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Agenda and minutes

Venue: Committee Rooms A, B and C, Civic Offices, Elstree Way, Borehamwood

Contact: Allan Siao Ming Witherick  020 8207 7806

Items
No. Item

37.

Membership

To receive details of any change in Membership of this Committee notified since the agenda was printed.

Minutes:

The Chair welcomed new Members to the Audit Committee.

38.

Communications and Apologies for Absence

(a) Communications (if any) relating to business on the agenda.

(b) Apologies for absence.

Minutes:

All Members were present.

39.

Declarations of Interest

Members are required to declare any disclosable pecuniary interests they or their spouse/partner have in any matter which is to be considered at this meeting.  Members must also declare any other pecuniary or non-pecuniary interests they have in any matter to be considered at this meeting. The responsibility for declaring an interest rests solely with the member concerned.

 

Members must clearly state to the meeting the existence and nature of any disclosable pecuniary interest, other pecuniary interest or non-pecuniary interest and the agenda item(s) to which it/they apply.

 

Disclosable Pecuniary Interests are prescribed by the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012 as follows;

 

Employment, office, trade, profession or vocation

 

Any employment, office, trade, profession or vocation carried on for profit or gain.

 

Sponsorship

 

Any payment or provision of any other financial benefit (other than from the relevant authority) made or provided within the relevant period in respect of any expenses incurred by a member in carrying out duties as a member, or towards your election expenses. This includes any payment or financial benefit from a trade union within the meaning of the Trade Union and Labour Relations (Consolidation) Act 1992.

 

Contracts

 

Any contract which is made between the relevant person (and a body in which the relevant person has a beneficial interest) and the relevant authority— (a) under which goods or services are to be provided or works are to be executed; and (b) which has not been fully discharged.

 

Land

 

Any beneficial interest in land which is within the area of the relevant authority.

 

Licences

 

Any licence (alone or jointly with others) to occupy land in the area of the relevant authority for a month or longer.

 

Corporate tenancies

 

Any tenancy where (to the member’s knowledge) - (a) the landlord is the relevant authority; and (b) the tenant is a body in which the relevant person has a beneficial interest.

 

Securities

 

Any beneficial interest in securities of a body where - (a) that body (to the member’s knowledge) has a place of business or land in the area of the relevant authority; and (b) either (i) the total nominal value of the securities exceeds £25,000 or one hundredth of the total issued share capital of that body; or (ii) if the share capital of that body is of more than one class, the total nominal value of the shares of any one class in which the relevant person has a beneficial interest exceeds one hundredth of the total issued share capital of that class.

 

In cases of disclosable pecuniary interest, Members must withdraw from the meeting room while the matter is being considered.

 

Minutes:

During the debate of Item 6, Annual Audit and Certification Fees 2019/20 (EY), Councillor P Hogdson-Jones declared a non-pecuniary interest as Chairman of Hertsmere Development Limited (HDL) which would be covered by the group audit fees.

40.

Minutes pdf icon PDF 118 KB

To approve and sign the ATTACHED minutes of the meeting of the Committee held on 30 January 2019.

 

The Minutes of the Special Meeting held on the 15 May 2019 are TO FOLLOW.

 

In accordance with the Constitution, no discussion shall take place upon the minutes, except upon their accuracy.

Additional documents:

Minutes:

RESOLVED that the minutes of the meeting held on 30 January 2019 and the Special Meeting held on the 15 May 2019 were approved and signed as a correct record.

41.

External Audit Plan Progress Report 2018/19 (EY) pdf icon PDF 251 KB

The purpose of the ATTACHED report is to provide the Audit Committee with an overview of the stage reached in the Ernst & Young 2018/19 audit and ensure it is aligned with the Committee’s service expectations.

Minutes:

The External Audit Manager, Ernst & Young, reported on their progress against the 2018/19 Audit.  They noted that this covered both Financial Statements and Value for Money and confirmed the risks communicated in the audit plan were unchanged.

 

Finally they reported that the dates for site visits had been revised and would be undertaking remote work in advance of this.

 

Members queried whether the Pension valuation would be revised as had occurred last year.  The External Auditor stated that their position was unchanged that, as they had the benefit of end of year estimates, these would be compared to the earlier estimates and an assessment made of whether the variance was significant.  Officers reported that the variation this year was below the level of materiality and that a decision would be made to ensure consistency in reporting.  It was noted that a regular triennial review was undertaken and that the current target to cover the pension deficit was 18 years.

 

RESOLVED that the information contained in the 2018/19 Audit Progress Report from Ernst and Young be noted.

42.

Annual Audit and Certification Fees 2019/20 (EY) pdf icon PDF 300 KB

The ATTACHED report summarises the overall assessment by Ernst and Young of the Council’s management arrangements for the certification process and the fees set as a result.

Additional documents:

Minutes:

The External Audit Manager, Ernst & Young, reported on the Annual Audit and Certification Fees letter for 2019/20.

 

It was noted that as part of the Public Sector Audit Appointments Ltd (PSAA) scheme, set up after the Local Audit and Accountability Act 2014, it had been agreed that Ernst & Young would be the appointed External Auditor for Hertsmere Borough Council for the five year period of 2018/19 to 2022/23.

 

The External Auditor highlighted that appended to the letter was an overview of their approach to working with councils and the added value that they provided beyond the audit.  This was a requirement of the PSAA contract.

 

Finally they reported that the 2019/20 Audit Plan would be issued by Ernst & Young early in 2020 and would provide a statement on any significant risks identified and the planned audit procedures to deal with those risks.

 

The Committee queried why no fee was shown for the group accounts and were informed that consideration as to which group organisations would be consolidated was still being concluded.  It was confirmed that the fee would relate to the level of work required for those audits rather than a fixed value and that any additional fee would need to be agreed by the PSAA.

 

RESOLVED that:

1.    The Annual Audit and Certification Fees for 2019/20, set out in the Ernst & Young letter, report A/19/10, be noted.

2.    The presentation of the Audit Plan for 2019/20 to the Committee in January 2020, be noted.

43.

Local Government Audit Committee Briefing (EY) pdf icon PDF 1007 KB

To receive the ATTACHED briefing paper produced by Ernst & Young for Local Government Audit Committees.

Minutes:

The Committee received a briefing booklet from Ernst and Young entitled ‘Local Government Audit Committee briefing’. This booklet was intended to support Audit Committees in their work and reported on technical issues as well as wider matters of potential interest to Audit Committee Members.

 

RESOLVED that the information contained in the briefing from Ernst & Young be noted.

44.

Audit Committee assurance from Management pdf icon PDF 56 KB

ATTACHED letter and response setting out how the Audit Committee gains assurance from management.

Additional documents:

Minutes:

The Chair introduced the letter that set out how the Audit Committee gained assurance throughout the year from Officers.

 

Members asked how the Committee compared to other Audit Committees and the External Auditor reported that whilst members were not expected to be qualified accountants they did look for a level of understanding and insight in to the papers presented.  Hertsmere Borough Council Audit Committee presented a good level of questioning with a suitable level of support from Officers.  The Head of Shared Internal Audit Service commented that an important aspect of membership was to have the intellectual curiosity to ask questions.  As there were a number of new Audit Committees in Hertfordshire it may provide an opportunity for review and shared training.

The Chair reported that he had previously attended a meeting of Audit Committee chairs and that the questions and debate had been similar to that undertaken at Hertsmere Borough Council.

 

It was noted that training for Audit Committee members would be organised later in the year and that a number of organisations such as CIPFA (Chartered Institute of Public Finance and Accountancy) also provided useful guides.

 

RESOLVED that the correspondence from the Chair to the External Auditor, Ernst & Young, setting out how the Audit Committee gains assurance from management be noted.

45.

Annual Assurance Statement 2018/19 and Internal Audit Annual Report (SIAS) pdf icon PDF 558 KB

The ATTACHED report asks the Committee to:

·         Note the Annual Assurance Statement and Internal Audit Annual Report

·         Note the results of the self-assessment required by the Public Sector Internal Audit Standards (PSIAS) and the Quality Assurance and Improvement Programme (QAIP)

·         Accept the SIAS Audit Charter

·         Seek management assurance that the scope and resources for internal audit were not subject to inappropriate limitations in 2018/19

Minutes:

The Committee had a report before them which detailed the Shared Internal Audit Service’s (SIAS) overall opinion on the adequacy and effectiveness of Hertsmere Borough Council’s control environment and summarised the internal audit work that informed this opinion. It also set out the outcome of the self-assessment against the Public Sector Internal Audit Standards (PSIAS) which incorporated the requirements of the Quality Assurance and Improvement Programme (QAIP), showed SIAS’s performance in respect of delivering the Council’s 2018/19 audit plan and presented the SIAS Audit Charter.

 

There were two areas of intentional non-conformance with PSIAS as previously agreed and reported as these areas did not fit the nature of a shared service and suitable alternative structures had been adopted that complied with the principles:

1)    Reporting Structures: The Head of Assurance reports to Director of Resources of Hertfordshire County Council, along with the SIAS Board which represents the partner bodies.  This is deemed more appropriate than reporting to several Audit Committees.

2)    Appraisal: The Head of Assurances appraisal is undertaken by the Director Resources of Hertfordshire County Council on behalf of all the member authorities.

It was noted that an external peer review and assessment was due by quarter three in 2020 and Members were reassured by the Corporate Director as Chief Financial Officer that they provided input in to the process.

 

The Internal Auditor confirmed that, in line with 2.10 of the report, during the year:

  • No matters threatened SIAS’s independence; and
  • SIAS was not subject to any inappropriate scope or resource limitations.

 

During discussion of this item, the Corporate Director gave formal notice that the scope and resources given to SIAS had not been subject to inappropriate limitations in 2018/19.

 

The Head of Shared Internal Audit Service reported that they were able to provide a “Satisfactory overall assurance on financial systems” and “limited overall assurance on non-financial systems”.  It was highlighted that the assurance definitions had changed at the start of 2018/19, and that the definitions for limited assurance had materially changed, such that an overall assurance opinion of limited assurance in 2018/19 should not be conflated with such an outcome in 2017/18. The limited assurance opinion for non-financial systems did not represent a negative direction of travel from the outcomes in 2017/18.  There were no critical level recommendations made during 2018/19.  The Head of Shared Internal Audit Service noted that there were two outstanding reports in draft form and that they would be published when available.

 

The Head of Shared Internal Audit Service was pleased to report that performance targets for 2018/19 had been achieved.

 

The External Auditor confirmed in response to a Member query that they took in to account the Internal Audit reports as part of the council’s overall assessment, however they did not rely on them and undertook their own substantive audit.

 

Finally, it was commented that a welcome change would be the placement of the summary annual assurance opinion at paragraph 2.11 at the start of section 2 within  ...  view the full minutes text for item 45.

46.

Annual Governance Statement 2018/19 (SIAS) pdf icon PDF 292 KB

The ATTACHED report explains how the Council has maintained sound governance during the 2018/19 financial year, how it meets various legislative requirements and identifies any significant governance issues.

·         HBC Annual Governance Statement 2018-19 - Covering Report

·         Appendix 1-HBC Draft Annual Governance Statement 2018-19

·         Appendix 1A-HBC Draft Annual Governance Statement 2018-19 Action Plan

·         Appendix 2-HBC Local Code of Governance update May 2019

 

Additional documents:

Minutes:

The Corporate Director and Head of Shared Internal Audit Service introduced the Annual Governance Statement (AGS) for 2018/19 to the Committee. The AGS explained how the Council had maintained sound governance during the 2018/19 financial year and how the Council met the requirements of the Accounts and Audit (England) Regulations 2015.  The Head of Shared Internal Audit Service highlighted that this Statement forms part of the published Statement of Accounts to be considered later in the meeting.

 

The Annual Governance Statement process five issues for inclusion in the 2018/19 Action Plan were:

a) Business Continuity,

b) General Data Protection Regulations (GDPR),

c) Newberries Car Park Development,

d) Workforce Capacity, Succession Planning and Use of Temporary Staff,

e) Governance of Local Authority Trading Companies.

 

The Corporate Director explained that there had been a number of changes taken to mitigate concerns:

  • Business Continuity planning had been impacted by efforts to identify suitable premises for relocation and changes in staffing which had led to joint working with Welwyn Hatfield Borough Council.
  • A new Information Officer was in place working to improve GDPR support in addition to the basic training which had been provided to nearly all officers.
  • A report on Newberries Car Park Development was due to go before Executive and the Council.
  • Workforce Capacity, Succession Planning and Use of Temporary Staff continued to be a concern due to limited alternatives.  There were difficulties recruiting with £1.7 million spent on temporary and agency staffing and the council was working to grow staff internally.
  • Governance was still under review pending a report on the trading companies which, once completed, the Council would look to implement the recommendations.

 

The Committee questioned the level of spending on temporary staff and how this figure compared to the amount which might have been spent otherwise.  The Corporate Director responded that on average the Council spent 17-18% extra but this did vary by service with the more specialist staff being more expensive.  It was noted that in some services, waste staff for example, were cheaper, while in Asset Management the effective use of temporary staff on particular projects had generated a net surplus on income.

 

A query was raised by a Member about the delay in resolving Newberries Car Park Development.  The Corporate Director stated that, as a result of feedback from consultation and further assessment the proposal for the original scheme was being reconsidered and that this was due to go to the Executive.

 

The Committee recognised the changes in GDPR and welcomed the appointment of the Information Officer but sought assurances as to the training and processes in place.  Officers responded that all staff are trained but it is an area with deficits and that, across the Council, efforts were being undertaken to review and simplify privacy notices and application forms.  This formed part of an ongoing programme of work.  It was noted that the Information Commissioners Officer had more resources and powers to ensure compliance.

 

RESOLVED that:

1.    The Council’s Annual  ...  view the full minutes text for item 46.

47.

Internal Audit Plan Report 2019/20 (SIAS) pdf icon PDF 347 KB

The ATTACHED report provides the Committee with details of the proposed Hertsmere Borough Council Internal Audit Plan for 2019/20.

Minutes:

The Shared Internal Audit Service (SIAS) submitted a report which detailed the proposed Hertsmere Borough Council Internal Audit Plan for 2019/20. This Plan set out the programme of audit work for the year ahead and forms part of the Council’s assurance framework. In presenting the report, the Head of Shared Internal Audit Service highlighted that the plan was flexible and dynamic to meet the needs of the Council.  The Plan included a reserve list of audits for drawdown on available capacity, should an audit in the Plan be deferred or cancelled and other higher priority work had not been identified.  Based on prior Audit Committee feedback, and linked to the Strategic Risk Register, Cyber Security will again be reviewed as part of the Plan.

 

It was noted that the Internal Audit Plan for 2019/20 had already been given by the Chief Officers Board in March 2019 in line with normal protocol so that plan delivery could begin at the start of the financial year due to the timing of the Audit Committee meeting in May.

 

RESOLVED that the Hertsmere Borough Council Internal Audit Plan for 2019/20 be approved.

48.

Progress Report - Shared Internal Audit Services (SIAS) pdf icon PDF 482 KB

The attached report provides the Committee with:

(a)  the progress made by the Shared Internal Audit Service (SIAS) in delivering the Council’s 2019/20 Internal Audit Plan as at 17 May 2019,

(b)  changes to the 2019/20 Audit Plan,

(c)  the implementation status of previously agreed audit recommendations,

(d)  an update on performance management information as at 17 May 2019.

Minutes:

The Shared Internal Audit Service (SIAS) submitted a report to the Committee detailing progress made by SIAS on: delivery of the Council’s 2019/20 Internal Audit Plan as at 17 May 2019; status of audit recommendations and an update on performance management information.

 

The Head of Shared Internal Audit Service drew the Committee’s attention to the high priority recommendations, linked to the previous agenda items on the AGS and Head of Assurance Opinion, the recommendations update from the audit of the CCTV partnership and to other medium priority recommendations which were still outstanding.

 

The Committee acknowledged that SIAS had been in operation for 8 years and that the audits were now integral to the council.  It was recognised as a good example of where shared working had helped to build both resilience and specialist skills with an audit team that was both flexible and objective.  The Head of Shared Internal Audit Service thanked the Committee for their support.

 

RESOLVED that the information contained in the Shared Internal Audit Service progress report (A/19/16) be noted and the amendments to the Audit Plan be approved.

49.

Presentation of the 2018/19 Draft Accounts pdf icon PDF 366 KB

The report TO FOLLOW presents the Council’s Statement of Accounts for 2018/19 for recommendation to external audit.

 

Appendix 1 [Draft Statement of Accounts 2018/19] will follow.

Due to the substantial size of this appendix, it will be circulated electronically. Would any Councillor who wants a hard copy of this appendix, please let the Democratic Services Manager know.

Additional documents:

Minutes:

The Committee had before it a report presenting the Council’s draft Statement of Accounts for 2018/19 for noting before it is signed off for submission to external audit.  Officers presented key elements of the financial statements to the Committee.

 

According to The Accounts and Audit (England) Regulations 2015, amended by Statutory Instrument 234, the Chief Financial Officer must, by the 31 May following the year end, sign and date the Statement of Accounts and confirm that they present a true and fair view of the financial position as at 31 March.

 

The fully audited accounts would then return to the 30 July 2019 meeting of the Committee to be approved and the Chair of the Audit Committee would be asked to sign them off.

 

Members were informed by officers that the Council had financial processes in place which were active throughout the year to allow the accounts to be finalised properly and promptly.  The Corporate Director had been provided regular updates to give them confidence in the year end processes and were able to recommend submission for external audit.

 

The Committee queried the levels of available funding and the transfers to reserves.  The Officer noted that some, such as those to the Business Rates and Housing Benefits reserves, were to cushion potential changes in fluctuation in Business Rate income and recovery of Housing Benefit overpayments. Also there was significant uncertainty around the potential financial impact of the national review of Business Rates, scheduled for 2020/21, and the transition from Housing Benefit to Universal Credit. These reserves were considered prudent whilst there was such uncertainty.  Some of the figures, such as Section 31 Grant from government to deal with in-year legislative changes, had also been more significant than usual.

 

RESOLVED that the draft Statement of Accounts for 2018/19 be noted and their submission to external audit be approved.

50.

Risk Management Progress Update pdf icon PDF 315 KB

The ATTACHED report reviews and updates the Strategic Risks facing this Authority.

Additional documents:

Minutes:

The Committee received a report reviewing and updating the strategic risks facing the authority.  It was stated positively that the risk “Illegal encampments” [SO31] had now been removed following successful use of the injunction.

 

A Member noted that “Supply of Affordable Social Housing & Homelessness” [SO01] remained red as both high likelihood and high impact and was questioned what actions were in place to reduce these.  Officers responded that there were a number of actions being taken, however as the briefing from the External Auditor earlier in the agenda showed, this was a national issue.  The Council is taking various actions including the Crown Road development and collaborating with neighbouring authorities.  It was noted by a Member that the Homelessness Strategy was due to go to the Executive.  The Corporate Director stated that as the Chief Financial Officer they could not provide full assurance due to the factors outside the control of the Council but reassured Members that appropriate actions were being taken.

 

The Committee queried why “Newberries car park development scheme” [SO22] was still listed as both medium likelihood and impact as there was a decision in the Forward Plan which was scheduled for the Executive and Full Council.  Officers responded that it would be removed once appropriate actions had been completed.

 

RESOLVED that the current strategic risks be noted and that there are no significant changes.

51.

CCTV Partnership Joint Executive governance arrangements

A report was requested at the last meeting on the CCTV Partnership Joint Executive governance arrangements from the Hertsmere CCTV Member representative.  Due to the meeting of the Joint CCTV Executive being rescheduled to the 5 June 2019 and therefore it is recommended that this item be DEFERRED to the next meeting.

Minutes:

The Committee was informed that the previous CCTV Partnership Joint Executive meeting had been rescheduled to the 5 June 2019.

 

RESOLVED that the CCTV Partnership Joint Executive governance arrangements be DEFERRED to the next meeting of the Audit Committee to be held on the 30 July 2019.

52.

Any other non-confidential business which the chair considers urgent

In accordance with S100b(4) of the Local Government Act 1972, amended by the Access to Information Act of 1985, no urgent business may be raised unless it has been approved by the Chair.  The item and reason for urgency must be announced at the start of the meeting.

Minutes:

There was none.

53.

Dates of Future Meetings

Future meetings are scheduled to take place at 7.30pm at the Civic Offices, Elstree Way, Borehamwood, as follows:

·         30 July 2019

·         24 October 2019

·         29 January 2020

·         27 May 2020

Minutes:

The next meeting was scheduled for 30 July 2019 at 7.30pm.