| Place: | Cross Room, Civic Centre, West Paddock, Leyland, PR25 1DH |
| Present: | Councillors O'Hare (in the chair), W Bennett, Mrs Mort and Patten. |
| In attendance: | Director of Corporate Governance (Maureen Wood), Head of Shared Financial Services (Susan Guinness), Internal Audit Manager (Clare Ware), Risk Manager (Andy Armstrong), Principal Financial Accountant(Gordon Whitehead), Principal Auditor (Dawn Highton) and Democratic Services Officer (Carol Eddleston) and the Cabinet Member for Finance and Resources (Councillor Stephen Robinson). Fiona Blatcher (from the Council's external auditors, the Audit Commission). Other Members: Councillors Hamman and Martin. |
| Public attendance: | 0 |
| Other Officers: | 3 |
| Item | Description/Resolution | Status | Action | |
|---|---|---|---|---|
| OPEN ITEMS | ||||
| 13 |
Apologies for Absence Apologies for absence were submitted on behalf of Councillors Foster and Michael Green. |
Noted | ||
| 14 |
Declarations of Interest There were no declarations of interest. |
Noted | ||
| 15 |
Minutes of the Last Meeting Minutes attached Members noted that the resolution under minute no. 5 did not include the committee?s request to the Cabinet Member for Finance and Resources to respond on its behalf to the DCLG consultation to express concerns about the future of local public audit. Councillor S Robinson said that a response had not been sent because of the tight deadline. RESOLVED (unanimously): That, subject to the omission above, the minutes of the meeting held on 28 June 2011 be approved as a correct record and signed by the chairman. |
Agreed | ||
| 16 |
Audited Statement of Accounts 2010/11 AGR attached Covering report (55K/bytes) attached SoA (4M/bytes) attached The Head of Shared Financial Services informed members that in the past the full statement of accounts had been brought to the June meeting for approval before being submitted to the external auditors. This year, following a change in legislation, the accounts had been signed off by the Chief Financial Officer (Mike Nuttall) before submission to the external auditors. The auditors? findings had resulted in a few minor adjustments and had concluded that officers had coped successfully with the requirements of the International Financial Reporting Standards (IFRS). Ms Blatcher said that it was quite an achievement for the finance team to have done so well given the additional work in implementing the IFRS and the pressures on the budgetary process in the current economic climate. The whole process had gone very well and Mr Whitehead and his team had been very responsive and helpful throughout. The early work on the IFRS had made it very easy for the Audit Commission to review how the council was responding to the new standards and to discuss any issues directly with the team. The value for money certificate was issued following assessment against a number of specific criteria set by the Audit Commission on the council?s arrangements for securing economy, efficiency and effectiveness in its use of resources ? essentially how it dealt with the financial constraints it was facing and whether it was being strategic in how it identified and delivered efficiency savings. Ms Blatcher was happy that this council was doing all that it could. The Head of Shared Financial Services highlighted the following areas of note in the Statement of Accounts: Page 10 - the increase in the General Fund was due to an underspend in the General Fund budget and higher income received in respect of Housing Benefit Subsidy; Page 11 ? the significant movement in the Comprehensive Income and Expenditure Statement was largely due to changes in pensions valuations; Page 12 ? there was an improvement in the position relating to both short term and long term debtors. In response to questions from members about depreciation, the Principal Financial Accountant explained that revaluation of the council?s assets was done by a property consultant under the management of the Council?s Estates Supervisor. Local authority assets were revalued every five years apart from investment assets which were revalued every year. Ms Blatcher confirmed that the external auditors tested a sample of revaluations to check that they were done in accordance with normal revaluation procedures. Councillor Patten enquired about the difference between depreciation and impairment. The Principal Financial Accountant explained that depreciation was an annual charge, levied on all properties, which reduced the book value of each asset over its life. Impairment was a one off charge resulting from a reduction in the value of a single asset as a result of specific circumstances affecting that asset. In response to questions from Councillor W Bennett about the Council as a lessor (page 49), Councillor S Robinson explained that the council budgeted for what it expected to receive in the current climate and the way in which any arrears were handled was dictated by individual circumstances. Following a question from the chairman about the Icelandic Banks, the Principal Financial Accountant confirmed that the council had followed CIPFA guidance on impairing the assets. Ms Blatcher said that CIPFA had issued new guidance on 27 September which indicated that the recovery from Heritable Bank might be closer to 90% than the 85% previously mooted. This would have had a 7.5% effect on the accounts which she was satisfied would not have been material. Councillor S Robinson explained that it was not appropriate to include the contingent liabilities and assets detailed on page 54 due to their uncertain nature. In response to a question from Councillor Hamman from the audience about the changes in the pension fund liability, Ms Blatcher pointed out that it was a net pension liability. With asset values on the pension fund fluctuating with the markets, and with actuarial assumptions now based on the Consumer Price Index (CPI) rather than Retail Price Index (RPI), the liability would inevitably continue to change year on year. The effect of the price index change however would be a one-off. Government policy was currently under review and this would also affect actuarial assumptions. This authority?s position with regard to the pension scheme, currently approximately 80% funded, was better than that of many others in the country. RESOLVED (unanimously) that: 1) the contents of the external auditor?s Annual Governance Report be noted; 2) the Statement of Accounts for 2010/11 be approved; 3) the Chief Executive be authorised to sign the letter of Management Representation as set out in the Annual Governance Report, and 4) officers be thanked for their hard work on, and positive approach to, the audit and the external auditors, and be commended on producing a reader-friendly Statement of Accounts. |
Agreed | ||
| 17 |
Future External Audit Arrangements DCLG attached AC attached Ms Blatcher reminded members that the Audit Commission's in-house Audit Practice currently undertook the majority of audits for local public bodies. In July 2011, DCLG Ministers confirmed their preference for transferring this work to the private sector by outsourcing contracts. The Commission's Board was carrying out a procurement process to give private sector bidders the chance to compete for the Commission's audit work. This would mean all of the Commission's in-house work would be outsourced in time for the audit of 2012/13 accounts. The Commission?s in-house Audit Practice was putting a bid together and staff were expecting to be TUPEd across. Contracts would be let for three or five years, with bids for five year contracts expected to be more competitive. Prior to primary legislation to introduce a new local audit framework, the Audit Commission would oversee the contracts and other statutory functions and make auditor appointments. The Audit Commission had divided the country up into 10 packages in four geographical areas. The Northern area included the North West, the North East and Yorkshire and Humber. Whichever external audit company audited this council would also audit all local authorities in the North West. The Audit Commission would consult with all local authorities on their appointments and would agree any swaps which might be required as a result of any conflicts of interest. It was expected that this council would know the details of its new external auditors by August 2012. Councillor S Robinson expressed his concern about the proposed arrangements. He believed that it was ?scandalous? that the council could not choose its own auditors and would apparently have no right of recourse if it considered that the appointed auditors were not doing a good job. The big three or four accountancy firms were really the only ones who would be in a position to bid for the work and the council had no idea what the fees were likely to be. He would be writing to DCLG to express his extreme displeasure. In response to a question from the chairman about references, Ms Blatcher confirmed that the Audit Commission wrote to a sample of local authorities on an annual basis to seek their feedback on their satisfaction with their auditors. Councillor S Robinson confirmed that he was very happy with the current auditors and would be willing to provide a reference if requested. In response to a question from Councillor Patten about fees, Ms Blatcher explained that the Audit Commission would be letting, managing and monitoring the contracts and would set the audit fees. If the bids came in lower, the Audit Commission may be in a position to set the fees lower. Members thanked Ms Blatcher for providing a comprehensive update on future external audit arrangements. |
Noted | ||
| 18 |
Proposed Work Programme and Scales of Fees 2012/13 Report (127K/bytes) attached Ms Blatcher said that the proposed fee for 2012/13 was ?86,495 which was 10% lower than the 2011/12 fee and could yet be revised downwards. The basis for the audit would be the same as this year?s. The auditors? work on certifying grant claims was charged for separately on an hourly rate basis. Councillor S Robinson confirmed that he was satisfied with the way the Audit Commission conducted the audit and with the reduction in fees for 2012/13. In response to questions from Councillor Patten, Ms Blatcher explained that the reduction in fees had been made possible because of the efficiency savings already made by the Audit Commission. The chairman endorsed Ms Blatcher?s view that the audit fees compared favourably with the private sector. RESOLVED (unanimously): That the report be noted. |
Agreed | ||
| 19 |
Internal Audit Progress Report as at end of July 2011 Report (208K/bytes) attached The Principal Auditor presented a report to advise members of the work undertaken in respect of the Internal Audit Plans for South Ribble and Shared Services up until 31 July 2011, gave an appraisal of the Internal Audit Service?s performance to date and informed members of any general developments involving or impacting upon the work of the Internal Audit Service. She was pleased to report that, at this stage, the Internal Audit Plan was on target to be achieved and all the reviews completed to date had been given either a substantial or adequate assurance rating. In the course of the transition to a new monitoring process for ensuring management actions had been completed, (i.e. on a quarterly rather than monthly basis), the % of agreed management actions implemented had been lower than the original target but she was confident that the figure would rise over the course of the year as the new system became embedded. Having said this, the performance indicator was largely beyond the control of the Internal Audit Service which was reliant on managers to implement what they had agreed by the agreed time. Members believed that quarterly monitoring was more realistic and reasonable for all parties. The Internal Audit Manager said that managers were able to agree one revised date for the implementation of management actions. It had been agreed with the Senior Management Team that If this date was not met the matter would be referred to this committee which might choose to call the manager to a meeting to explain why the agreed action/s had not been implemented on time. A delay in the implementation of the new financial system had resulted in a lower % of management actions implemented on time. The system had now been implemented. RESOLVED (unanimously): That the report be noted. |
Agreed | ||
| 20 |
Year End Risk Monitoring Report 2010-11 and Revised Corporate Risk Register 2011-12 Report attached The Risk Manager presented the report which aimed to inform members of the actions taken by management to address the key risks and opportunities in the Corporate Risk Register (CRR) during 2010/11, present a revised CRR for 2011/12 which took into account the risks which had now been mitigated and any new or emerging risks and opportunities which were now impacting on the Council and demonstrate that the Council was continuing to manage its strategic risks effectively. Appendix 2 showed the risk matrix and the key to the risk ratings. Most of the projects and actions had been given green ratings and none had been given red ratings. The ratings were an assessment of where the Senior Management Team believed the corporate risk to be at the time they gave the assessment. Councillor W Bennett commented that CR/2010/04 on page 6 would be expected to relate to the whole of the borough but the status update on occupancy rates related to only one small part of the borough. He commended the greater than anticipated financial efficiencies generated by the C-Smart programme (CR/2010/05). The chairman commended the report which showed that the council seemed to be in control of its risks and commented on the fact that it was more easily readable than in the past. RESOLVED (unanimously) that: 1) the progress made to manage the Council?s key strategic risks during 2010/11 by reference to the end of the year monitoring statement shown at Appendix 1 be commended, and 2) the revised CRR 2011/12 shown at Appendix 2 be noted. |
Agreed | ||
| 21 |
Treasury Management Activity - Mid year review Report (167K/bytes) attached The Principal Financial Accountant presented the report which outlined investment activity to 13 September 2011 and sought the committee?s approval of the limit of three months on term deposits with institutions other than the nationalised banks. In response to a question from the chairman, the Principal Financial Accountant said that the Council could choose to place all its investments in call accounts [requiring one day?s notice only] but doing so would reduce the yield. Councillor S Robinson confirmed that he was happy with the proposed three months limit, and did not feel it necessary to restrict deposits to those which afforded immediate access. The Principal Financial Accountant explained that Money Market Funds gave a number of advantages ? they allowed daily access without notice, diversification across a wider range of high quality counterparties, better placing power than that available to a single authority because of the larger sums invested and pooling of the risk because of the number of different counterparties in which the sums were invested. Councillor S Robinson echoed Ms Blatcher?s earlier comment that the latest guidance on the repayment to the Council of its deposit in Landsbanki was 90%. RESOLVED (unanimously): That the report be noted and the committee agree to the limit of three months on term deposits with institutions other than the nationalised banks. |
Agreed | ||
| 22 |
Budget Monitoring Report - Q1: April to June 2011/12 Report attached Appendices 1 & 2 attached Appendix 3 attached The Head of Shared Financial Services was pleased to report that there was a slight net underspend of ?0.073m but, as it was early in the year and given the current economic climate, the situation could change. Councillor Patten queried the transport related budget variation on page 2 of Appendix 1 and the Head of Shared Financial Services explained that it was partly due to the low number of repairs required so far, although this might well increase over the winter period. She said that the Director of Neighbourhoods had worked extremely hard on the vehicle replacement programme to explore all options and get the best deal all round. In response to a question from Councillor W Bennett about the decrease in car parking income, Councillor S Robinson said that this income would be monitored closely ? the reduction may be due to reduced foot fall and/or more people taking advantage of the one-hour free parking spaces. Following a question from the chairman, Councillor S Robinson said it was not easy to assess at the current time if car parking income was covering all costs, including maintenance. RESOLVED (unanimously): That the report be noted. |
Agreed | ||
| 23 |
SRBC Reserves Review Report attached Councillor S Robinson presented a report which had been prepared following concerns raised by Councillor Foster at the last meeting about the level of the General Reserves. The report set out why the council held reserves. Councillor S Robinson said that this Council would be failing in its duty if it did not hold on to a healthy level of reserves and he confirmed that he was happy with the current level, especially in view of the number of question marks over local authority funding in the future. In response to a question from the chairman, the Head of Shared Financial Services explained that the reserves figure of 7.75% referred to the Council?s gross expenditure. The Chief Executive, from the audience, said that the target, when it was originally set, had been a minimum of 10% of the net budget requirement. The chairman observed that in the current financial period the reserves were currently at approximately 25% of the net budget requirement. The chairman and Councillor W Bennett said that members had wanted a rationale for why the reserves were at their current level. Councillor W Bennett said that in the current climate members of the public and council employees might question why the level was increasing. He thought that an explanation along the lines of ?we need three months? cashflow? would be acceptable. Councillor S Robinson said it was impossible to put a figure on the risks that the Council was facing but he believed the Council had budgeted prudently for the things it knew were coming but could not cost. RESOLVED (unanimously): That the report be noted. |
Agreed | ||
| 24 |
Review of the Constitution At the chairman?s invitation, the Director of Corporate Governance said there were a number of areas of the Constitution which were now ready for review: The Financial Regulations were out of date, the Protocol for Members involved in Planning Procedures would also benefit from a refresh and the review of community involvement now required the new My Neighbourhood area arrangements to be incorporated. Councillor W Bennett pointed out that the planning protocol must be aligned with the Local Development Framework. The chairman said that the review of Standing Orders for committees had not been fully completed and he would also like to see a review of outside bodies, including which ones the Council wished to nominate representatives to and what the role and responsibilities of those representatives should be. Councillor W Bennett pointed out that the Outside Body list had already been streamlined quite significantly. The chairman had been asked to suggest a review of the number of councillors, to which the Director of Corporate Governance replied that a major piece of work on boundary reviews was going to be undertaken by a separate working group and this would include consideration of the appropriate number of councillors. In response to a concern expressed by Councillor W Bennett about My Neighbourhood area decision making, the Director of Corporate Governance explained that the My Neighbourhood area chairmen would be expected to reach consensus with the other members of his or her My Neighbourhood area before making delegated decisions consultation with the Director of Regeneration and Healthy Communities. She explained that this would be a new delegation process which would be open and transparent, with the parameters for expenditure and details of the monies spent published on the council?s website. From the audience the Chief Executive said it was right and proper for this committee to discuss the constitutional arrangements of the new My Neighbourhood areas and the chairman agreed that this should be included on the agenda for the next meeting. The chairman suggested that, as in previous years, Constitution review meetings should be arranged on a monthly basis to deal with the review and that these should commence in November. This meeting would focus on the revision of the Financial Regulations. RESOLVED (unanimously) that: 1) The new My Neighbourhood area constitutional arrangements be brought to the next meeting, and 2) the review of the Constitution 2011/12 be carried out in the following order: (i) Financial Regulations (November) (ii) Protocol for Members Involved in Planning Procedures (January) (iii) Streamlining of committee Standing Orders (iv) Review of Outside Bodies |
Agreed | ||
| 25 |
Forward Plan Plan (42K/bytes) attached The forward plan was noted without further debate. The chairman announced that the next meeting would be held on Thursday 1 December rather than the originally scheduled 30 November. |
Noted | ||