| Place: | Cross Room, Civic Centre, West Paddock, Leyland, PR25 1DH |
| Present: | Councillors O'Hare (in the chair), Mrs Moon, Ogilvie and M Tomlinson |
| In attendance: | Head of Shared Financial Services (Susan Guinness), Director of Corporate Governance (Maureen Wood), Internal Audit Manager (Clare Ware), Legal Services Manager (David Whelan), Principal Auditors (Dawn Highton and Jan Minchinton), Democratic Services Officer (Carol Eddleston) and the Cabinet Member for Finance and Resources (Councillor S Robinson) Representatives from the council's external auditors (Audit Commission) Fiona Blatcher and Gareth Winstanley. |
| Public attendance: | 0 |
| Other Officers: | 2 Other Members:- Councillors Clark and Mullineaux. |
| Item | Description/Resolution | Status | Action | |
|---|---|---|---|---|
| OPEN ITEMS | ||||
| 29 |
Apologies for Absence An apology for absence was submitted on behalf of Councillor Breakell. |
Noted | ||
| 30 |
Declarations of Interest There were no declarations of interest. |
Noted | ||
| 31 |
Minutes of the Last Meeting Minutes attached RESOLVED (unanimously): That the minutes of the meeting held on 1 December 2010 be approved as a correct record and signed by the chairman. In relation to minute no 27 and in response to further questions from the chairman, the Cabinet Member for Finance and Resources explained that although Council was the body authorised to approve the Treasury Management Strategy and any changes to it, the Governance Committee would normally have the opportunity to consider the relevant report before Cabinet and Council. The Chief Executive confirmed that this was so and said that every effort would be made to bring such reports to this committee first in future. Councillor S Robinson explained that the cycle of meetings before Christmas meant that final Council approval of the changes proposed in the report could not have been given until 2 March had the report been brought to tonight?s Governance Committee meeting. It had not been considered prudent to delay on this occasion because the Council?s cash balances at the end and beginning of the year were so high and a decision needed to be taken to increase the limit on term deposits with the partly nationalised banking groups Lloyds/HBoS and RBS. |
Agreed | ||
| 32 |
External Audit - Audit Plan ? South Ribble Borough Council - Audit 2010/11 Report attached Ms Blatcher presented the audit plan which set out the proposed audit work for the audit of financial statements and the value for money conclusion 2010/11. It was based on a risk-based approach to audit planning and the only specific area of risk which had been identified was the efficient implementation of international financial reporting standards. This risk was common to all local authorities. The value for money conclusion would be quite different in 2010/11 in that it would focus on whether the Council was managing its financial risks to secure a stable financial position for the foreseeable future and whether the Council was prioritising its resources within tighter budgets and improving productivity and efficiency. Ms Blatcher informed the committee of a proposed change to the Accounts and Audit Regulations in that the Chief Financial Officer would have to sign the statement of accounts when they were submitted to the external auditors at the end of June but the committee would not have to approve them until the end of September when the audit work had been completed. In response to a question from the Cabinet Member for Finance and Resources, Ms Blatcher said it would be for this committee to agree whether or not it wished to see the statement of accounts in June. At the chairman?s suggestion that the committee should be given an opportunity to review them in some (possibly abridged) form, officers indicated that they would be happy to discuss with members the level of detail that they would prefer to see. The Head of Shared Financial Services assured the chairman that officers were happy with the timescales proposed and that the weekly meetings with the external auditors had worked well in the past. Mr Winstanley confirmed that continuity would be maintained in the form of the same audit team being involved this year. The fee for the 2010/11 audit had been set in April 2010 at just over ?101,000. Since then, the Audit Commission had decided to give a rebate of ?6,000 for the additional cost of the international financial reporting standards and of ?1,500 because of the reduced work on value for money. The net physical cost would now be ?93,500. Ms Blatcher had explained at the last meeting that legislation would be required to formally abolish the Audit Commission and to set out a new framework. Latest indications were that the current parliamentary timetable meant that the abolition might be delayed, with the Audit Commission possibly continuing until December 2012. As the Audit Commission was appointed as the council?s external auditor up to 2011/12 and a new framework was still quite some way off Ms Blatcher advised the council to delay giving much consideration to how it might procure external audit services in future. In the past the Audit Commission had let the contracts to external auditors and the process had started in the autumn prior to commencement of the contract in the new financial year. The Audit Commission?s in-house practice would continue in some form in the private sector and a business case for a management buy-out was currently under consideration. As the assessment regime had decreased significantly the commission?s focus could shift towards offering consultancy type services. Consultation on 2011/12 fees had just taken place and the results of the consultation would be published at the end of February. The proposed fee for this council was ?96,106. Costs associated with the end of the Comprehensive Area Assessment and the abolition of the Audit Commission would have to be met from somewhere and fees in the past had always included a contribution to the commission?s central costs. Councillor Ogilvie pointed out that at the meeting in April 2010 there had been some suggestion that the committee might see a reduction in audit fees as a result of shared services but he observed that this now seemed unlikely. Ms Blatcher explained that savings as a result of a combined financial system would start to show in 2011/12 although there would be some increase in cost in year one. In future however there may be no discretion to reduce fees. From the audience Councillor Clark suggested that the opportunity to benefit from much of the preparatory work of the Internal Audit Service was going to be lost as there would be no rebate on the charges. Ms Blatcher acknowledged that this was probably the case whilst the current audit regime was in place. The chairman thanked Ms Blatcher and Mr Winstanley for presenting the Audit Plan and for providing an update on the latest developments relating to the Audit Commission. RESOLVED (unanimously): That the report be noted. |
Agreed | ||
| 33 |
Finance and Resources - Budget Monitoring Report - Quarter 3: April to December 2010/11 Report attached Appendices (153K/bytes) attached The Cabinet Member for Finance and Resources presented an update on the Council?s overall financial position and financial strategy for 2010/11 based on the latest outturn projections. Councillor Ogilvie commented that the presentation of the figures in 2.1 of appendix 1 was confusing, with the ?277,000 relating to one-off severance/redundancy payments appearing in its own right as well as part of the ?1M efficiency savings figure. The Head of Shared Financial Services explained that she had attempted to present the figures in a different way but, for transparency purposes, had concluded that this was the best way, however, she would give further thought to how it might be presented in future reports. In response to a question from the chairman about concessionary travel, the Head of Shared Financial Services explained that the council had realised a significant underspend this year. Each year local authorities in the county made a contribution for the scheme to the county council, any year end overall over or underspend was in turn charged or returned respectively on a pro rata basis. The figures presented in appendix 1 represented the refund for a two year period. The Head of Shared Financial Services explained that, on page 3, freezing Council Tax was shown as having a negative impact because compensatory funding from the government would be available for a fixed amount of time only. In response to a question from Councillor Ogilvie, the Cabinet Member for Finance and Resources explained that the total forecast efficiency savings 2010/11 for Commercial Services on page 7 was less than the recurring saving 2011/12 because although the restructure was complete, savings only started part way through 2010/11. The chairman repeated an observation made at previous meetings that the capital programme slipped every year. The Cabinet Member acknowledged that this was the case. From the audience Councillor Clark, as Cabinet Member with responsibility for shared services, pointed out that in the case of IT, financing had been identified for IT projects but, amid ongoing efforts to achieve efficiency savings, a different outcome would often occur. In response to a question from Councillor Ogilvie, the Cabinet Member explained that the prudential borrowing shown on page 20 was from the council?s own cash balances so it was not incurring interest charges on anything that it had borrowed for the capital programme but not spent. RESOLVED (unanimously): That the report be noted and further consideration be given to how efficiency savings might be presented in future reports. |
Agreed | ||
| 34 |
Finance and Resources - Treasury Strategies and Prudential Indicators 2011/12 to 2013/14 Report attached The Cabinet Member for Finance and Resources presented the report which outlined the council?s prudential indicators for 2011/12 to 2013/14 and set out the expected treasury operations for this period. It also stated the policy for making the minimum provision for repayment of debt. With regard to prudential indicator 4 (incremental impact of capital investment decisions on the band D Council Tax), members noted that, whilst slippage in the capital programme meant there was less impact on the council tax charge, it also meant that projects in the programme were not being completed and residents were not seeing the benefits of the programme. In relation to the Treasury Management Strategy 2010/11, the Cabinet Member pointed out that the council currently had no debt and had no plans to borrow at this time but the figures on page 4 were estimates and forecasts. Councillor S Robinson confirmed that the estimate of 95% of recovery of the Icelandic investments that he had mentioned at the last meeting was based on the priority status of local authority deposits being upheld in a test case involving 5 authorities which would be heard in the Icelandic courts later this month. In relation to 2.4 of the Investment Strategy 2011/12, the Cabinet Member confirmed that the council had a 12 month cash investment with Lancashire County Council. The Chief Executive confirmed that the council?s treasury advisors had carried out a risk assessment before the investment was made. Councillor Ogilvie referred to 2.7 and enquired how a decision would be taken to place funds with one of the two Money Market Funds mentioned and who would approve any such decision. The Head of Shared Financial Services explained that the same procedures would apply as for with call accounts. In response to the chairman, Councillor S Robinson confirmed that the two Money Market Funds concerned had consistently the best performance among Money Market Funds. He and the Chief Executive emphasised that these would only be used at times of the year when the council?s cash reserves were high and its investments in other financial institutions were at their maximum limit permitted by the treasury management strategy. In relation to a question from Councillor Ogilvie, the Head of Shared Financial Services explained that capital expenditure was by nature a long term expenditure item and therefore it was likely that it would carry over between different administrations. RESOLVED (unanimously): That Council be recommended to approve: i) the Prudential Indicators for 2011/12 to 2013/14; ii) the Treasury Management Strategy for 2011/12, incorporating the Treasury Prudential Indicators; iii) the Annual Investment Strategy 2011/12, and iv) the Annual MRP Policy Statement 2011/12. |
Agreed | ||
| 35 |
Internal Audit - Internal Audit Interim Report as at 24th December 2010 Report attached Dawn Highton, Principal Auditor, presented the report which advised members of the work undertaken on the Annual Internal Audit Plan up to 24 December 2010, gave an appraisal of the Internal Audit Service?s performance to date, sought the committee?s approval of the proposed Audit Plan covering the first quarter of 2011/12 and informed members of any other developments involving or impacting upon the work of the Internal Audit Service. Councillor Ogilvie observed that quite a few of the completed and ongoing areas of work had overrun. The Principal Auditor acknowledged that this was the case but said that some of the ongoing work was expected to underrun. The Internal Audit Manager pointed out that although there appeared to be quite an underspend on anti-fraud and corruption at the present time, this was an area which was ?dipped into? as issues arose. In response to a question from the chairman about the Key Control Issues against National Fraud Initiative on page 6, the Principal Auditor explained that the amount of total discounts awarded incorrectly should rise as the focus now was on monitoring the results from the 2009/10 Council Tax/Electoral Register exercise. Councillor Mrs Moon enquired what steps were taken to recover overpayments which had been made. The Internal Audit Manager explained that the Benefit Enquiry Unit dealt with cases of overpayment and fraud and the money would be recouped. Cases of fraud were publicised widely in the local press and Forward and this proved to be a useful deterrent. The Director of Corporate Governance said that in addition to recovering the money, the learning from the initiative was used to improve and tighten internal procedures whenever possible. The Principal Auditor confirmed that dates were agreed with managers for the management actions to be implemented. Occasionally situations might arise which would justify a change to the agreed dates and any such changes would be discussed and agreed with the relevant manager. Should the revised dates not be met the matter would be escalated to the Internal Audit Manager and ultimately perhaps to this committee. Councillor Ogilvie noted that the format of appendix 2 did not allow members to identify progress and improvements being made. Officers pointed out that control ratings were based on assessments made at a particular point in time and were given before management actions were implemented. Future audits of the same area might show that the control rating had moved upwards or downwards but that might not necessarily be directly as a result of the implementation of previous management actions. RESOLVED (unanimously): That the report be noted and that the proposed Audit Plan for the first quarter of 2011/12 be approved. |
Agreed | ||
| 36 |
Internal Audit - Internal Audit Customer Charter Report attached Charter attached Jan Minchinton, Principal Auditor, presented the Internal Audit Customer Charter which defined both the obligations and responsibilities of the Internal Audit Service to its customers and the obligations and responsibilities of its customers to the service. The format was completely different from the previous version which was produced in 2007. This Council?s charter would be broadly similar to that of Chorley Borough Council. In response to questions and observations from members, officers explained that Directors, Heads of Service and this committee were customers of the Internal Audit Service. The term ?auditee? had been used in the past but ?customer? was considered to be a more friendly term. Members queried whether the word ?customer? gave the right impression, given that the service was intended to measure and improve internal controls. Officers pointed out that the service also provided advice and consultancy and might be engaged to identify if there were any more efficient and effective ways to do something. Members discussed possible alternative wording such as ?Internal Audit Client Charter? and ?Internal Audit Service Charter?. RESOLVED (unanimously): That the charter be approved, subject to suitable wording as an alternative to ?customer?. |
Agreed | ||
| 37 |
Corporate Governance - Corporate Governance Progress Report Report attached The Director of Corporate Governance presented the report which gave an update on the steady progress being made to strengthen the Council?s governance arrangements. In response to a question from the chairman, the Director of Corporate Governance confirmed that the Annual Governance Statement, from which the actions in the Corporate Governance Action Plan were derived, was presented to this committee annually in June alongside the statement of accounts. It was again presented for final approval (integrated with the final accounts report) in September. A half-yearly progress report was made to committee in January or February as appropriate. RESOLVED (unanimously): That the report be noted and the ongoing progress in strengthening the Council?s governance arrangements be welcomed. |
Agreed | ||
| 38 |
Corporate Governance - RIPA Report Report attached Report attached The Legal Services Manager presented the report which summarised the outcome of a recent inspection of the Council?s Regulation of Investigatory Powers Act 2000 (RIPA) regime by the Office of Surveillance Commissioners. It was likely that the next inspection would take place in three to four years time. Members welcomed the positive nature of the report and the high commendation of the Director of Corporate Governance and the Legal Services Manager in the Inspection Report itself. They were pleased to note that three out of the four recommendations in the Inspection Report had already been implemented and enquired what the intentions were with regard to a Central Record of Authorisations. The Director of Corporate Governance explained that this was still under consideration. All authorisations to date were already filed centrally and from a resource point of view, with only two RIPA authorisations since 1 January 2008, officers were exploring the need to create a database. A recent Government review had proposed that authorisations to proceed would in future have to be granted by magistrates. This was likely to restrict, even further, the council?s use of these powers in the future. Councillor Ogilvie said he understood the rationale of the officers? comments but noted that the letter from the Office of Surveillance Commissioners said it looked forward to learning that the Council had accepted the recommendations and would implement them. The Legal Services Manager confirmed that the council had responded to the letter and most of the recommendations had been implemented. Councillor Mrs Moon said she was conscious of the cost implications of implementing the final recommendation and supported Ms Wood?s suggestion that further consideration might be given to it in future if the Council were to see an increase in requests to use its RIPA powers. RESOLVED (unanimously): That the report be noted and that further improvement action be incorporated into the Corporate Governance Action Plan and reported accordingly. |
Agreed | ||
| 39 |
Forward Plan ? Governance Committee 2011/12 - (based on provisional 2011/12 timetable of meetings) Forward Plan attached The committee considered a draft forward plan which was based on the draft timetable of meetings for 2011/12 which was to be considered by Cabinet on 16 February and Council on 2 March. Members observed that the workload for the committee was significant and said they would prefer to meet on a more frequent basis with fewer items on the agenda to allow them time to fully consider the papers in advance of each meeting. RESOLVED (unanimously): That every attempt be made to identify six meeting dates in the 2011/12 timetable of meetings. |
Agreed | ||
| 40 |
Date of Next Meeting RESOLVED (unanimously): That a special meeting of the committee be held to ratify the recommendations of the Constitution Task Group at the rise of the Constitution Task Group meeting on Thursday 24 March. Members noted that the committee meeting would be unlikely to last longer than 15 minutes and agreed that this, and the purpose of the meeting, should be made clear on the agenda for the benefit of any members and members of the public who may consider attending. |
Agreed | ||