| Place: | Cross Room, Civic Centre, West Paddock, Leyland, PR25 1DH |
| Present: | Councillors O'Hare (in the chair) Councillors W Bennett, P Foster, M Green, Mrs Mort, J Patten |
| In attendance: | Director of Corporate Governance (Maureen Wood), Head of Shared Financial Services (Susan Guinness), Legal Services Manager (David Whelan), Internal Audit Manager (Clare Ware), Principal Auditor (Dawn Highton) and Senior Democratic Services Officer (Andy Houlker) and the Cabinet Member for Finance and Resources (Councillor Stephen Robinson) |
| Public attendance: | 0 |
| Other Officers: | Councillor K Martin and one officer |
| Item | Description/Resolution | Status | Action | |
|---|---|---|---|---|
| OPEN ITEMS | ||||
| 35 |
Apologies for Absence There were no apologies for absence. |
Noted | ||
| 36 |
Declarations of Interest There were no declarations of interest. |
Noted | ||
| 37 |
Minutes of the Last Meeting Minutes attached In response to an enquiry, the Chairman clarified resolution min. no.32(1). A member suggested that a degree of members? concerns relating to the proposed governance arrangements for My Neighbourhoods might be due to a lack of understanding. The Chairman indicated that officers had been requested to look at this further and report back to this committee before any proposed arrangements were submitted to the Cabinet/Council. Regarding min. no.30, the Vice-chairman and the Chairman shared a frustration that the matters arising had not been followed up and requested that this information be circulated to committee members. Whilst the Cabinet member for Finance and Resources and the Head of Shared Financial Services did not have the information to hand they confirmed it would be provided. UNANIMOUSLY RESOLVED: That the minutes of the meeting held on 1 December 2011 be signed as a correct record. |
Agreed | ||
| 38 |
External Audit - Audit Plan - Audit 2011/12 Plan (510K/bytes) attached The chairman welcomed Fiona Blatcher (Senior Auditor Manager/Engagement Lead) and Gareth Winstanley (Audit Manager) from the Audit Commission (the council?s external auditor). 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 2011/12. It was based on a risk-based approach to audit planning. There were three areas identified, two were not specific to South Ribble and common to all local authorities and related to the estimated value of property and pensions. The only specific area of risk relating to this council was the introduction of the new financial management information system which was integral to the council?s accounts. In response to an enquiry about the concept of ?materiality? the Senior Audit Manager explained that for South Ribble this was just over ?1m (as percentage of the council?s gross revenue expenditure). Any figure below that the auditor would decide if it was felt necessary to look at, such as an area of sensitivity. The auditor used gross revenue figure because this was stipulated by the Audit Commission which was a methodology fairly similar to that applied other firms. It was suggested there weren?t many items over ?1m. Regarding property values it was accepted these could substantially rise and also fall, and it was wondered if there a risk the council could be misstated. The Senior Audit Manager commented that these values formed part of the council?s capital financing requirement, it was necessarily a problem but identified as good stewardship of assets. The Audit Manager added that the level of depreciation charged to the revenue budget was affected by changes to the value of assets. Responding to an enquiry about pension liability the Senior Audit Manager confirmed that changes in the stock market would have some impact. One aspect was the actuary?s view on the mortality rate which was re-calculated annually. The chairman thanked Ms Blatcher and Mr Winstanley for attending and presenting the Audit Plan. RESOLVED (unanimously): That the report be noted. |
Agreed | ||
| 39 |
External Audit - Consultation on Interim Auditor Appointment for 2012-13 Letter attached Fiona Blatcher (Senior Auditor Manager/Engagement Lead) and Gareth Winstanley (Audit Manager) from the Audit Commission (the council?s external auditor) remained present and addressed the committee. The Audit Commission had started the process of procuring a new auditor for the council. The appointment of the council?s current auditor ceased after 2011/12, however, a new auditor would only be appointed from 1 September 2012. As the council needed to have an auditor, the Audit Commission had suggested that the current auditor?s appointment be extended to 1 September 2012. The Senior Auditor Manager commented this was a holding appointment and she didn?t envisage any significant work being carried out until after 1 September. If she had to carry out any work it would be funded by the Audit Commission. The committee expressed general concern/disappointment at this situation but recognised the need to have an auditor and was pleased that the council wouldn?t be funding this temporary appointment. The Senior Audit Manager added that the new audit contract awards would be notified on 6 March 2012. The committee asked and the Manager agreed to provide an update to the next meeting. RESOLVED (unanimously): 1. That the committee notes the interim auditor appointment for 2012/13; and 2. That the Audit Commission gives the committee an update at its next meeting on 25 April 2012. |
Agreed | ||
| 40 |
External Audit - Certification of Claims and Returns Annual Report - 2010/11 Audit Report (295K/bytes) attached Fiona Blatcher (Senior Auditor Manager/Engagement Lead) and Gareth Winstanley (Audit Manager) from the Audit Commission (the council?s external auditor) remained present and addressed the committee. The Audit Manager indicated this represented the work of the auditor in 2010/11 which had followed a national approach (page 3) and looked at claims relating to housing & council tax benefit scheme, national non-domestic rates return and, disabled facilities (pages 5-6). The claims were unqualified apart from those for housing & council tax benefit scheme. This was because of a small number of minor errors (claimant and council) and an overpayment. It was noted that the audit fee had reduced from the previous year. In response to an enquiry whether staff training issues had been identified regarding the qualification for the housing & council tax benefit scheme, the Audit Manager commented that this wasn?t part of Audit Commission?s remit but internal to the specific service area of the council. He wasn?t sure what action was being taken. The director of Corporate Governance commented that sometimes these were quite difficult to assess and subjective and it appeared the council had erred on the wrong side. It was noted that there had only been three minor errors in respect of claims totalling ?26,547,000. RESOLVED (unanimously): That the notes the report. |
Agreed | ||
| 41 |
Treasury Management Strategy Report (213K/bytes) attached The Cabinet Member for Finance and Resources (Councillor S Robinson) and the Head of Shared Financial Services (Susan Guinness) attended and presented the report which outlined the council?s prudential indicators and treasury strategy to 2013/14. Councillor Robinson stated that basically very little had changed. The council was not borrowing and had retained the ?3m ceiling for investments. Councillor Robinson referred to the list of financial institutions and investment criteria on page 10 of the report. He commented that the number of institutions had reduced because some had lost their AAA rating. Those partly nationalised were 100% guaranteed. The council had also started to use Lancashire County Council which was AAA rated and was backed by the government. It was anticipated the council would continue to receive monies back from the Icelandic banks. Over the next two to three months the council would consider where to invest and the limits on them. In respect of Table 6 (page 5) the Head of Shared Financial Services indicated this summarised the council?s long term liabilities included in the medium term financial strategy. It was confirmed that slippage in the capital programme had an impact on this. The council?s revenue account, capital programme and treasury management were interlinked. Whilst it looked like the position deteriorated over future years there would be an improved revenue position. Referring to Table 2 (page 2) this related to the council?s Capital Financing Requirement which was a measure of the council?s level of debt caused by its capital programme. There was a calculation of the value of the council?s assets and what the limit of debt was which it shouldn?t exceed. This level was increased when, as indicated in the table, the council incurred unfinanced capital expenditure or leased liabilities. It was noted how much the council spent on vehicles, albeit those vehicles were very expensive. In response to an enquiry regarding why weren?t the vehicles shown as purchased, the Head of Service commented that the assumption in the accounts that vehicles were funded by borrowing or leasing it would follow that at a future point they would be owned by the council. Regarding an enquiry about the Icelandic banks, the council had received in January 2012 a further Heritable payment of ?67,000 (3.32%) which meant a total of 68% had now been repaid. The Head of Service added that in respect of Landsbanki, the first repayment was expected imminently. However, this payment would be in Icelandic Krona and the council needed to be conscious of the exchange rates. Following an enquiry asking for an update on the level of VAT rebate to the council, the Head of Services stated she didn?t have the information to hand and offered to provide an update to the next meeting. Referring to page 10 of the report and the list of financial institutions and investment criteria, the Head of Services confirmed that MR1+ was a different high sovereign rating and she offered to provide a glossary of terms for the committee. It was confirmed that the investment period would continue to be limited to three months for AAA rated institutions with more flexible investment periods in sovereign/part nationalised UK institutions. RESOLVED (unanimously): 1. That Council be recommended to approve: i) the Prudential Indicators for 2012/13 to 2014/15; ii) the Treasury Management Strategy for 2012/13, incorporating the Treasury Prudential Indicators; iii) the Annual Investment Strategy 2012/13, retaining the limit of 3 months on investments in all financial institutions other than the part nationalised banks; and iv) the Annual MRP Policy Statement 2012/13; 2. That the committee receives an update on the council?s level of VAT rebate at its next meeting on 25 April 2012; and 3. That the committee receives a glossary of terms explaining the sovereign ratings for different financial institutions. |
Agreed | ||
| 42 |
Budget Monitoring - Quarter 3: April to December 2011/12 Report (55K/bytes) attached Apps 1 and 2 (151K/bytes) attached App 3 (58K/bytes) attached The Head of Shared Financial Services remained in attendance and presented the report for the third quarter of the financial year to 31 December 2012. This included revenue income and expenditure, progress on the efficiencies programme in the mid term financial strategy and capital expenditure. She referred to Appendix 1 which indicated a current projected underspend of ?138,000 which reduced the transfer from general reserves to ?292,000. It was felt that the 85% occupancy of rate of the council?s commercial units was very positive in the current economic climate. The Head of Service offered to check the car park income trends/assumptions following a query that the previous mid year monitoring report had projected a ?5,000 shortfall which was reported the same in this quarter, despite a two week period of free parking. In response to an enquiry about the likely budget gap in future years, the Head of Service confirmed this could be ?ms rather than ?ks after taking into account current recurring efficiency savings. The council?s updated/adjusted projected annual expenditure to what was felt a realistic budget. However, there was a projected shortfall for the next four years. The council?s efficiencies programme was on-going being regularly re-assessed. It was confirmed that the budget gap had moved. Shared services had be re-structured, new technology introduced and items identified that could be done have been rather than waiting. There was a comment that there was a 33% underspend on the capital programme and it was wondered if this programme was reduced would that assist dealing with possible budget gaps. The Head of Service stated it wouldn?t. If the council earmarked ?430,000 an annual contribution from reserves this would eventually run down the General Reserve. Also such action would not pass scrutiny by external audit or the Section 151 Officer. The council would not be setting a balanced budget if it was being topped up by cash reserves. RESOLVED (unanimously): That the report be noted. |
Agreed | ||
| 43 |
Internal Audit Progress Report Report (217K/bytes) attached The chairman welcomed the council?s Internal Audit Manager (Clare Ware) and Principal Auditor (Dawn Highton). The Principal Auditor presented the report which indicated progress made between 1 August 2011 and 2 December 2011 in respect of the 2011/12 Internal Audit Plan. It also gave an appraisal of the Internal Audit Service?s performance to date, informed of any significant outstanding management actions with any underlying reasons and also any general developments impacting or involving the service. It was reported that the majority of performance measures were on or around target. Following previous comments about the percentage of management actions implemented a new monitoring process was introduced and this figure had now risen from 74% to 89%. The committee was also informed that the service was to conduct 10 audit days at St Catherine?s Hospice. A snap shot of progress against the Internal Audit Plan and Internal Audit Performance were Appendices 1 and 2 to the report. The Internal Audit Manager indicated that the work for St Catherine?s Hospice was at the market rate which had been applied when the service had previously tendered for work with Lancashire Fire and Rescue Service. The Hospice had been happy to accept this. The work was for 12 months after which it would be subject to re-negotiation. Also the work could be absorbed without impacting on the audit plans of both Chorley and South Ribble Borough Councils. In response to whether the audit could be provided free to a charity. The Hospice had previously agreed a fee with another auditor but had been let down. Whilst the service would like to it was not possible to provide a free audit. The Vice-chairman expressed his on-going satisfaction with the work of the Council?s Internal Audit Team. In response to a member in the audience referring to Appendix 1 and asking if the service had caught up from last year, the Principal Auditor commented there were always projects that couldn?t be completed by 31 March and an allowance was made in each audit plan to accommodate this. The Chairman referred to a questionnaire which members had previously completed in relation to their role as members of the Governance Committee and it was agreed that the exercise would be repeated before the end of the current municipal year, not least to obtain feedback from those members who are new to the Committee. RESOLVED (unanimously): That the report be noted. |
Agreed | ||
| 44 |
Corporate Governance Progress Report Report (91K/bytes) attached The Director of Corporate Governance presented the report which gave an update on the progress being made to strengthen the Council?s governance arrangements. The appended action plan showed progress on those areas identified for improvement and whilst some were complete others would continue to run throughout 2012. It was felt in the current circumstances considerable progress was being made. Although a couple of items had not progressed as well as hoped (business continuity and equality schedule) a reason was there had been significant re-structuring in the council. RESOLVED (unanimously): That the notes the report. |
Agreed | ||
| 45 |
Action Plan on Transparency Report (56K/bytes) attached Appendix 1 attached Appendix 2 (63K/bytes) attached The Legal Services Manager presented the report which summarised the implications of the government?s ?Code of Recommended Practise for Local Authorities on Data Transparency? (Appendix 1) and sought approval for the adoption of the Action Plan for transparency (Appendix 2). The government was keen for councils to be as transparent as possible and the recent Localism Act also included aspects on transparency. In respect of this council it was already delivering many items in the Code, such as expenditure of ?500 or more and the salaries of its senior managers. However, in respect of providing all contract details, there were reservations as these did contain confidential information and it was recommended the council continued its current practise. In response to a comment regarding the publication of female councillors private address details on the internet, the Director of Corporate Governance sympathised. However, they had provided those details in the knowledge it would be available to the public. In respect of publicising this via the council?s website, each case could be considered on its merits. However, the recent Localism Act included a requirement for the council to publicise its members? interests via its website by 7 July 2012. As yet the government had not published the specific regulations (giving details) and it was unknown if those registers would have to include a member?s personal address. Therefore at the moment whilst the council might make arrangements for female councillors, it might be required to publish such details later. Whilst supporting the transparency agenda members of the committee had mixed views on the publication of private contact details being publically available. One view was it was something a person accepted when they put themselves forward for public office. Whilst another was that if this was no longer an option and the information had to be published it would preclude some persons from standing for office. The Director commented that in June 2012 there would be a period of education, when members would be advised of the changes on interests and associated processes. However, as previously stated the council was still waiting for those regulations to be published. The Manager added that one aspect was there would be a new Code of Conduct which members would need to adopt and sign up to. The committee had strong reservations about publicising all commercial contract details and supported the suggestion that the council retain its current practise. It was confirmed and supported by the committee that senior managers? salaries would be published as a lower/upper band and not include individual names. RESOLVED (unanimously): 1. That the committee notes the report and supports and approves the adoption of the Action Plan on Transparency (including the following) - continue the current practise regarding the publication of contract details - senior managers salaries only be publicised as lower/upper bands - before publication of the register of members? interests via the council?s website members are contacted to ascertain their agreement and that the information is accurate 2. That the committee approves that those actions are integrated in to the Corporate Governance Improvement Plan and reported accordingly. |
Agreed | ||
| 46 |
Forward Plan Forward Plan attached The committee received and noted its Forward Plan. This included changes to the items to be considered on 25 April 2012 such as the removal of External Audit Opinion Plan ? Audit 2011/12 and Transparency Agenda and the addition of the Council?s Constitution and My Neighbourhoods ? Governance Arrangements. It also discussed future meetings of its Constitution Task Group and agreed that those scheduled in February and March 2012 proceed and, that the latter be followed by a special meeting of the committee. UNANIMOUSLY RESOLVED: a) That the committee?s Forward Plan be amended in accordance with the discussion; and b) That a special meeting of the committee be convened to be held on 6 March 2012 at the rise of the meeting of the Constitution Task Group. [Editor?s Note: this date was subsequently changed to 12 March 2012] |
Agreed | ||