirational in nature. In response to questions from members, the Head of Shared Assurance Services explained that behind each of the high level aims there was a whole series of questions which were used to inform the work of Internal Audit and the service level reviews. Annual reviews against the code would form the basis of the Annual Governance Statement and a Corporate Governance Action Plan. This committee was responsible for monitoring progress against this plan and would receive twice yearly progress reports. Whilst CIPFA was not consulted on the code, the external auditors would certainly be interested in it in the course of their audit and inspection work. The Head of Shared Assurance Services said that he could not think of an occasion in the past when there had been a service delivery failure [core principle 1] but he was confident that effective procedures and processes were in place to enable the council to respond appropriately should any failure occur in the future. The code was very much specific to this council and went beyond the detailed CIPFA and SOLACE guidance, with the introduction of Service Assurance Statements which required Directors and Heads of Service to review the operation of a wide range of governance systems and procedures within their service areas. RESOLVED: (4 yes, 0 no, 0 abstention) That the revised Code of Corporate Governance be recommended for approval by Council |
Agreed | ||
| 5 |
Draft Annual Governance Statement Covering report attached The Director of Corporate Governance presented the report about the Draft Annual Governance Statement for 2009/10 (contained in full within the Statement of Accounts) and the Corporate Governance Action Plan. The AGS explained the council?s governance arrangements, the review of the governance framework directed by the senior officer governance group and future plans to improve and strengthen the governance environment. In response to questions from members, the Director of Corporate Governance explained that meetings of the senior officer governance group took place approximately monthly and were minuted. The group?s remit was very broad and included previewing all items which came before the Governance Committee and promoting awareness of the governance environment among members and officers. Members questioned the status of the actions taken to ?further embed project management disciplines? in item 5 of the Corporate Governance Action Plan and whether an ?adequate? project management framework on page 3 was satisfactory. The Director of Corporate Governance explained that an ongoing review and restructure of the Policy team meant that education and training for staff on the project management framework would not be rolled out before December and that the wording in the plan could be improved to better reflect the fitness for purpose of the framework. In response to specific comments on the AGS itself it was agreed that clauses 3.2 and 3.4 would be amended to include reference to the Governance Committee, where appropriate, and that figures and statistics would be added to 3.3 and 3.6, where appropriate. Members noted that there was some repetition in the document and the Director of Corporate Governance agreed to remove any unnecessary repetition. The term ?ethical governance audit? would be amended for clarity to ?audit of ethical arrangements?. The aspirations identified in 5 ?Enhancing our Governance Arrangements? would be expanded into specific actions and targets in an action plan, progress against which would be reported to this committee in January. RESOLVED (4 yes, 0 no, 0 abstention): That the Draft Annual Governance Statement be approved, subject to the comments above. |
Agreed | ||
| 6 |
Compliance with International Auditing Standards Report attached The Head of Shared Assurance Services introduced a report which had been compiled to enable the chairman and the Deputy Chief Executive to respond to a number of questions in letters from the Audit Commission about the council?s management processes relating to fraud and internal control, laws and regulations and potential for litigation and claims affecting the financial statements. The Audit Commission would have been satisfied with an emailed response but officers felt that this item should be dealt with in a transparent manner and brought to the full committee. The chairman expressed his disappointment that he had not had sight of the Audit Commission letter prior to the agenda being published. The Cabinet Member for Finance and Resources expressed concern that the Audit Commission had written such a letter when it already had access to most of the information that it was seeking. He acknowledged that a response needed to be sent but he would appreciate some further explanation of why the council was being asked to provide this information at this stage and suggested that officers might take the matter up informally with the Audit Commission. The Deputy Chief Executive agreed to finalise a draft response for the chairman to approve prior to signing and sending off to the Audit Commission. RESOLVED: (4 yes, 0 no, 0 abstention) That a final draft response be sent to the chairman for approval, signature and return to the Audit Commission. |
Agreed | ||
| 7 |
Corporate Risk Register 2009/10 - Year End Progress Report Report attached The Risk Manager presented a report informing members of the steps taken to implement a range of projects and actions contained in the Corporate Plan and Service plans which sought to address the key risks and opportunities in the Corporate Risk Register for 2009/2010. The numbers against the Key Project/Action column related to projects in the Corporate Plan. The Risk Manager explained that for the preparation of this report there had been a more in-depth look at the projects and actions, especially those which occurred most frequently. The mitigation provided by the actions had been effective in managing the risk ? where corporate risks had been carried forward to the current year more work was required to monitor and mitigate the risk going forward and the amber ratings were due to the risks overlapping years rather than an indication of the projects and actions being behind target. The Risk Manager did not expect to see any project level rating to change to red when progress was next reported to the committee and he was hopeful that performance information would be migrated from the TEN computer system to excel spreadsheets by the end of the next quarter. The Risk Manager agreed that a key to the risk owner acronyms needed to be added to the end of the monitoring statement to clearly identify the risk owners and he noted that the first sentence on page 2 had been accidently left in from the report that came to committee in January. From the audience, Councillor Clark commented that this committee was privileged to know how the project rating scores were derived and he suggested that a refresher for all members might be helpful. At the chairman?s suggestion that this might be a suitable topic for a Learning Hour, the Head of Shared Assurance Services confirmed that a training and awareness raising programme for members and officers was currently being developed. RESOLVED (4 yes, 0 no, 0 abstention): That the action taken to address the key strategic risks during 2009/10 be noted. |
Agreed | ||
| 8 |
South Ribble Borough Council Statement of Accounts 2009/10 Report attached Appendix A attached The Head of Shared Financial Services introduced the report which provided an update on the Council?s overall financial position and financial strategy. Members noted the fact that the original capital allocation for 2009/10 had been revised during the year from ?4.1 million to ?3.3 million to incorporate the re-phasing of some capital projects from 2008/09. They commented that this seemed to happen on an annual basis and queried whether delays in the capital programme were due to financial constraints or commissioning issues. The Head of Shared Financial Services confirmed that it was generally the latter as budget was available as soon as capital schemes were agreed. Money allocated to capital schemes which was not spent in the current financial year was not classified as a saving. The Deputy Chief Executive stressed that there were sometimes valid reasons for delaying implementation of schemes such as waiting for third parties. One such example was the Farington Park play area ? ongoing discussions about site access had resulted in an unforeseen delay. The Deputy Chief Executive referred members to paragraph 2 of page 6 and said that guidance contained in updates of Local Authority Accounting Panel Bulletin 82 impacted on some of the financial statements. This guidance would be used as the basis for compiling the post audit accounts which would be considered by this committee at its September meeting. Noting the lower than expected required contribution from the general reserve, the chairman queried whether it would be worth revising the 10% target or deciding what the funds should be used for. The Cabinet Member said that the level of general reserve was extremely defensible and in the current financial climate he would not advise earmarking any of it for spending: the anticipated zero percent rise in council tax for 2011/12 as well as 2010/11 could cost the council in the region of ?400,000; details of a Comprehensive Spending Review would be announced later in the year; and the implications of Concessionary Travel on the council in the future were not yet clear.. He reassured members that the level of an authority?s general reserve did not affect the amount of government support grant. The Deputy Chief Executive explained that the Performance Reward Grant went into Earmarked Reserves rather than the General Reserve because the authority was holding it on behalf of the Local Strategic Partnership and as such, it was earmarked for a particular purpose. Members noted that the report relating to Building Control under the future risks to the Council?s Medium Term Financial Strategy was rather vague and did not give confidence that the service would meet its statutory requirement to cover its costs over a three year period. The Head of Shared Financial Services confirmed that the actual cash savings generated in 2009/10 were ?2.3 million. However, for National Indicator 179 (Value for Money Gains) reporting purposes, only recurring savings were reported and one-off savings were stripped out. In response to a request for clarification about the pension fund for South Ribble Community Leisure Limited (SRCLL), the Deputy Chief Executive explained that the pension fund was in the middle of being valued when the Leisure Trust was set up. Serco had based its bid on what it knew at the time before completion of the actuaries? report. This council had put a sum of money in the reserves for the early years to cushion the impact on the council. Once the remaining ?8,000 was gone, the council would have to absorb the whole cost in the budget (?30,000), with ten years of the partnership remaining. In response to members? questions on Appendix C, the Deputy Chief Executive explained that the Council Tax arrears as of 31 March 2010 (?1.007 million) included any arrears going back to when council tax was first introduced. Whilst every attempt was made to recover arrears, some would be covered by bad debt provision. Similarly, with sundry debtors (everything apart from Council Tax and National Non Domestic Rates), the council used all legal processes at its disposal to recover any debts but on occasion, when these did not result in recovery, would look at the age of the debt and decide whether the most appropriate course of action was to make provision for writing it off. The Deputy Chief Executive explained that the reduction in the General Fund in the General Reserves in Appendix D was due to a restructure which had not been budgeted for. The Cabinet Member stressed that the council was not tied into the rises in Council Tax which had been included in the revenue budget forecasts in Appendix F. Referring members to Appendix G, the Cabinet Member commended the council and officers on a tremendous performance in 2009/10 which included exceeding the already huge original efficiency and improved customer satisfaction ratings. Members joined the Cabinet Member in commending such a tremendous performance. Members expressed grave concern about the extent of the pension fund liability shown on page 6 of Appendix A and of the apparent 50% increase in the liability over a 12 month period. The Cabinet Member pointed out that those figures were based on a snapshot in time and that the value of the council?s assets had increased. Members noted a significant reduction in interest and investment income on page 20 and the Cabinet Member explained that this was due to the fact that the terms of the council?s ?3 million investment in Lloyds bank, which had been paying a good rate [7.02%], had a break clause in it. Lloyds repaid the council on 1 January 2009 and the interest rate in the deposit account into which it was subsequently invested was 0.5%. Members noted a significant increase in the value of debtors on page 22. The Head of Shared Financial Services explained that this was due to a change in accounting practices and was explained on page 7 of the covering report and Note 2 to the Collection Fund Account (page 58 of Appendix A). The council paid the rates that it collected to the government on a monthly basis. A number of appeals which might have gone back years had been settled and if the appellant received a refund the council would claim it back later. With regard to d. Impairment on page 43, the Acting Principal Financial Accountant explained that the investments in Landsbanki were still deemed to be generating interest at the original investment rate and the amounts shown were the present value of the expected repayments, at 31 March 2010, discounted at the original interest rate. Referring to page 20 in Appendix A, the Head of Shared Financial Services obtained members? agreement to move ?23,000 for area based grant from the Non Domestic Rates Redistribution line to the General Government Grant line. Members joined the chairman in thanking officers for preparing the Statement of Accounts in good time. RESOLVED (4 yes, 0 no, 0 abstention): That: 1) The contents of the report and appendices be noted; 2) The budget variances for 2009/10 listed at Appendix B be noted; 3) The budget items listed at Appendix E be carried forward to 2010/11; 4) The financing of the capital programme for 2009/10 and the carry forward of capital rephasing to 2010/11 as outlined in the report be approved but that the Scrutiny Committee be requested to investigate the continuing underspend and delays in the Capital Programme; 5) The retention of reserves at Appendix D, together with the proposed contributions to and withdrawals from these reserves, as detailed within the Statement of Accounts, in accordance with the policy as set out in the report, be endorsed; 6) The Statement of Accounts for 2009/10, which incorporates the Annual Governance Statement, be approved; 7) The preparation of the Statement of Accounts on the basis that the impairment associated with the Icelandic deposits is accounted for in 2009/10 be noted, and 8) The committee express its astonishment at the level of pension fund liability and in particular at the significant increase over the last 12 months. |
Agreed | ||
| 9 |
Treasury Outturn 2009/10 Report attached The Cabinet Member for Finance and Resources presented the report which summarised the treasury activities of the Council for 2009/10. Responding to members? questions about the impairment charge for Icelandic Investments, the Cabinet Member explained that the amount (?989,200) had been calculated according to CIPFA guidance. He did not know what other local authorities were doing in this regard but his view was that the amount should be charged to the 2009/10 General Fund Accounts rather than 2010/11 to ?get it out of the way?. Dealing with it sooner rather than later did not mean that the council was less likely to get any government help as there was no help available. Current indications were that there could be a recovery of 95 pence in the pound from Landsbanki but the council was impairing at 85 pence. As recovery went further into the future, the money would be worth less. He suggested that recovery was likely to be higher if the property market recovered quite well. The Cabinet Member explained that the decision to impair now (2009/10) had followed discussions between himself and the Deputy Chief Executive (Section 151 Officer). The Deputy Chief Executive confirmed that the Treasury Outturn Report would go to Cabinet and Council as it contained proposals to modify the Treasury Management Strategy and the Governance Committee was delegated to approve the Statement of Accounts. He explained that, under normal circumstances, the authority would seek to defer something when it was aware it had a potential liability that it needed to provide for, but, given the information that the council had now, the proposal was to impair now. The Cabinet Member said that his preference would still have been to impair now even if the council had not received the ?500,000 VAT refund this year. In response to further questions from members, the Cabinet Member confirmed that if all the monies currently ?frozen? were returned immediately, the council would have ?4.1 million to invest. However, in reality, the council could currently do nothing with the money invested and, based on a longer term recovery of 95% of the ?3 million, the council was likely to lose a relatively low amount of ?150,000. Writing off the ?989,200 would not affect the council?s claim. The Deputy Chief Executive explained that regulations for deferral were brought in in 2009 and all affected local authorities had to consider how to deal with the issue. A decision to impair at that time could have caused major problems for council tax setting and this council had decided to take advantage of the opportunity to defer. In view of the government?s refusal to allow local authorities to capitalise the net cost of impairment charges and in the absence of any government aid, there was nothing to be gained by deferring for another year. The Cabinet Member explained that the recommendation to increase the maximum period for investment from 3 months to 12 months was due to the fact that rates of return were expected to remain low for some time to come. Credit ratings were still used extensively but there was no national mechanism to ?police? the credit rating agencies. From the audience, Councillor Clark said that Cabinet relied on guidance from the Cabinet Member for Finance and Resources, the Deputy Chief Executive and this committee. RESOLVED (4 yes, 0 no, 0 abstention): That: 1) The report and appendices be noted; 2) The treasury position and prudential indicators for 2009/10 as set out in the report be noted; 3) The charging of the ?989,200 impairment charge for Icelandic investments to the 2009/10 General Fund Accounts be noted, and 4) The Revised Investment Strategy 2010/11 be recommended for approval by Council at its meeting on 4 August 2010. |
Agreed | ||
| 10 |
Forward Plan Plan attached Members noted that the forward plan for the August meeting was relatively light and contained nothing that could not be considered at the September meeting. They agreed to cancel the August meeting and defer the items to the September meeting. Members agreed that they would discuss at the next meeting which parts of the Constitution they wished to review next and a list of possible areas for review would be included on the agenda. They agreed that the detailed work should again be carried out by the Task Group but that it should not be constrained by meeting just before the full committee. RESOLVED (4 yes, 0 no, 0 abstention): 1) That the meeting scheduled for 18 August be cancelled and the items originally planned for discussion at that meeting be deferred to the 22 September meeting, and 2) the agenda for the next meeting include an item ?Review of the Constitution? and a list of possible areas for review. |
Agreed | ||