Meeting of Governance Committee on Wednesday, 25th September, 2013
Meeting documents
Governance Committee
Wednesday, 25th September, 2013
Place: | Cross Room, Civic Centre, West Paddock, Leyland, PR25 1DH |
Present: | Councillors W Bennett (in the chair), Nelson, Ogilvie and Patten |
In attendance: | Garry Barclay (Head of Shared Assurance Services), Jane Blundell (Principal Management Accountant), Michele Brennan (Internal Auditor), Carol Eddleston (Democratic Services Officer) and Lee Hurst (Principal Systems and Financial Accountant) The Cabinet Member for Finance and Resources, Councillor Robinson Representatives from the Council's external auditors Grant Thornton - Fiona Blatcher and Gareth Winstanley |
Public attendance: | 1 |
Other Officers: | 1 Other Members:- Councillors Hamman and P Smith |
Item | Description/Resolution | Status | Action | |
---|---|---|---|---|
OPEN ITEMS | ||||
18 |
Apologies for Absence Apologies for absence were submitted on behalf of Councillors Clark and Foster. |
Noted | ||
19 |
Declarations of Interest There were no declarations of interest. |
Noted | ||
20 |
Minutes of the Last Meeting Minutes attached RESOLVED (unanomous) that: The minutes of the meeting held on 22 July 2013 be approved as a correct record and signed by the chairman. |
Agreed | ||
21 |
SRBC Audited Statement of Accounts 2012/13 Report (105K/bytes) attached Appendix A (2M/bytes) attached Appendix B (140K/bytes) attached The Cabinet Member for Finance and Resources, Councillor Robinson, presented the report. He was pleased that the accounts had shown better than anticipated results which had allowed the authority to add to both the general and the earmarked reserves.
For the committee?s information, Ms Blatcher explained that depreciation recognised the economic cost of using a product over its lifetime; impairment recognised the external (including economic) factors which might change the value of assets. In relation to the Council?s investments in Icelandic banks, Councillor Robinson was pleased to report that the Council had now recovered 94% of its deposit in Heritable Bank. RESOLVED (unanimous) that: |
Agreed | ||
22 |
External Audit - Audit Findings Report Report (446K/bytes) attached Gareth Winstanley from the Council?s External Auditors, Grant Thornton, presented the report, explaining that it was essentially the same report format as in previous years but with a different title. It was a very positive report as the audit had gone very well and he thanked Financial Services staff for their co-operation throughout and the high quality of the working papers. He was pleased to confirm that the auditors had received satisfactory evidence in relation to the bullet points on page 5 of the report. A small number of presentational and disclosure changes had been made to the financial statements simply for clarification and consistency purposes. The Value for Money conclusion had found that the authority?s arrangements were sound and good, acknowledging that there were some challenging times ahead that all authorities would need to address. Members joined the chairman in thanking the external auditors for their report and commended the fact that it was user friendly and easy to read. The chairman considered it to be one of the most important external reports about the authority that this Council received and he believed that the officers concerned deserved tremendous credit for their hard work. For the committee?s information, Ms Blatcher explained that an ?unqualified? audit opinion confirmed that the external auditors thought that the statement of accounts was materially correct. Had they believed otherwise, they would have issued a ?qualified? audit opinion. In relation to page 10, she explained that the external auditors needed to understand the authority?s processes so that it could complete a risk assessment and identify what work they needed to do. Mr Winstanley explained that a ?walkthrough test? was undertaken to check that the outcome of a particular transaction was as expected, and that the appropriate controls were in place and working satisfactorily. The chairman recalled that the committee had welcomed the significant reduction in fees and he enquired whether the council had still received the same level of service. From the audience, the Chief Executive confirmed that the council had no concerns in this regard and that the transition had worked well. He and the Monitoring Officer met regularly with the external auditors to discuss the council?s arrangements, to ensure that these were effective and to identify problems and resolutions promptly. Mr Winstanley explained that an extra fee might have been considered necessary if, for example, the quality of the working papers had been inadequate and additional audit work / time had had to be spent on ensuring a satisfactory standard of information / papers was available. Ms Blatcher did not believe that the audit had been compromised by the reduction in fees and in fact Grant Thornton had worked hard to demonstrate that it was adding value. She explained that this reduction had been made possible in part by the fact that external audit firms were no longer bearing some of the central costs of the Audit Commission and in part by the lower pension costs involved following the move to Grant Thornton. The chairman expressed the committee?s thanks to the external auditors for presenting an excellent report, and to external audit staff and Council officers for their work on the 2012/13 audit. RESOLVED (unanimous) that: |
Agreed | ||
23 |
External Audit - Financial Resilience Report Report (503K/bytes) attached Ms Blatcher presented the report. She said that even though the council?s high level of usable reserves appeared relatively high when compared with other authorities, this was actually very helpful in the context of the budget gap. The council had a relatively strong level of liquidity and very low borrowing and needed to challenge itself going forward about the level of its reserves. She explained that the ?benchmarking group? listed on page 10 was based on a number of criteria which the Audit Commission had used to identify the council?s nearest statistical neighbours. Members welcomed the introduction of the benchmarking information and would be interested to know more about the assessment criteria used to identify our nearest neighbours. Grant Thornton now audited approximately 40% of local authorities in the country and the benchmarking results would form part of a national document later in the year. From the audience, the Chief Executive explained that this type of benchmarking was an approach adopted by Grant Thornton only at this time and was an example of added value in the service provided. The chairman noted that reference to ?slippage? of the capital programme on page 12 was in fact simply a case of prudent management of the capital programme. Councillor Robinson explained that the increase in the working capital ratio between 31 March 2011 and 31 March 2012 was due in part to decisions made to ensure that the council had liquidity and also to the council?s efforts to forecast the budget gap year on year and plan for how to bridge the gaps. Ms Blatcher pointed out that one of the main reasons for the high ratio was that the council had no external borrowing. Mr Winstanley explained that the bullet points on page 18 were generic to all Grant Thornton?s local authority clients and intended to set the scene for the following pages. ?Recovery plans? would only be required if, for example, the authority had identified through its budget monitoring a significant overspend and needed plans in place for how to deal with it. In response to an observation from the chairman that the level of understanding among members about the council?s financial position varied significantly, Ms Blatcher acknowledged that this tended to be the case among local authority members but, in her experience, the members of this council with which the external auditors had dealings compared very favourably with those from other authorities. Noting the graphic on page 28, Councillor Patten suggested that it would be useful to have ?private sector? broken down into something more meaningful in future as this was such a massive and disparate group of companies. In response to a question from the member of the public, Ms Blatcher observed that some of the efficiency savings identified by the council were due in part to the use of technology but suggested it might be interesting to collect some data in this regard. Councillor Robinson expressed his thanks to all those concerned both in Shared Financial Services and at Grant Thornton for the tremendous amount of hard work which had gone into the 2012/13 audit. The reports had been first rate, deadlines had been met and explanations had been very clear. RESOLVED (unanimous) that: |
Agreed | ||
24 |
External Audit - Governance Committee Update Report Report (461K/bytes) attached Mr Winstanley presented the report which summarised a number of emerging national issues and development, and included a number of challenge questions in respect of these emerging issues which, he suggested, the committee may wish to consider at a later date. The report was being brought to this meeting to gauge whether it was something that members might wish to see in future. Members joined the chairman in welcoming this new report, suggesting that it would be a useful addition to the committee?s work programme and that members would welcome receiving regular email updates on issues of interest. RESOLVED (unanimous) that: |
Agreed | ||
25 |
Budget Monitoring Statement ? Month 4 (July) 2013/14 Report (65K/bytes) attached Appendices 1+2 (978K/bytes) attached Appendix 3 (16K/bytes) attached Appendix 4 (32K/bytes) attached Councillor Robinson presented the report which provided an update on the Council?s overall financial position compared to the financial strategy for the first four months of the current financial year. He reported that the trends were pleasing, with a number of efficiencies made and savings realised. Like all local authorities, this council was facing a stark challenge over the next three years, however, this council?s saving grace was that it had built up a healthy level of reserves. He predicted that it would take a full 12 months before the impact of the Business Rates Retention Scheme would be known. Councillor Robinson and the Principal Management Accountant responded to questions and observations from members of the committee and the audience. The portion of the ?75K underspend on employee costs relating to staff vacancies was explained by the fact that a number of vacancies had not been filled due to ongoing service reviews or because completed service reviews had identified that certain posts were no longer considered necessary as a result of different ways of working. There were no seasonal patterns to planning applications and the timing and volume were very hard to predict, hence it had been decided to take a cautious approach in the 2013/14 budget. There was a suggestion that with the signing of the City Deal, more resource may actually be required rather than less, so the efficiency savings proposals in relation to the planning service outlined in Appendix 2 may not be met. Consideration was constantly being given to how capital could be spent to reduce revenue spend and examples where this had already happened included vehicle repairs, property maintenance, and parks and open space infrastructure. RESOLVED (unanimous) that: |
Agreed | ||
26 |
Internal Audit - 1st Interim Report as at 26th July 2013 Report (139K/bytes) attached The Internal Auditor presented the report which advised on progress made on the South Ribble and Shared Financial Services Internal Audit Plans for the period April 2013 to July 2013, gave an appraisal of the Internal Audit Service?s performance to date, and informed members of general developments involving or impacting on the work or performance of the Internal Audit Service. It was agreed that future reports would make it clear in Appendix 1 whether audits showing ?to commence in QX? had slipped or whether they had originally been scheduled to commence in the quarter shown and in Appendix 2 to explain that some of the Shared Financial Services audit plans would not be expected to have been completed at this stage because the work could only be undertaken in quarters 3 or 4. Internal Audit Staff were involved in the Wesley Street Mill and Community Infrastructure Levy project team, ensuring that the project was on track and advising on financial probity. The committee said that they continued to value the work of the Internal Audit Service and congratulated Linsey Roberts who had recently been successful in the Institute of Internal Auditor examinations. RESOLVED (unanimous): |
Agreed | ||
27 |
Review of Constitution The committee was asked to agree Constitution Task Group meetings for the 2013/14 review as follows: (i) Council meeting minutes ? 6.00pm, Thursday 17 October; The chairman suggested that the first two themes were closely linked and he encouraged members to seek the views of other members. Councillor P Smith and the member of the public enquired whether it would be possible for people outside of the task group to participate / be involved. The committee noted that whilst the Constitution Task Group had been established in November 2009 with the same membership as the full Governance Committee, the 2012/13 constitution review had introduced new guidance in Part 3F on Working Groups and Panels relating to the Terms of Reference and any protocols required, including recommending that the parent committee have regard to, among other things, whether it considered it appropriate to have co-option, deputies/substitutes and public attendance. RESOLVED (unanimous) that: |
Agreed | ||
28 |
Forward Plan Forward Plan (33K/bytes) attached The committee noted the Forward Plan without further debate. |
Agreed |